Many good B2B companies are discovering that being good is no longer enough.
Deals that once moved now stall. Pricing gets challenged earlier. Buyers arrive already halfway through their own process. Some no longer need outside vendors for work they once had to outsource.
It’s easy to blame the economy or cautious buyers. Those factors are real. But they don’t fully explain what’s changing.
If a prospect can use AI to generate a first-pass legal contract in minutes, the attorney who delivers a stronger version two days later at ten times the cost faces a different kind of problem.
The lawyer’s work may still be better. But the buyer now judges the difference through a new lens: speed, price, and “good enough.”
That shift is showing up across software, IT services, and professional services.
It has a name: value compression.
What is value compression?
Value compression happens when the market begins to value your offering less, even though the quality of your work has not declined.
Your product may be stronger than it was two years ago. Your team may be more capable. Your outcomes may be as good as ever. But if buyers now believe parts of that outcome can be created faster, cheaper, or internally with AI, the value they assign to your offering changes.
That shift is easy to misread. Many leaders assume they have a sales problem, a marketing problem, or a pricing problem. Sometimes the real issue is simpler and more structural: the market’s perception of value has moved, and your offering hasn’t moved with it.
What value compression looks like.
This dynamic is not limited to legal work.
If an internal IT team can use AI to troubleshoot routine issues, managed support hours may be judged differently.
If software buyers believe AI can replicate part of what your platform does, pricing pressure can arrive before they even book a demo.
In each case, quality may still matter. But what buyers are willing to pay for has changed.
Why this feels different.
Most technology waves changed how companies operated. AI is changing what buyers expect.
Tasks that once justified premium fees are becoming expected features. Outputs that once required specialists are becoming easier to generate. Work that previously required outside help can now begin inside the client’s own team.
In many cases, your first competitor is no longer another firm. It is DIY AI.
When the baseline rises, yesterday’s differentiators start to disappear. This rarely shows up all at once. It appears gradually through more price sensitivity, slower decisions, heavier comparison shopping, and less urgency after the demo.
You can see the same shift in the capital markets. Public SaaS valuations fell roughly 70% from their 2021 peak, and private software deals that once commanded double-digit revenue multiples are now closing closer to 4–5x.
Markets are asking a harder question now: where is the real moat in an AI era?
That same question is showing up in everyday buying decisions.
Value compression is already in your pipeline.
Value compression usually appears in the pipeline before it shows up in the financials.
A prospect says they are exploring internal options. A buyer asks why implementation should take that long. A customer assumes pricing should come down because “AI should make this easier now.” A deal that once would have moved forward goes quiet.
Nothing explicit is said, which makes the real issue easy to miss.
Increasingly, the silent competitor is DIY AI: an internal team using off-the-shelf AI tools to attempt a first version of the outcome themselves. They may eventually discover the limits of that approach. But before that happens, projects often get delayed, scoped down, partially pulled in-house, or disappear altogether.
Many teams respond tactically. They adjust messaging, launch campaigns, discount more aggressively, or push sales harder. Those actions can help in the short term, but they do not solve the underlying issue if buyers no longer see the same value they once did.
The real problem isn't AI.
A common reaction is to add AI to the product, the pitch deck, and the homepage. Sometimes that is necessary. But it is rarely sufficient.
If your message becomes “we use AI too,” you may unintentionally reinforce the idea that AI is the source of value rather than your business. That leads buyers to a difficult question:
If the value is in the AI, why do I need you?
Adding AI features without clarifying your irreplaceable value can accelerate the very pressure you are trying to escape.
Rebuild your moat.
The strategic question is not how do we add AI. It’s this:
What still matters when intelligence becomes abundant, and how do we rebuild our moat around it?
For some companies, it’s judgment. The ability to interpret messy situations, make sound decisions, and stand behind them.
For others, it is accountability. Clients are not buying software or hours. They are buying someone who owns the result.
For others, it is trust. Deep relationships, context, and hard-earned understanding built over time.
For others, it is integration. Bringing people, systems, change management, and execution together in a way tools alone cannot.
These are the places where premium value can still live.
Some places to start.
Countering value compression isn't a marketing exercise. It's a strategic one.
