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#127 · AI Agency Pricing Models: Flat vs. Revenue Share

youtube ↗Pricing

Do you think that there's a difference between the US market and other locations like Italy? I mainly afford a legion called average how business owners approach automation. Thanks so much for the incredible value delivered daily.

Most definitely. The United States is by far the strongest country in the world by labor productivity. That means you can typically charge people more money because they have more money, they're used to paying more for things, they're more productive with their time, and they also expect higher productivity with their time per dollar. So there are definitely differences, primarily in pricing. There are also anecdotal cultural differences. I don't mean to say this to offend my European friends—my family's from Bulgaria, Eastern Europe, and I go back there often. I've been in Belgium, and culturally speaking, there's less of an emphasis on America being the birthplace of capitalism, right? Adam Smith, Wealth of Nations. There's less of an inherent or intrinsic desire to spend money to solve problems, and people are just a little bit less problem aware and solution aware. So typically you're fighting slightly more of an uphill battle to get it done. Now, what am I not saying? I'm not saying that's an excuse to sit on your ass and do nothing, or an excuse for you thinking selling to a European audience makes everything much harder. No, everything is possible regardless of where you're selling in the world. These are just trends specific to regions—depending where in Italy, obviously—but I wouldn't consider Italy the economic superpower of Europe right now. If I wanted to sell my systems, I'd look at places like Switzerland, Luxembourg, Germany, which tend to have more money. So don't worry too much about this.

us-vs-italypricinglabor-productivitycultural-differences

Related answers

youtube ↗Niches

Is targeting the local Tunisian market worth it compared to going after US/EU markets given lower friction but lower earnings?

He explains that the decision comes down to weighing reduced earnings against reduced friction. He ranks markets: US first, British Commonwealth second, EU third, with Luxembourg and Switzerland similar to British Commonwealth. Selling locally yields lower income because of lower earning power, but also less friction if you share the local language and culture. The mental calculus is simple: if the reduction in friction outweighs the reduction in money, it’s worthwhile. For example, earning half as much but finding it three times easier to close deals gives you 1.5× the effective return compared to a high‑ticket, competitive market. He adds that when starting out, high‑ticket coaching beats low‑ticket offers because you need cash flow and proof; personal brand isn’t the real moat—distribution is. Systems beat motivation; clients who have a system stay, those who rely on motivation don’t. To teach money‑making you must be in the top 1% of earners yourself; otherwise you’re wasting time. He advises becoming a specialist rather than a generalist, as the market seems smaller but more focused.

market selectiongeographypricing
youtube ↗Niches

Is niche-specific knowledge required to start in automation, and which country is currently best for entrepreneurship, especially for someone in a third‑world country with no prior experience?

No, you don’t need to have knowledge of a specific niche or market to get into automation. I do have experience in some of the niches I show in my videos, but for others I don’t. What I do is go into a bunch of communities, read through all the pain points and problems people are talking about, and then use those pain points to formulate my offers. The process takes me a couple of hours, and anybody can do it—you don’t need to understand too much. As for the best country for entrepreneurship, hands down it’s the United States. Labor productivity there is about 1.5 × that of most of the developed world, let alone the undeveloped world. That means if you could sell a $10,000 project in Canada, you could sell the same project for $15,000 in the US. The reason is that people in the US work more and have systems that enable them to be more productive with their time, plus regulations that are very business‑forward. That’s also one of the reasons why the US is one of the hardest countries in the world to immigrate to. I’m bullish on the US; even if the age of American imperialism is coming to an end, the numbers show it won’t be anytime soon.

niche knowledgeautomationentrepreneurshipunited states
youtube ↗Pricing

How can I succeed selling automation in a low‑labor‑cost country like India where labor is cheap and adoption is low?

Everything is relative—you need to sell your automation for less if average labor productivity is much lower. There's also a case to be made for the opportunity cost saved by automation: if your automated approach is better than humans at something, shifting all ops to it reduces errors, increases reliability and speed, letting your company make more money on the top line, not just save on the bottom. Because of geo‑arbitrage you can still charge a multiple of the local rate and stay profitable, but you must be cognizant that the comparative value will be lower.

pricinggeo arbitrageautomation sales
youtube ↗Client Acquisition

It feels like over 95% of Upwork job owners want to pay less while expecting high value, especially when the freelancer is from Middle Eastern or Asian countries. What can I do to truly stand out and get paid fairly, especially targeting US/Canada clients?

You're right about the pattern — Western clients often assume they'll get outsized leverage from working with someone in a lower cost-of-living country, and for the most part that assumption is rooted in real cost-of-living arbitrage, not racism (though it still often results in your work being unfairly assumed to be lower quality). You'll be fighting against that the whole way through, and there's no way to fully eliminate it short of working with clients entirely outside that dynamic — but you can lessen it. Two big things: (1) Raise your rate — the biggest immediate signal of 'cheap offshore labor' is a low headline rate (e.g. $5-15/hr on Upwork); charge like $45-65/hr, competitive with Western freelancers, instead. (2) Understand Western working-culture norms — they tend to be blunter, more direct, and (from my experience employing people across a dozen+ countries) they generally like agency and initiative much more than excessive deference. A common issue with hires from lower cost-of-living countries is being reluctant to voice opinions or take initiative for fear of being off-putting — but Western clients tend to respond well to it. So instead of constantly asking permission, act, then explain afterward if needed, rather than asking 'should I do this?' at every step.

upworkrate negotiationcultural differencesoffshore perception