The Impact of AI on Your Pricing Strategy

For many, it should also serve as an inflection point to reassess your value. As industries innovate and set new standards with AI use cases, we anticipate they’ll also uncover new value drivers – and adjust their packaging and tiered offerings to reflect improvements in features and benefits. We’re in a new era, and those who stick with their old pricing and packaging models will be left behind.

Transitioning to value-based pricing

Large scale disruption can often prompt a shakeup in value drivers. Remember the beginning of the pandemic? Reliable supply chains became invaluable to customers like never before, mitigating risk for customers and customers’ customers. We saw many companies reassess and renegotiate contracts to reflect that change in priority – which started with effectively quantifying and communicating their value.

As you improve your business operations through AI, make sure your sales team is articulating that value. We often see sales teams understanding changes in delivery and impact but stop short of helping their customers see the monetary result.

Keep it simple, but ensure you know how much your offering’s impact is for each customer, tied to:

• Increase in revenue
• Decrease in cost
• Mitigated risk

Those numbers will change as your industry innovates, and the more effective your sales force is at that quantification, the better off your profits will be.

Evolving and improving your pricing model

Many businesses, especially professional services, still price based on time and materials. When you successfully utilize AI in your business’ operations (and everyone will eventually), are you going to reduce your price because you’re more efficient? Will you raise prices because you’re delivering faster and with better outcomes?

Before making changes, use this era of AI to reevaluate your business and its pricing power. How does AI allow you to go-to-market more efficiently? In what ways are you using those improvements to better serve your customers and differentiate yourself from the competition? At the same time, how are your competitors leveraging AI to improve?  It’s critical to monitor this dynamic and adjust your prices accordingly.  Those who “set and forget” their pricing will struggle in what’s sure to be a rapidly changing environment. 

Likewise, the better your commercial teams can understand your value (especially relative to competitors), the more effective they’ll be at negotiating and defending their prices and ultimately, delivering more benefits to customers where they need and value it most. AI is changing the game for all of us – and those who understand what those changes should imply about their pricing will come out ahead.