Pressure-test your brand promise. If your ideal customer had access to the same AI tools you have, what part of your promise would still justify their investment in you?
Listen differently to stalled deals. Where are deals slowing? What objections are news? Expectation drift shows up as friction before it shows up as lost revenue.
Separate efficiency from strategic value. If AI helps you do the same work faster, that is useful. If it helps you create new value customers will pay more for, that is strategic.
Decide what stays human. In a market racing toward efficiency, intentional human accountability can become a genuine differentiator.
The reset is already underway.
Value compression is not a future trend. It is already shaping pipelines, pricing conversations, renewal discussions, and acquisition values.
The question is not whether your business will feel it. The question is whether you will rebuild your moat before the market decides for you.
When intelligence becomes abundant, distinctiveness must become deliberate. Or the market will define it for you..
Is your value design keeping pace with AI?
Coefficient helps leadership teams uncover where value is being compressed, where buyers still see premium value, and how to redesign offerings for an AI-shaped market.
Book a strategy call with the Coefficient team.
Book a Strategy Call
WRITTEN BY: LEARY GATES
Leary Gates is a strategic advisor and co-founder of Coefficient, the value design firm helping B2B companies rethink what they sell and how they grow. He writes the Strategic CEO newsletter, a weekly exploration of leadership, strategy, and the next growth curve.
Like what you’re reading?
Get these sent to your inbox. Spam free.
Many good B2B companies are discovering that being good is no longer enough.
Deals that once moved now stall. Pricing gets challenged earlier. Buyers arrive already halfway through their own process. Some no longer need outside vendors for work they once had to outsource.
It’s easy to blame the economy or cautious buyers. Those factors are real. But they don’t fully explain what’s changing.
If a prospect can use AI to generate a first-pass legal contract in minutes, the attorney who delivers a stronger version two days later at ten times the cost faces a different kind of problem.
The lawyer’s work may still be better. But the buyer now judges the difference through a new lens: speed, price, and “good enough.”
That shift is showing up across software, IT services, and professional services.
It has a name: value compression.
What is value compression?
Value compression happens when the market begins to value your offering less, even though the quality of your work has not declined.
Your product may be stronger than it was two years ago. Your team may be more capable. Your outcomes may be as good as ever. But if buyers now believe parts of that outcome can be created faster, cheaper, or internally with AI, the value they assign to your offering changes.
That shift is easy to misread. Many leaders assume they have a sales problem, a marketing problem, or a pricing problem. Sometimes the real issue is simpler and more structural: the market’s perception of value has moved, and your offering hasn’t moved with it.
What value compression looks like.
This dynamic is not limited to legal work.
If an internal IT team can use AI to troubleshoot routine issues, managed support hours may be judged differently.
If software buyers believe AI can replicate part of what your platform does, pricing pressure can arrive before they even book a demo.
In each case, quality may still matter. But what buyers are willing to pay for has changed.
Why this feels different.
Most technology waves changed how companies operated. AI is changing what buyers expect.
Tasks that once justified premium fees are becoming expected features. Outputs that once required specialists are becoming easier to generate. Work that previously required outside help can now begin inside the client’s own team.
In many cases, your first competitor is no longer another firm. It is DIY AI.
When the baseline rises, yesterday’s differentiators start to disappear. This rarely shows up all at once. It appears gradually through more price sensitivity, slower decisions, heavier comparison shopping, and less urgency after the demo.
You can see the same shift in the capital markets. Public SaaS valuations fell roughly 70% from their 2021 peak, and private software deals that once commanded double-digit revenue multiples are now closing closer to 4–5x.
Markets are asking a harder question now: where is the real moat in an AI era?
That same question is showing up in everyday buying decisions.
Value compression is already in your pipeline.
Value compression usually appears in the pipeline before it shows up in the financials.
A prospect says they are exploring internal options. A buyer asks why implementation should take that long. A customer assumes pricing should come down because “AI should make this easier now.” A deal that once would have moved forward goes quiet.
Nothing explicit is said, which makes the real issue easy to miss.
