How to Structure Outcome-Based Pricing

June 2024. A senior operations consultant with 22 years at Fortune 500 companies was pricing his AI transformation partnership. His instinct: "$150/hour × 40 hours/month × 8 months = $48K." But he felt $48K was "too expensive" for an 8-month program. So he dropped it to $8K to "be competitive."

Reality check: He was helping a $3M/year business implement AI delivery systems worth $80K+ annually in saved labor costs and increased capacity. His $8K fee was 10% of first-year value.

One pricing conversation changed everything: "What's the outcome worth to them over 12 months? Not 'What's my time worth?'"

He restructured to $18K for 8 months. Three clients signed in 30 days. Same expertise. Different frame. Outcome-based pricing, not time-based billing.

What Is This?

Outcome-based pricing means charging based on the 12-month transformation value you deliver, not the hours you work or weeks you spend. For senior operators building AI transformation partnerships, this matters because your expertise unlocks $50K-$500K+ in annual value—but corporate conditioning makes you think hourly ($150/hour feels expensive, $18K for $200K outcome feels justified). When structured correctly, outcome-based pricing filters for the top 10% qualified buyers (transformation clients $3K-$10K, repositioning clients $10K-$20K+) while enabling you to deliver in 4-6 hours/day using AI systems (not 40 hours/week manual delivery).

Who This Pricing Framework Is For: Two Target Clients

IMPORTANT CLARITY: This pricing framework serves TWO types of senior operators. The value calculation differs based on WHO gets the transformation:

Type 1: Operators Building AI for Their OWN Business

You're building AI delivery systems to scale YOUR consulting/service business. You're the end user.

Value Calculation: Capacity unlocked = more clients you can serve without adding hours

• Example: Build AI onboarding agent (saves 6-8 hrs/week) = capacity to serve 2-3 more clients/year = $36K-$54K additional annual revenue
• Pricing range: $10K-$15K for 8 months (because YOU are implementing, you own everything, faster ROI)
• Quick Win payback: First AI agent unlocks $10K-$20K monthly capacity within 60-90 days

Type 2: Operators Building AI for Their CLIENTS' Businesses

You're helping YOUR CLIENTS build AI transformation systems. They're the end users. You're the transformation partner.

Value Calculation: Client outcome value = capacity/revenue/savings they unlock

• Example: Help client build AI delivery systems that unlock $180K annual capacity ($60K labor savings + $120K revenue capacity)
• Pricing range: $15K-$25K for 12 months (includes foundations + full build for THEM, you're the guide + methodology provider)
• Quick Win payback: Their first AI agents unlock $10K-$20K monthly capacity (pays for your entire fee)

Why This Matters for Pricing:

• Type 1: You price based on YOUR capacity unlocked (direct ROI to your business)
• Type 2: You price based on THEIR transformation value (direct ROI to their business)

Both use the same three-component structure (Quick Win + Core + Leverage) and 2-10% of annual value formula. The difference is WHOSE transformation you're pricing.

Which type are you?

• If you're thinking "I need to scale MY business without hiring a team" → Type 1
• If you're thinking "I help operators/businesses implement AI transformation" → Type 2

The rest of this framework applies to BOTH. Just adjust the value calculation to match whose outcome you're delivering.

The Perspective Shift

The Resentment Test

If you resent your current pricing, don't ignore that feeling. It's your gut telling you the truth.

Here's what I learned in 2024: There's no strategic advantage to being the second most expensive in the market. There IS an advantage to being THE most expensive. (Alex Hormozi was right.)

You won't charge the highest price today. But make it your mission to work toward it. Why? Because "if you're the best, people don't expect you to be cheap. And when you're cheap, people don't expect you to be the best."

Your pricing journey: Start where your proof justifies. Increase 2-5% quarterly as you build more proof. Track the resentment. When you stop resenting your price, you've found your current ceiling. Then push higher.

Think Tony Robbins, Elon Musk, Harvard. Pricing has a lot to do with where they are today. Premium pricing IS premium positioning.

Three-Component Pricing Structure

How to Structure Outcome-Based Pricing

Step 1: Calculate 12-Month Outcome Value (Not Your Time)

Stop thinking: "How many hours will this take?" Start thinking: "What's this worth to them in 12 months?"

Example (Service): Operations consultant helps $2M business implement AI delivery systems. Saves $60K/year in labor costs + adds $120K/year in capacity to take more clients. Total 12-month value: $180K. Your $18K investment = 10% of first-year value.

Example (Product): Revenue consultant builds AI-powered sales system. Client scales from $400K → $1M in 12 months. $600K growth. Your $22K investment = 3.7% of growth value.

Calculate their outcome value, not your hourly rate × hours worked.

Step 2: Use Three-Component Structure (Quick Win + Core + Leverage)

Don't price as one monolithic fee. Structure in three outcome-based components:

Component 1: Quick Win (Months 1-2) - Prove value fast. Unlock $10K-$20K monthly capacity with first AI agents. This pays for your entire fee in outcome value within 60-90 days.

Component 2: Core Outcome (Months 3-8) - Build the AI operating systems (Growth OS + Delivery OS). Stack agents until they hit revenue macro-goal ($40K-$100K/month capability).

