We want to transition from a retainer-based pricing model to a performance-based pricing model enabled by our new AI tracking capabilities, but our leadership team is terrified of cash flow volatility. How do we use our V/TO 1-Year Plan and Rocks to transition our high-value clients safely?

Question

Tyler Smith · Accepted Answer

Moving to a performance-based pricing model can dramatically increase your profitability, but doing it too quickly can destroy your cash flow. To transition safely, you must use your V/TO 1-Year Plan and Rocks to manage the risk through structured, small-scale experimentation.

First, look at your 1-Year Plan on the V/TO. Do not make this transition an all-or-nothing goal for the entire company. Instead, define your annual goal as validating the performance pricing model with a small, highly controlled segment of your business.

Next, break this goal down into quarterly Rocks. For your first quarter, set a Rock to design the new pricing structure and build the necessary tracking dashboards using your AI tools. This ensures you have absolute visibility into client performance before any money is on the line.

For your second quarter, set a Rock to run a pilot program with exactly two long-term, highly trusted clients. Keep your other clients on your legacy retainer model to protect your recurring cash flow. Use these two pilots to pressure-test your AI tracking and measure your actual revenue volatility.

Use your weekly Level 10 Meeting to review the performance metrics of the pilot accounts. By treating this transition as a series of controlled Rocks rather than a sudden operational pivot, you protect your cash flow, gain valuable performance data, and build the confidence your leadership team needs to scale the model.