Sarah Edwards is the Chief Product Strategy Officer at Kantata, a leading provider of Professional Services Automation (PSA) solutions.
I run the London chapter of Leaders in Consulting, which means I spend a lot of time in rooms where outcome-based pricing (OBP) is high on the agenda. At the same time, skepticism about whether it’s more than a myth for the average firm is just as high.
For the better part of a decade, the professional services industry has been told that OBP is the future: Firms will abandon the billable hour, tie fees to measurable results and build more sustainable businesses, resulting in happier clients. Yet every year, most firms don’t make the move.
This isn’t a failure to adopt. It’s a challenge tied to real organizational constraints. Operational readiness, attribution and revenue timing all shape the path toward OBP.
For firms pursuing OBP, this conversation increasingly intersects with AI and the shift toward high-value services. AI only becomes a margin expander rather than a margin threat when a firm’s value proposition extends beyond billable hours. As automation compresses delivery time, firms must be able to articulate and demonstrate the outcomes, expertise and strategic value they provide.
That requires a fundamental shift in how many firms think about their offerings. High-value services are rooted in capabilities that are difficult to replicate: deep subject matter expertise, proprietary methodologies, unique delivery approaches and accumulated experience.
Easy To Say, Hard To Define
Most firms aren’t one bold decision away from OBP; they’re one or two levels of operational capability away.
This gap may be frustrating, but it makes sense when we consider what OBP actually requires. Payment is triggered by a verifiable result, such as a measurable KPI documented in the client’s own data. This means your firm’s service delivery has to be standardized enough that results are repeatable. It means you need the tools to track whether an outcome has been achieved without someone manually compiling a status deck. And it means your contracts must specify what happens when the client doesn’t do their part, since client inaction is the number one reason outcomes fail.
Without those foundations, firms end up with outcome language bolted onto fixed-fee contracts, which means they’re carrying the risk of outcome-based pricing without any of the upside.
One Question, Three Different Responses
In my daily conversations with professional services leaders and buyers, I see the same pattern: Ask the CEO about outcome-based pricing and you get enthusiasm. Ask the delivery team and you get skepticism. Ask the finance team and you get concern.
A recent conversation I had captures this perfectly. A CEO confidently told me that a meaningful percentage of his firm’s revenue would be outcome-based within two years. The company’s COO interrupted: “We’ve never delivered anything purely on outcomes, and we couldn’t do it tomorrow.”
Many executives believe OBP is both necessary and inevitable. Revenue would be decoupled from headcount, providing a path out of the commodity trap, while valuation multiples could increasingly reflect intellectual property and differentiated capabilities rather than labor arbitrage.
The delivery team sees the unpredictability of execution on the ground. Outcomes often depend heavily on client actions, the attribution challenge remains unresolved for many firms and contingent revenue can feel like a penalty for factors outside the team’s control.
Meanwhile, the finance team is running the numbers between service delivery and contingent payment, and asking a valid question: If outcome recognition takes six months, what funds operations in the interim?
Moving To Hybrid Models
I’ve seen many organizations take a hybrid approach, with a base fee covering the cost of delivery and an outcome kicker on top delivering an additional reward when results are achieved.
This helps accomplish a couple of things. First, you’re not betting the balance sheet on a payment that may not arrive for six months. The kicker provides an upside when you deliver. Second, the organization is forced into actually defining and measuring results, which is the muscle-building work that makes true OBP possible down the road.
The Real Challenge
I’ll be direct about what I see in the market. For most firms right now, the real work is improving outcome predictability and measurability—you can’t price what you can’t deliver and validate.
That means getting the data foundation right so you can see what’s happening on projects in real time. It means standardizing delivery so results don’t depend on which team staffed the engagement. It requires being able to tell the difference between an outcome that failed because of something your team did versus something the client didn’t do.
AI makes this more urgent. When AI compresses timelines and changes the economics of a project, firms must be able to show what they achieved, not just how quickly they worked. On the other hand, if you automate much of the project execution but are still billing on time and materials, you’ve just cut your own revenue.
Foundation First
OBP is finding its footing slowly and honestly. The firms building toward it deliberately, starting with delivery definition before pricing, are the ones that will be ready when it counts.
Looking 10 years ahead, the firms that successfully make the switch will have perfected a simple formula: Define outcomes clearly, deliver them consistently and prove the results. Those that can do all three are the ones I believe will have a significant competitive advantage.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
