How to Price Your AI Services as a Beginner

in the past 2 years I've made over $2 million selling AI products and services ranging from $11,000 chat Bots to $100,000 AI SAS platforms and if there's one thing that I've learned along the way it's that getting your pricing strategy right is key to Turning those small initial wins into big wins down the line and today I'm going to show you how to do it even if you're just starting out as a beginner so in this video we'll be covering the fundamentals of pricing your AI products and services the common mistakes beginners make and the exact steps to go from offering free projects initially to Landing profitable deals down the line so we're going to be ripping through the slideshow here which is going to be available as a free resource on my school Community if you want to jump on there and grab it so let's get started firstly who am I if

you're new to the channel and don't know who I am my name is leam Motley I'm the founder of Morningside Ai and a number of other AI companies I've started my AI journey in January of 2023 I didn't have any formal education and AI or software development I was all self-taught I started off with a YouTube channel which you're watching right now that led me into AI Consulting starting my own AI automation agency Morningside Ai and really discovering that model as a whole then I started my own education business my AA accelerator I've got my own S as well that I built now too so I've sold a lot of AI stuff basically ranging from like,000 or $1,500 chat Bots all the way up to $100,000 AI s builds which is the biggest project that I've ever taken on at morning Ai and more recently over the past 6 months my businesses collectively have done over a million dollars in Revenue which you can see here which I put out on my newsletter so some of you might have seen that but that's enough about me let's get into it so what are

we going to be covering today these are the topics I'm just going to jump straight into them now so firstly why pricing matters why is it so important well it's actually the foundation of your agency because we are running a business and you need to charge a certain amount in order to make a profit your price and the price that you charge out at needs to be more than the cost that you incur to deliver that service that's how we make a profit and that's how a business works if you don't make profit you don't really have a business or some big tech companies would say otherwise but for businesses that we want to run you need to make a profit and at a basic level the pricing strategy you use determines how much profit you can make secondly our pricing shows our value so the amount that we're charging out tells how good our services are basically the more we're charging clients and people in general see price or high prices as a proxy for Value so we assume that more expensive things are more valuable inherently thirdly it shapes your work and your life as an agency owner for example your pricing strategy determines if you're going to be taking on one big project every few months or lots of little ones in order to get that Revenue number that you're chasing and also we have things like retainer so it really shapes the way that your business operates on a day-to-day and finally an effective pricing strategy is what is going to actually grow your business over time making sure you have enough profit so that you can reinvest into the key parts of the business that need it marketing product team Etc so the main thing you need to understand when you're pricing

your AI services and solutions is what I call the value formula so this is a combination of your skills and your experience and those two added together is what determines your value and therefore how much you can charge for your Solutions so this is the frame that I want you to look through is like okay what skills do I have and what experience do I have skills are your technical abilities like building chat bots on voice flow U automating processes with make. com Etc all the other stuff I teach on this channel and then your experience is the actual practical wisdom gained from real projects and delivering that in the real world by actually taking your skills and applying them in the real world to build AI solutions to businesses or for yourself you gain a much deeper and richer understanding of what it actually takes to make a successful AI implementation in the real world and so the experience that you gain through delivering multiple projects ideally in the same Niche or within a similar area um The Experience you gain increases your value to the client by reducing the project risk because you've been through it before and you see the pitfalls and the potholes along the way um you can speed up the Imp ation because you can sort of go straight through and you don't need to hitle those potholes along the way and finally you can better align the solutions with the business needs from your experience so the more experience you gain that's the way that you can increase your value and of course the more skills you have either yourself or within your organization by hiring other people so the skills and the experience is what goes together to determine your value and so now that you understand this value formula just hold that thought CU we'll be back to it in a second then we get into pricing Basics so we have

products and services are typically charged by time so you go to a legal professional and you charge or you ask for hey I need these Legal Services they're going to Bild You by time like how many hours this is going to take for me to do the thing you need to do whereas with products it's done by perceived or real value so if you sell me a an iPhone or something I'm not going to be looking at the number of hours it took you to build it there's a perceived value of that iPhone of value that I can get out of it and that's what I'm willing to pay for so products and services priced very differently and this is important because if you're selling a product and you want to show value you need to provide some data on how that value was created in a business setting at least so if I'm selling a AI solution to a business they want to see okay well if you're putting this website chatbot on my landing page how many people are going to engage with it provide their lead information how many people have based on my close rate is that going to convert into Clos deals and how much revenue am I'm going to get so what is the data that shows that there is some value attached to this because if there's no data showing that someone's going to use it then you're kind of just taking a stab in the dark and making up numbers about the value that this product or that this thing will be able to create for the business owner so in order to prove or communicate value you need data and most cases but beginners when you're starting an AI automation agency you don't have any firsthand data or proof of results therefore starting out with the AI development services rather than trying to go for products immediately is best so Services you can charge it based on your time or the time of your developer so you can start off with no Code and low code tools and operate as an agency where you offer your services basically we can build this thing we're going to calculate how much time it's going to take for us and then we're going to give you a proposal or a quote based on those hours rather than this product and value based on which you can but we'll talk about later so getting onto your first project as a