Increasingly, the silent competitor is DIY AI: an internal team using off-the-shelf AI tools to attempt a first version of the outcome themselves. They may eventually discover the limits of that approach. But before that happens, projects often get delayed, scoped down, partially pulled in-house, or disappear altogether.
Many teams respond tactically. They adjust messaging, launch campaigns, discount more aggressively, or push sales harder. Those actions can help in the short term, but they do not solve the underlying issue if buyers no longer see the same value they once did.
The real problem isn't AI.
A common reaction is to add AI to the product, the pitch deck, and the homepage. Sometimes that is necessary. But it is rarely sufficient.
If your message becomes “we use AI too,” you may unintentionally reinforce the idea that AI is the source of value rather than your business. That leads buyers to a difficult question:
If the value is in the AI, why do I need you?
Adding AI features without clarifying your irreplaceable value can accelerate the very pressure you are trying to escape.
Rebuild your moat.
The strategic question is not how do we add AI. It’s this:
What still matters when intelligence becomes abundant, and how do we rebuild our moat around it?
For some companies, it’s judgment. The ability to interpret messy situations, make sound decisions, and stand behind them.
For others, it is accountability. Clients are not buying software or hours. They are buying someone who owns the result.
For others, it is trust. Deep relationships, context, and hard-earned understanding built over time.
For others, it is integration. Bringing people, systems, change management, and execution together in a way tools alone cannot.
These are the places where premium value can still live.
Some places to start.
Countering value compression isn't a marketing exercise. It's a strategic one.
Pressure-test your brand promise. If your ideal customer had access to the same AI tools you have, what part of your promise would still justify their investment in you?
Listen differently to stalled deals. Where are deals slowing? What objections are news? Expectation drift shows up as friction before it shows up as lost revenue.
Separate efficiency from strategic value. If AI helps you do the same work faster, that is useful. If it helps you create new value customers will pay more for, that is strategic.
Decide what stays human. In a market racing toward efficiency, intentional human accountability can become a genuine differentiator.
The reset is already underway.
Value compression is not a future trend. It is already shaping pipelines, pricing conversations, renewal discussions, and acquisition values.
The question is not whether your business will feel it. The question is whether you will rebuild your moat before the market decides for you.
When intelligence becomes abundant, distinctiveness must become deliberate. Or the market will define it for you..
Is your value design keeping pace with AI?
Coefficient helps leadership teams uncover where value is being compressed, where buyers still see premium value, and how to redesign offerings for an AI-shaped market.
Book a strategy call with the Coefficient team.
Book a Strategy Call
WRITTEN BY: LEARY GATES
Leary Gates is a strategic advisor and co-founder of Coefficient, the value design firm helping B2B companies rethink what they sell and how they grow. He writes the Strategic CEO newsletter, a weekly exploration of leadership, strategy, and the next growth curve.
Like what you’re reading?
Get these sent to your inbox.
Spam free.
Many good B2B companies are discovering that being good is no longer enough.
Deals that once moved now stall. Pricing gets challenged earlier. Buyers arrive already halfway through their own process. Some no longer need outside vendors for work they once had to outsource.
It’s easy to blame the economy or cautious buyers. Those factors are real. But they don’t fully explain what’s changing.
If a prospect can use AI to generate a first-pass legal contract in minutes, the attorney who delivers a stronger version two days later at ten times the cost faces a different kind of problem.
The lawyer’s work may still be better. But the buyer now judges the difference through a new lens: speed, price, and “good enough.”
That shift is showing up across software, IT services, and professional services.
It has a name: value compression.
What is value compression?
Value compression happens when the market begins to value your offering less, even though the quality of your work has not declined.
Your product may be stronger than it was two years ago. Your team may be more capable. Your outcomes may be as good as ever. But if buyers now believe parts of that outcome can be created faster, cheaper, or internally with AI, the value they assign to your offering changes.
That shift is easy to misread. Many leaders assume they have a sales problem, a marketing problem, or a pricing problem. Sometimes the real issue is simpler and more structural: the market’s perception of value has moved, and your offering hasn’t moved with it.
What value compression looks like.
This dynamic is not limited to legal work.
If an internal IT team can use AI to troubleshoot routine issues, managed support hours may be judged differently.
If software buyers believe AI can replicate part of what your platform does, pricing pressure can arrive before they even book a demo.
