what's your view on AI consulting? What's the current cost per acquisition for an AI agency client?

#210 · Scaling an automation agency past $300K/m: how?

what's your view on AI consulting? What's the current cost per acquisition for an AI agency client?

My view on AI consulting is that there’s no real difference—it’s just consulting repackaged. Whenever you see terms like AI automation, AI consulting, AI growth systems, or AI operators, they’re all the same thing; people are just trying to sell a business model and differentiate themselves in a crowded space, which in content is called packaging. At its core, this is foundational marketing: nothing has really changed since the SMMA craze; we’re still selling marketing systems, just rebranded as AI automation. Most AI automation sellers are actually selling marketing systems—content repurposing, social media automation—so it’s just repackaging. Regarding cost per acquisition for an AI agency client, it depends entirely on your lead‑generation mechanism. If you run an inbound funnel with massive distribution, your CPA is essentially just your time on new inquiries—near zero. If you’re doing Upwork applications at $2 each and need about 33 applications to land a client, your CPA is $66. If you run a cold‑email campaign spending $450 per month and sending roughly 3,000 emails to land three clients, your CPA is about $150. However, CPA alone means nothing unless you also know the order value or lifetime value of the clients. For example, if Pete’s CPA is $64 and he sells a product for $1,000 on average, his CPA is 6.4% of revenue. If Samantha’s CPA is $150 and she sells for $10,000 on average, her CPA is only 1.5% of revenue. You also need to factor in referrals and other variables to judge which business is truly more successful. After that, I mention I’m running out of time because I have a podcast with Jack Roberts. We’ve become fast friends after initially being hesitant to collaborate due to a scarcity mindset. We now chat regularly, run a podcast together, and plan to play video games like Halo, Fortnite, or League of Legends while streaming, which I think will be fun and more engaging. I’m even considering buying a gaming computer just to stream with Jack weekly. Ultimately, I’m moving into Twitch streaming to play video games all day.

ai consultingcost per acquisitionltvlead generation

Related answers

youtube ↗Client Acquisition

I've been building AI customer service systems, and most clients came from Upwork and referrals — I've got a case study for a big property management company where a system led to big savings, and I built others for medical practices too. My issue is generating demand myself outside of referrals: is this sellable via cold outreach, and can it be turned into a front-end offer? I've sent thousands of cold emails with only one booked meeting, plus LinkedIn DMs and content, and I don't know if that's the right play or if I should pivot.

Right now you're focused on the savings, and I think that's the main thing you've understood automations to provide, but savings is a small fraction of the total value of an automation. Say you build a system that saves 10 salespeople 1 hour a week each — that's 40 hours a month, and if they're paid $50/hour that looks like a $2,000/month automation. That looks sizable, but it's only a small part of the value you're capable of providing. The big thing isn't the savings, it's the revenue: if you free up an hour of a salesperson's time and they can use it to close deals worth, say, $500 in that hour (amortized across their whole workload), you're not just saving $2,000, you're making them an extra $20,000. That's the difference between a savings mindset and a revenue mindset — it's opportunity cost. When I sell a cold email system, I don't say 'this saves you $50/month on cheaper leads,' I say 'this frees up 10 hours a month of your salespeople's time, worth $500/hour, meaning it makes you $5,000.' Reorient your pitch around revenue, not savings — savings only matters if you're working with a multi-billion dollar enterprise. On your second issue: 3,000 emails to one booked meeting is a 0.03% booked-meeting rate. Two meetings would be 0.06%, three would be 0.1% — that's totally fine, not the best ever (ideally 0.5-1%, a meeting every ~200 emails), but it proves it's possible. You've run the equivalent of a 10-minute mile; now make your copy better and run a 9-minute mile.

cold emailai customer serviceopportunity costreply rate

youtube ↗Lead Generation

I work with a digital marketing agency that wants to add an AI chatbot to a client's website, but the site gets little organic traffic. Is it worth implementing the chatbot, or should we first focus on getting traffic to the site?