beginner with an AI automation agency you'll either be self-d delivering or you'll be delegating it to a developer so I recommend that you start out by delivering them yourself if possible it gives you a chance to actually build that experience for yourself rather than relying entirely on other people it is not uh not a great fit for some people but ideally you start off with some straightforward projects by posting say in my school Community easy way to get your first client is just gone to my school community and post hey I know how to do this or this is what I've been building recently anyone interested in something similar you'll be shocked how much attention you get and how easy it is to get your first client there I've heard of so many stories like that in the free community anyway so you want to be getting started with these straightforward projects that you can deliver yourself using no Code and low code tools ideally so you don't have any cost Associated because if you're delivering yourself you can go to someone and say hey I'll work for you for free so that I can build my experience and then become more valuable and this ties back into the value formula that we mentioned earlier where initially you have some skills yes you might spend a month or two learning uh different AI automation tools but you have no experience so that limits your value therefore you should be going into find these straightforward projects where you can offer your services for free in exchange for getting experience which in the long run will make you much more valuable so starting offer some straightforward projects you can deliver yourself using no Code and low code tools as ideal so that you don't have any cost and because you don't have any costs you're not needing to take money from the client to stay at least at break even so do your first few projects for free if possible if you are self-d delivering to build your experience in order to become more valuable however if you must hire and you're one of those people who just refuses to do a bit of tinkering themselves and get a bit of Hands-On EXP experience then you should be offering your services at cost in my experience and in my opinion because since you don't have any experience delivering these kind of projects it's a bit Rich if you to go to these clients and say hey look I want you to pay me to learn on your business which is basically what you're saying so it does depend on your situation if you bring on a developer who has a ton of experience then technically the experience for your entire organization goes up and the skills also and therefore you become a little bit more valuable but as a rule of thumb when you are getting started even if you're delegating and hiring a developer then I recommend that you offer your services at cost just to take the pressure off your back as well communicate that clearly with your first client or a couple of clients say hey look here's what we've built in the past or for ourselves just any kind of proof you can get to show that you know what you're talking about and that there's a reasonable likelihood of you actually seeing this thing for you as a beginner by coming in and offering your services at cost and being like hey I have my developer I'm willing to do this deal for you at Cost because I value your testimonial more than the money that this would make me and a really key Point here at the end which is by offering them projects at Cost clients will be more lenient with you if things fall short of your expectations which as a beginner delivering your first few projects is highly likely because you have you sell them the dream just to get the deal over the line and unfortunately you realize it's a lot more difficult to deliver that than uh than you expected so it's completely normal but the issue is exacerbated if you've charged them a whole bunch of money and you were going to be trying to pocket a few thousand starting out and this kind of thing of rushing to the money and trying to skip this learning phase and going straight to selling and making as much money you can out of this AI Space is really one of the biggest issues that I'm seeing and beginn is approaching this I was on my free community Q& A in the school Community this morning and there was this guy who came up on stage and he saying I'm going to be selling gems this this and I like what have you done what are your baby steps you've done to get to this point of selling this big expensive package to them it's like oh well like no I've just started how hard can it be but if you're a beginner just take baby steps and focus on learning before earning because if you try to jump to the earning part you're just going to get chewed up and Spar out by this AI space and I promise you that so taking it slow and zooming out and seeing this is a long process where you need to build your skills and expertise by doing regular deliveries even if that means taking less money up front so that you can make more money later on so it's about staying in the game not maxing things out immediately as soon as you get in here so after