In each case, quality may still matter. But what buyers are willing to pay for has changed.
Why this feels different.
Most technology waves changed how companies operated. AI is changing what buyers expect.
Tasks that once justified premium fees are becoming expected features.
Outputs that once required specialists are becoming easier to generate. Work that previously required outside help can now begin inside the client’s own team.
In many cases, your first competitor is no longer another firm. It is DIY AI.
When the baseline rises, yesterday’s differentiators start to disappear. This rarely shows up all at once. It appears gradually through more price sensitivity, slower decisions, heavier comparison shopping, and less urgency after the demo.
You can see the same shift in the capital markets. Public SaaS valuations fell roughly 70% from their 2021 peak, and private software deals that once commanded double-digit revenue multiples are now closing closer to 4–5x.
Markets are asking a harder question now: where is the real moat in an AI era?
That same question is showing up in everyday buying decisions.
Value compression is already in your pipeline.
Value compression usually appears in the pipeline before it shows up in the financials.
A prospect says they are exploring internal options. A buyer asks why implementation should take that long. A customer assumes pricing should come down because “AI should make this easier now.” A deal that once would have moved forward goes quiet.
Nothing explicit is said, which makes the real issue easy to miss.
Increasingly, the silent competitor is DIY AI: an internal team using off-the-shelf AI tools to attempt a first version of the outcome themselves. They may eventually discover the limits of that approach. But before that happens, projects often get delayed, scoped down, partially pulled in-house, or disappear altogether.
Many teams respond tactically. They adjust messaging, launch campaigns, discount more aggressively, or push sales harder. Those actions can help in the short term, but they do not solve the underlying issue if buyers no longer see the same value they once did.
The real problem isn't AI.
A common reaction is to add AI to the product, the pitch deck, and the homepage. Sometimes that is necessary. But it is rarely sufficient.
If your message becomes “we use AI too,” you may unintentionally reinforce the idea that AI is the source of value rather than your business. That leads buyers to a difficult question:
If the value is in the AI, why do I need you?
Adding AI features without clarifying your irreplaceable value can accelerate the very pressure you are trying to escape.
Rebuild your moat.
The strategic question is not how do we add AI. It’s this:
What still matters when intelligence becomes abundant, and how do we rebuild our moat around it?
For some companies, it’s judgment. The ability to interpret messy situations, make sound decisions, and stand behind them.
For others, it is accountability. Clients are not buying software or hours. They are buying someone who owns the result.
For others, it is trust. Deep relationships, context, and hard-earned understanding built over time.
For others, it is integration. Bringing people, systems, change management, and execution together in a way tools alone cannot.
These are the places where premium value can still live.
Some places to start.
Countering value compression isn't a marketing exercise. It's a strategic one.
Pressure-test your brand promise. If your ideal customer had access to the same AI tools you have, what part of your promise would still justify their investment in you?
Listen differently to stalled deals. Where are deals slowing? What objections are news? Expectation drift shows up as friction before it shows up as lost revenue.
Separate efficiency from strategic value. If AI helps you do the same work faster, that is useful. If it helps you create new value customers will pay more for, that is strategic.
Decide what stays human. In a market racing toward efficiency, intentional human accountability can become a genuine differentiator.
The reset is already underway.
Value compression is not a future trend. It is already shaping pipelines, pricing conversations, renewal discussions, and acquisition values.
The question is not whether your business will feel it. The question is whether you will rebuild your moat before the market decides for you.
When intelligence becomes abundant, distinctiveness must become deliberate. Or the market will define it for you..
Is your value design keeping pace with AI?
Coefficient helps leadership teams uncover where value is being compressed, where buyers still see premium value, and how to redesign offerings for an AI-shaped market.
Book a strategy call with the Coefficient team.
Book a Strategy Call
WRITTEN BY: LEARY GATES
Leary Gates is a strategic advisor and co-founder of Coefficient, the value design firm helping B2B companies rethink what they sell and how they grow. He writes the Strategic CEO newsletter, a weekly exploration of leadership, strategy, and the next growth curve.
Like what you’re reading?
Get these sent to your inbox. Spam free.