TL;DR

• ​We're doing a micro-survey (<10 questions) on how agencies are pricing and packaging the AI services they're selling to clients.​
• Agencies exist because: client teams are strapped, agencies are ahead on the tech curve, they execute faster, know more about specific tech and industries, and offer a quality outside perspective that cuts through (some) politics.
• Clients are buying revenue, margins, and/or risk mitigation.
• AI eases bandwidth constraints for both clients and agencies, but this favors agencies slightly.
• AI shrinks the tech gap between in-house teams and agencies, at least on the execution side.
• AI will make agency and in-house teams faster, but does little to the bureaucratic speed limits at larger clients.
• AI is lowering project cost and shrinking timelines which is impacting ROI calcs and bringing up pricing questions.

New Micro-Survey (<10 Questions)

How are agencies pricing and packaging AI services?
​
We're doing a micro-survey (<10 questions) on how agencies are pricing and packaging the AI services they're selling to clients.
​
This'll be part of a larger AI Agency Playbook we're writing and we're sharing that playbook with everyone who participates.

Why Agencies Exist?

Client teams are thin.

Many simply don’t have the bandwidth to take on new large projects. Agencies allow a client to ramp up or down without needing to hire a bunch of new team members individually. CFOs love this because it turns semi-fixed costs (employees) into more elastic costs that can flex better with shifts in demand.

Agencies are ahead on the tech curve.

It typically goes startups -> agencies -> industry. The reason for this is partially due to the thinness of the client teams. Many times, the talent that makes up in-house teams is so strapped that they don’t have time in their day to experiment with new tech. They also aren’t incentivized to. Agencies on the other hand absolutely have to stay ahead on new tech and best practices because that’s a key reason they’re valuable to a client. This naturally creates an environment where agencies are more capable of implementing new capabilities than in-house teams and keeps them ahead on the tech curve.

When it comes to mid-market and larger clients, agencies are also significantly more nimble.

Once you’ve made it through the procurement gauntlet, you can do things in few sprints that’d take an in-house team 6 months to deliver. You don’t have to requisition dev resources, wait for design to get through their backlog, fight with legal about edge-case risks, or keep management focused on your shiny thing vs. the 100 others they saw at the latest conference. Turnkey solutions that don’t add to the client team’s workload are a godsend.

For specialized agencies, they can often have a better view of the client’s industry than the client themselves.

This is a core benefit to specializing an agency and it often makes the buying decision significantly easier for a client. It gets even better when an agency specializes in a few adjacent industries and can cross-pollinate best practices and learnings across them.

Agencies have an outside perspective and the ability to question things that in-house teams can’t. Don’t get me wrong, there are still politics to play, but they’re different, and good clients value a candid outside perspective.

What Clients Buy

Clients buy revenue or margins (sometimes both).

Agencies, in the broadest sense of the term, typically deliver revenue.

The activities they undertake (site builds, marketing campaigns, design, etc.) are purchased because of the revgen potential they have for the client.

Clients are also purchasing job advancement or security.

Hence, the old saying, “No one ever got fired for buying IBM.” Clients are individuals with their own goals and stressors and everyone in the buying committee is influenced by them differently. A CMO probably won’t lose their job over a delayed site rollout, but a director might, especially if they championed hard for the agency internally.

So the value an agency brings to the table is partially the revenue or margin, but also risk mitigation. This is why evidence (case studies, ROI calculations, references, etc.) is so critical.

That’s the entire “clients buy trust” argument in a nutshell.

They have to believe that you can do the job and trust that you’re not going to add new stress to their career/life.

How AI’s Changing the Game

Let’s summarize why agencies exist.

• Client teams don’t have bandwidth.
• Agencies can implement tech, but client teams can’t.
• Agencies can do things faster.
• Agencies deliver revenue or margins at a discount.
• Agencies can provide individual safety and reduce risk.

So how does AI impact each of those?

AI improves client team bandwidth, if they know how to use it, but it also expands agency bandwidth. Right now, this probably favors the agency, but shops need to be careful about how they reinvest their AI gains (time and dollars). Strategy has been the hot service for years now and it looks like that’ll ramp up even more with AI commoditizing a good portion of execution. Therefore, it makes sense to invest whatever AI gains made into higher-order strategic services, cutting-edge tech capabilities, and talent vs. raw execution.

It shrinks the tech gap between in-house teams and agencies, but agencies can keep the gap open by packaging fine‑tuned models, prompt libraries, and governance frameworks. I don’t see this closing fully anytime soon, but if it feels like your shop has to keep running the marathon, that’s because it does. If you slow down, you risk looking like the webdev shop who hasn’t changed since the early 2000s and is wondering why they can’t grow past 15ish employees.

It has some impact on how quickly firms move, but bureaucracy still runs rampant at large companies, so this effect is muted. External partners (agencies) still have the advantage here.

Delivering revenue or margins is still something agencies can do, but AI is impacting the ROI calculation. AI lowers marginal production cost, so fee models must shift away from Time & Materials pricing which will be quite a shift since the vast majority of the industry uses T&M for a major portion of their work. In addition to this, clients are aware of the cost and speed benefits and have become more demanding about these.

Keep Adapting

While there are many structural reasons why agencies exist, clients really only hire them to grow revenue or expand margins while lowering execution risk. The spread of AI only sharpens this. Reinvesting AI gains into strategy-related services or high-tech capabilities will likely keep agencies relevant though this AI shift. Really, it comes down to a continued ability to deliver clear ROI (with evidence), but what that means is changing quickly.