Insights
How do I price my services now that AI cuts the hours?
Price the outcome and the accountability, and keep hours as an internal cost measure. Hourly billing makes revenue fall when hours fall. Fixed-scope packages and retainers with a defined scope hold revenue steady. Measure your real hours first, because the evidence on average time savings is modest.
Step 1: What are your real hours?
Measure the hours before you change a price. A Danish study of 25,000 workers found average self-reported time savings of 2.8% of work hours. A randomised study of writing tasks found 40% less time on the task. Your number sits somewhere in that range for each task. See how many hours AI saves and use the two-week method there.
Count checking time. Noy and Zhang note that fact-checking and prompting reduce real-world speed.
Step 2: Which pricing model fits?
Business.gov.au describes the pricing strategies a small business can combine. Each behaves differently when your hours fall.
| Strategy (business.gov.au definition) | What happens when AI cuts your hours |
|---|---|
| Charge per hour: cost all business expenses into an hourly rate | Revenue falls with hours. Margin per hour stays the same |
| Cost-plus: total cost of supplying the service plus a mark-up | Price falls as your cost falls, unless you reset the cost base |
| Going rate: price near the market leader, using competitors as a guide | Price tracks the market. Check what peers charge |
| Value pricing: base the price on the value the service gives customers | Price holds when the client's result holds |
| Premium pricing: a higher price for exclusive, top-quality service | Price holds if quality and service stay high |
You can combine strategies. Business.gov.au advises choosing a strategy you can explain to a customer, partner or team member.
Step 3: How do you build the price?
Work out your cost per deliverable, add margin, then compare with what the client values. Business.gov.au says to include wages, superannuation, leave entitlements and taxes when you cost an hourly rate, and to review prices at least once a year or when costs or market conditions change.
Cost per deliverable = hours (including checking) x internal cost per hour + AI tools + overhead share. Price = cost + margin, tested against the value to the client.
Illustrative example. These numbers are invented to show the arithmetic and are not data.
A monthly client report took 10 hours at an internal cost of $120 an hour, so $1,200 of cost, and sold for $2,000. With AI the report takes 6 hours including checking, so $720 of labour cost, plus $40 of AI tools, so $760 of cost.
| Pricing approach | Revenue | Cost | Margin |
|---|---|---|---|
| Before AI, billed at $200 an hour for 10 hours | $2,000 | $1,200 | $800 |
| After AI, still billed at $200 an hour for 6 hours | $1,200 | $760 | $440 |
| After AI, fixed price held at $2,000 | $2,000 | $760 | $1,240 |
| After AI, fixed price reduced to $1,700 with faster turnaround | $1,700 | $760 | $940 |
Hourly billing cut the margin from $800 to $440 in this example. A fixed price raised it. The fixed price at $1,700 shares part of the gain with the client.
Step 4: How do you handle extra work?
Pair a base retainer with an overage rate set above the base rate. Ad hoc hours billed at or below the base rate dilute effective earnings. A higher overage rate keeps extra work profitable and gives the client a reason to plan requests inside the base scope.
Write the retainer around deliverables, not hours. State what is in scope, the turnaround and the overage rate.
Step 5: How do you tell existing clients?
Tell clients before the renewal and offer options. Use these steps.
- Send the new packages two weeks before renewal. Each lists deliverables, turnaround and price.
- Explain what changed in how you deliver the work and what stays the same.
- Offer a fixed-package option and, if the client prefers, an hourly option with monthly hours by task.
- Check that your prices and any price display follow Australian law. Business.gov.au covers pricing law, including clear, accurate and not misleading price display.
For discount requests, see a client wants an AI discount.
What to do next
Measure one service for two weeks, then price it with the table above. The Clockwise Intensive is one focused hour with Megan, one-on-one on Google Meet, on where AI fits in your business and which process to hand over first. It costs $550 AUD.
Book the Clockwise Intensive →
Frequently asked questions
Should I keep billing hourly if AI cuts my hours?
Hourly billing cuts your revenue in step with your hours. A fixed-scope package or a retainer built around deliverables holds revenue steady, and the client still sees the result they pay for. Choose the model you can explain to a client in two sentences.
How often should I review my prices?
Business.gov.au advises reviewing prices at least once a year, or whenever your costs or market conditions change. A material change in your hours per deliverable counts as a change in costs.
About the author
Megan Hogan is the founder of Clockwise and works as a fractional COO inside small to medium businesses. She spent seven years at Optus and has led customer experience transformation and AI-enabled contact centre implementation.
Editorial standards
Pricing definitions come from business.gov.au, dated. The worked example is illustrative and labelled as such. This article is business practice. It gives no legal or financial advice.
Sources and dates
All checked 29 October 2026.
- business.gov.au, Choose a pricing strategy. Page dated 1 October 2026. https://business.gov.au/products-and-services/choose-a-pricing-strategy
- Humlum, A. and Vestergaard, E., Large Language Models, Small Labor Market Effects. Becker Friedman Institute Working Paper 2025-56, May 2025. https://bfi.uchicago.edu/wp-content/uploads/2025/04/BFI_WP_2025-56-3.pdf
- Noy, S. and Zhang, W., Science 381(6654), 14 July 2023. https://www.science.org/doi/10.1126/science.adh2586
- MIT Economics, Study finds ChatGPT boosts worker productivity for some writing tasks. 14 July 2023. https://economics.mit.edu/news/study-finds-chatgpt-boosts-worker-productivity-some-writing-tasks