delivering a few free or lowcost projects just to get up your experience you now becoming valuable enough that you can start to charge for your services and when you get to this point the pricing structure and strategy that I recommend for all beginners is what's called Cost Plus pricing this is what I started off with my own agency morning T AI when we were first getting started back in early 2023 so after you deliver a few free or cost projects your experience has increased therefore you are more valuable if you haven't already hired a developer now is a good time to do so and so from now on you should be adding some profit to your deals with what's known as Cost Plus pricing in order to do Cost Plus pricing you need to estimate the time and resources required to deliver a client's project so they come to you or you reach out to them and offer a service and then once you fully scoped the project and determine what they need and what you're going to need to build you can do an estimate of the time and resources required and how much that's going to cost you and then you need to get your developer hourly rate that you've hired on to take these projects and that may be from $30 to $50 an hour depending on how skilled they are and how experienced and then you can apply markup to get your final cost so for example the project was estimated to take 60 hours of Dev work with your one Dev and he or she costs $50 an hour then when we multiply these two together and then add our markup of say 2x or 3x I recommend that you start off with 2x that's what we did at my agency so just basically get the developer cost and double it that's a good starting point for starting to actually make profit on your deals and then you can start to increase that to 3 4 5x we eventually got up to 6 or 7x for some of the larger projects we did um you can just continue to increase it and that's going to give you a nice healthy margin you've got the experience needed to justify you charging these prices when it comes to signing the deal and getting the first invoice paid and getting the money in your account there's a few different ways that you can structure the payment terms the one that I started out with and the one I recommend to most beginners um particularly on projects that are kind of under 20 to $30,000 is a 50% upfront and 50% on completion structure um the structure is really good when you're starting out because if you're just doing a 2X markup like I said like you've got $1,000 of cost and then $2,000 um price that you're charging out um when you take that 50% up front you're immediately covering what your expected cost are going to be so ideally with the three markup you get a little bit more buffer and you're almost always in profit um but with this structure if you take that 2x markup you get the 50% up front you've covered your cost and then 50% on completion but as I say here make sure you set the terms very clearly and the contract on what is defined as completion so that's a whole other story I can do a video on contracts if you want but um make sure that you've clearly stated what the end uh deliverable or end result is so you don't get pissed around on that final payment and just to reiterate the most

important thing out of this whole video that I want you to take away is that experience is more valuable than money when you're starting out it's really the only way to succeed in this long term and if you don't understand that and you don't change your approach you're going to run into failure after failure because you're trying to shoot too high for your current skill level and then basically causing a whole bunch of issues for yourself and your business and your clients too make sure that you're taking on lowc cost or free projects to build case studies and experience early on collect testimonials from these early projects and the data of before and after of the real impact that you're providing to your clients so that you can prove that you can create value for other businesses too and my final Point here is that every Ed OT right now thinks that they're an AI expert just because they play around with chat GPT and Claude um despite having no experience of actually delivering these things for businesses so successful deliveries early on and even at the later stages of your AI automation agency Journey these successful deliveries are really the gold in the space and should be your number one goal early on it's just can I get a handful of successful deliveries under my belt to see things through the completion to work with clients and get experience in dealing with them and then have the data that I can use to go and increase the prices of my services as you continue to take on more clients

quick recap of the key takeaways in this video we have experience coming first prioritize gaining experience and case studies over immediate profits which is easy to do as a beginner take free or lowcost projects to build experience and ultimately build trust and proof secondly Cost Plus pricing so after a few successes you can add profit to your rate by using Cost Plus pricing with a 2X markup initially thirdly structure your deals with a 50% upfront and 50% on completion uh structure to cover cost and reduce risks initially number four experience plus skills equals value your skills and experience Define your value increase your rates as you grow and finally keep it simple start with basic no code or low code projects depending on your skill level if you're a developer coming and obviously you can jump up a bit higher in order to minimize your costs and reduce the complexity of your builds and really accelerate your learning before you start tackling complex projects which are definitely out there and this video

is only really just scratching the surface on AI automation agency pricing there's a lot more to it retainers versus upfronts pricing by Milestone Cost Plus first value based pricing data collection for Price maxing and more there's so much left to what I really had to exclude a lot out of this just to keep this short and sweet for beginners but if you want to learn about these topics you can firstly subscribe to the channel cuz I might make some videos on it later actually drop a comment below if you want me to make any of those videos or these parts of it that you're particularly interested in and if you haven't already join my free school Community which is my first link in the description below where I've got a free course on starting an AI automation agency that I've just released so everything you need to start your AI automation agency is in there so if you haven't already joined the school first link in the description that's all for the video guys I'll put another one up here if you want to learn more about how to hire your first developer which is the next problem after this but that's all for the video guys thank you so much for watching and I will see you in the next one