“”Time is what we want most, but what we use worst.” — William Penn
is there a future in … time based pricing
Hello there! I’m Mark from Fraction, a consultancy on a bit of a mission. We’re trying to figure out what the future of companies in various sectors actually looks like. Not in some distant sci-fi tomorrow, but right now, as AI transforms everything we thought we knew about our industry.
Let’s start with something that’s kept the lights on for decades: good old time-based pricing used in many organisations such as marketing agencies. You know the drill – track your hours, bill the client, rinse and repeat. It’s been the backbone of agency economics since, well, forever.
And it’s worked brilliantly, until it doesn’t.
The time-based pricing problem
Here’s the awkward conversation that is either happening or really should be happening across the country: what happens when the work that used to take three days now takes three hours?
I bet you know of many examples where even just strategist used their favourite to create a content strategy framework that would’ve taken her three days. Did it in half a day. There is nothing wrong with this at all, but how are you going to bill that?
It’s not just content, either. PPC campaigns that once required careful human thought are increasingly automated. Basic design work that took days can be roughed out in minutes. Social media calendars that were a week’s work can be drafted before lunch.
If we’re honest, the “sell our time” model is getting increasingly wobbly. And since cash is king in agency land, this isn’t just an interesting theoretical problem – it’s an existential one.
So what are the alternatives?
From the conversations we’re having across the industry, several approaches are emerging:
Value-based pricing Charging based on the value delivered, not the time spent. “A bottle of water is worth more in the desert than the city.” Sounds lovely in theory, but flippin’ hard in practice. How do you quantify the value of a rebrand? A campaign? Still, the agencies making this work are seeing healthier margins and less time-tracking faff.
Output-based pricing Fixed prices for specific outputs, regardless of how long they take. “A website costs £X, a campaign costs £Y.” Simple for clients to understand, but you’d better get efficient at delivery or your margins vanish. Also how do you justify the cost? If you can spin up a website in Webflow and didn’t actually use a developer – what are you actually charging for?
Retainer evolution Moving from “we’ll give you X hours a month” to “we’ll deliver these specific outcomes each month.” It requires a mindset shift, but creates more predictable revenue without the time-tracking headache.
Subscription models Productising agency services into tiered offerings. “For £2,000 a month, you get these specific deliverables.” Works brilliantly for some services, less so for others.
Account management Complex reports used to take hours to make, but can now be done really easily. Clients can interrogate a chatbot for answers and not just a human, taking an important element out of the loop.
What does this mean for everything else?
Here’s the kicker – changing how you charge changes… well, everything.
Your team structure? Different. When efficiency is the goal, not billable hours, you need fewer doers and more thinkers.
Your recruitment? Different. You’re looking for people who can add value beyond what AI can do, not just fill timesheets. And how do we train the marketers of the future.
Your client relationships? Completely different. You’re selling outcomes and expertise, not time and materials.
Your workflows? Unrecognisable. When AI can handle the heavy lifting, human time becomes focused on quality control, refinement, and the truly creative leaps.
Your profitability? Well, that’s the million-pound question, isn’t it! Looking even beyond that – what is the agency you have spent years building actually worth?
What might the future agency look like?
Look, I’d love to give you a neat answer wrapped with a bow, but the truth is – we’re all figuring this out together. At Fraction, we’re seeing patterns emerge, but no definitive model yet.
That said, if I were betting on tomorrow’s successful agency, I’d put my money on one that:
- Prices based on a value created / outcome, not hours logged
- Uses AI aggressively to improve efficiency (while being transparent about it)
- Employs a lot fewer but more strategic and creative people
- Focuses on the parts of marketing that AI can’t do well (yet) – strategy, emotional intelligence, creative leaps
- Creates proprietary methodologies that can’t be easily replicated
For now, the smart move seems to be picking a direction and committing to it. The agencies caught in the middle – half time-based, half something else – are the ones struggling most.
Is time-based pricing dead? Not entirely, just yet but it probably should be and it’s definitely on life support for many types of agency work. The question isn’t whether to evolve, but how quickly, and toward what model.
What’s your agency doing about all this? I’d genuinely love to know. We’re all in this weird, wild transition together – might as well compare notes along the way.