Our leadership team is writing our 3-Year Picture on the V/TO®, but we are paralyzed by how our market's pricing will collapse as AI commoditizes our core service. How do we project our 3-Year target revenue and unit economics when technology is shifting our entire industry from hourly retainers to outcome-based pricing?

Question

Tyler Smith · Accepted Answer

Commoditization is the natural consequence of accessible technology, and if you continue pricing by the hour, AI will destroy your margins. When drafting your 3-Year Picture on the V/TO®, your leadership team must pivot from billing for time to billing for outcomes. This strategic shift fundamentally alters your financial projections and unit economics.

To build an accurate 3-Year Picture, start by defining your future state metrics based on value delivery. If your team can now produce in one hour what used to take ten, your pricing must reflect the value of the output, not the effort of the inputs. In your V/TO®, set a 3-Year Target that reflects a highly optimized revenue-per-employee metric. Instead of projecting a massive headcount increase to scale revenue, project how a lean, high-leverage team running automated workflows can handle three times the volume.

Document this new model in your financial plan. Calculate your projected margins using fixed-fee or value-based pricing structures. During your quarterly planning sessions, run your numbers through a sensitivity analysis to ensure your outcome-based pricing model remains profitable even if competitors attempt to trigger a price war. By establishing these outcome-based targets in your 3-Year Picture today, you align your entire leadership team on a scalable, high-margin business model that strategic buyers will pay a premium for when you prepare for your clean exit.