Component 3: AI Leverage (Months 9-12) - Scale and orchestrate multi-agent workflows. Push system until it bends, make it unbreakable. They manage by metrics, not by doing the work.

Each component delivers measurable value. Not time-based milestones (week 1, week 2). Outcome-based milestones (capacity unlocked, systems live, constraints eliminated).

Step 3: Offer Three Tiers Based on Client Segment

Not everyone starts from the same place. Your pricing reflects WHOSE transformation and what stage:

TIER 1: Transformation Journey ($3K-$10K, 3-6 months) - For uncertain operators transitioning from corporate who need foundations first. Includes positioning clarity, offer architecture, and initial AI systems. 50% of qualified buyers start here. These clients become action-first operators (like Chris: started $3,200, transformed in 5 months).

TIER 2: Ready to Build ($10K-$18K, 6-8 months) - For operators with offer clarity ready to execute AI transformation. Skip foundations, go straight to full AI ecosystem build + scaling. Established consultants ready to scale delivery.

TIER 3: Enterprise Repositioning ($15K-$25K+, 6-12 months) - For multi-million dollar consultancies who need positioning/marketing clarity (like Ayman: $15,500 for 9 months). They have proven methodology but can't articulate it for marketing. Higher pricing reflects positioning is worth millions to them.

Determine tier on discovery call. Most senior operators in transition start at Tier 1 (transformation journey), while established consultants enter at Tier 2 or 3 depending on their specific need.

Step 4: Price at 2-10% of Annual Outcome Value

General pricing formula:

Annual Outcome Value × 2-10% = Your Fee Range

Where you land in that range depends on:

• Your level of involvement (Leveraged DFY vs traditional manual DFY)
• Speed of value delivery (60 days vs 12 months)
• Client's financial capacity (cash flow constraints)
• Your positioning strength (recognized expert vs building authority)

For AI transformation partnerships, pricing ranges based on segment: Transformation Journey ($3K-$10K), Ready to Build ($10K-$18K), Enterprise Repositioning ($15K-$25K+). The range reflects WHOSE transformation (yours vs theirs) and starting point (uncertain vs ready vs repositioning).

Step 5: Structure Payment Options for Cash Flow (Not Convenience)

Don't offer too many payment options. Offer 2-3 maximum that optimize for cash upfront:

Golden Rule: If your offer is below $10K OR you're making less than $50K/month, optimize for cash upfront. Only move to recurring monthly after hitting those thresholds.

Example Payment Structure (for $18K offer over 12 months):

• Option 1: Monthly - $1,500/month × 12 months = $18,000
• Option 2: Quarterly (save 10%) - $4,860/quarter × 3 quarters + $4,860 = $16,200
• Option 3: Pay in Full (save 20%) - $14,400 upfront

Why this works:

• Clients who pay more upfront are MORE committed (better results, less hand-holding)
• Cash upfront lets you reinvest in business growth immediately
• Discounts for commitment incentivize the behavior you want (skin in the game)
• Payment schedule should NEVER exceed program duration (no 7-month payments for 5-month program)

Critical Rule: Start low, then increase prices 2-5% quarterly. Use increases as urgency mechanism in sales conversations ("Current rate is $18K, but it increases to $18.9K on April 1st").

Step 6: Justify with Value Milestones (Not Time Spent)

When client asks "Why $18K?", DON'T say: "Because I'm spending 8 months working with you."

Instead, say: "Here's the value you're getting:

• Month 1-2: First AI agents unlock $10K-$20K monthly capacity (pays for entire fee)
• Month 3-8: Full AI operating systems built ($40K-$100K monthly revenue capability)
• Month 9-12: Scaled multi-agent workflows (you manage by metrics, not doing work)
• 12-month outcome: $50K-$500K+ annual value created
• Your investment: $18K = 3.6% of low-end outcome ($500K) or 10% of high-end outcome ($180K)

You're not paying for my time. You're investing in transformation outcomes you own forever."

What Success Looks Like: Client says "When can we start?" instead of "Can you discount this?" They see the 12-month ROI (10x+ the investment) and recognize this is outcome-based value, not time-based billing. They choose quarterly or pay-in-full (not monthly), signaling high commitment.

Real Example: Seyola Pricing Structure Evolution

What Changed: Switched to outcome-based pricing with three distinct tiers:

• TIER 1 (Transformation Journey): $3K-$10K for 3-6 months (uncertain operators, 50% of market)
• TIER 2 (Ready to Build): $10K-$18K for 6-8 months (offer clarity, ready to execute)
• TIER 3 (Enterprise Repositioning): $15K-$25K+ for 6-12 months (established consultancies)
• Justified by 12-month ROI: $50K-$500K+ annual value created
• Quick Win component (months 1-2) unlocks $10K-$20K capacity = payback of entire fee

Key Insight: The price increase filtered OUT wrong-fit clients (wanted cheap quick wins) and filtered IN right-fit clients (ready to invest in 6-12 month transformation). Premium outcome-based pricing is a client selection filter, not just a revenue lever.