What a great question. This is more a consulting and strategy perspective than a building one. Naturally, if you're trying to make more money and thinking, 'Ooh, what's a way to make more money? I know AI is all the rage—maybe we'll add an AI chatbot to our website,' but if the chatbot doesn't talk to anybody, it won't make you more money. You've stumbled on a universal problem for many service businesses: they just don't have any leads. The real point of value, the bottleneck you could fix, is usually lead generation. I don't know how many people visit their site daily, monthly, or yearly, so it's hard to suggest exactly what to do next, but you're on the right track. The usual thinking is: get leads first, then worry about optimizing how you deal with them, nurture them, and improve conversion rates later. In your opinion, what's the best automation to sell? Could you make a video on it? The best automation to sell is something that increases or encourages lead generation, which we discussed. One of the main systems I sell is a cold outreach system where I build distribution for someone from scratch for about $200–$300 a month ongoing. They start with zero leads in their pipeline—usually an agency—and after the system is set up, they get roughly 30 leads per month that want to book calls. This is a game-changer and easy to justify as an investment for companies whose bottleneck is lead generation, like most businesses under $50k–$100k per month in revenue. Think of it this way: I'm solving their most dire problem—no leads entering the business. I charge them $3,000–$4,000 a month, which is fine because without me they wouldn't even have a business making more than $3k–$4k a month. In my experience, the best automations to sell for small to mid-sized businesses are those that help the top of the funnel. If they already have an outbound system but aren't getting many leads, I'd recommend a speed-to-lead system. Anything close to the top of the funnel—whether outbound or inbound—helps a lot, and that's what I'd recommend.

lead generationai chatbotcold outreach

youtube ↗Pricing

Hey Nick, thanks so much for these valuable pieces of content. I'm able to run cold email effectively and generate leads with a reply rate of 5%. Hell yeah, my brother. The only problem I'm facing is to make the business profitable. For instance, if I charge a few dollars for my client, build a system that saves time for them, maybe generates revenue for them, but I'm not able to make enough money as I'm only charging a few bucks from them. Let me know I should plan my AI business to hit $50 to $100,000 a month. Keep doing the great work. Cheers.

You need to charge more, proportional to the value you provide. If you solve a $10,000-per-month money need, you can reasonably charge 30%–50% of that, i.e., $3,000–$5,000 per month. From the business owner's perspective, this is a simple ROI: hiring you should yield about a 3x return, acknowledging some uncertainty between the $3,000 fee and the $10,000 value. You can charge a proportion of the value delivered. Focus on profitability by charging significantly more for your services. On the expense side, avoid accruing unnecessary liabilities. Many who sell cold email or lead generation merely wrap a cold email product with minor added value and then bundle in unnecessary costs like email inboxes, platform fees, and domains. Instead, have the client pay for some of those costs so you're not left liable if you don't deliver results or fulfill guarantees. For example, one consulting client guaranteed a client $10,000 but only sought payment after delivering that amount; due to a long sales cycle, the client didn't receive the $10,000 for four or five months, while the consultant's ongoing email costs were $600–$700 per month, totaling $2,400–$2,800 over that period, yielding a 76% margin after COGS. Don't put yourself in that situation.

pricingvalue-based pricingROI

youtube ↗Pricing

I run AI automation retainer projects for CPA firms, mostly small firms of 1-10 people who won't shell out large amounts of money. Any advice on pricing strategies for the retainer services? Should I start lower than the ~$4-7K/month others in the space charge and gradually climb my pricing, the way you did?

Yeah, this is bang on — this is exactly what you want to do. You basically increase your prices until you get so much resistance that it doesn't make sense to increase them anymore. Here's a concept I think is really important: the optimal conversion rate is not 100%. If you put an offer in front of 100 people and all 100 say yes, odds are you could be making way more money by taking a few hits on the front end — because how much you actually make is conversion rate times price. If your fee is $1/month and 100% convert, you make $100 servicing 100 clients. If your fee is $25,000 and only 1 in 100 converts, you make $25,000 for 1/100th the work — 250x the money for 1/100th the work. This is an optimization problem: as price rises from low to high, conversion rate falls, but not proportionally at first — there's a hypothetical maximum where price times conversion rate is far higher than at a low price, even though conversion rate has dropped. So keep pushing your price up as long as your services stay solid; you'll make more money per unit of work. Alex Hormozi's rule of thumb is that the ideal conversion rate on a high-ticket service (and a $3K/month retainer with a ~5-month average return, i.e. $15K, counts as high-ticket) is around 30-40%. So if your current conversion rate is more like 50-60%, you'd actually make more money pushing pricing up until it drops to that 30-40% range — supply and demand: as price goes up, the number of people willing to say yes goes down.

retainerspricing strategyconversion ratecpa firms