Beyond the Billable Hour: How AI Is Making Time & Materials Irrelevant

The Digital Project Manager

In this episode, Galen Low sits down with Brian Kessman of Lodestar Agency Consulting to tackle a big question: is AI finally the deathblow to billable hours? Brian argues yes—and not because AI “broke” the model, but because it’s exposed just how misaligned hourly billing has always been with the real value agencies deliver. Instead of rewarding efficiency and innovation, time-based pricing incentivizes dragging things out and commoditizes expertise. The real shift, Brian says, isn’t just about swapping billing methods—it’s about fundamentally rethinking what you sell, how you position it, and how you prove its impact.

They dig into the Agency Value Model—a framework for moving from selling time to selling outcomes. Brian explains how to define your best-fit clients, identify their high-value problems, and design structured solutions that command higher prices while delivering measurable impact. Along the way, they unpack how to navigate the “race to the bottom” fueled by AI, nearshoring, and automation; why confidence in your positioning can help you turn away misaligned clients; and how to operationalize repeatable, scalable value delivery without falling back into chaos.

Resources from this episode:

• Join DPM Membership
• Subscribe to the newsletter to get our latest articles and podcasts
• Connect with Brian on LinkedIn
• Check out Lodestar Agency Consulting
• Value Model Assessment
• Agencies building business models around AI offerings:
  • Go Supergood — an AI-native creative agency
  • Silverside.ai — an AI innovation lab
  • Skeptic™ by Known — uses machine learning and artificial intelligence to deploy rapid scientific experimentation and persistent optimization
  • Jellyfish — social media AI agents
  • Magnolia by Newfangled — is an AI-powered strategic planner
  • Content Symphony

Kapitel

1. Is AI Killing Billable Hours? (00:00:00)

2. The Problem with Time-Based Pricing (00:05:00)

3. Moving from Selling Time to Selling Solutions (00:09:30)

4. Four Shifts in Agency Transformation (00:17:12)

5. Project Managers as Outcome Leaders (00:27:10)

6. Real Results: Value Pricing Success Stories (00:45:12)

7. Future of Agencies and AI Tools (00:53:00)