2027 Will Not Run on 2026's Assumptions

The default line I described yesterday rests on an assumption so quiet that nobody states it: that next year's market is this year's market. Same demand, same prices, same competition, same cost of doing the work. For most of the last decade that assumption has been roughly right, which is why so many businesses have survived without a floor. The year was forgiving. 2027 will not be, for two reasons, and today I want to deal with the first.

The work you sell is being repriced from underneath, and it is happening this quarter rather than next decade. I covered technology for most of my career, and I wrote about artificial intelligence long before it was something everyone talked about, so I am wary of both the hype and the dismissal. What I can say from watching businesses this year is that a substantial part of what many owners charge for, the drafting, the research, the first version of nearly anything, the analysis that used to take a junior a week, is now available to their customers for very little. Every owner in this position already feels it. A prospect who would have paid for the whole job now asks for the part that still needs a person. A competitor who has adopted the tools quotes half the price and delivers in a third of the time. Most owners have not yet put a number on this, and that is the problem.

The problem is not that the work is disappearing. Some of it is, and most of it is changing shape. The problem is that a business model written in 2024, or never written at all, assumes a price for the work that the market has already moved away from, and a financial model built on that price will be wrong by spring. The owner who runs the default line into 2027 is running a model whose central assumption has quietly expired.

This is not a reason to panic. It is a reason to know the numbers before January rather than after. The owners who have a plan for this get to choose what to do about it. The rest get chosen for.

The response is to go back into the business model and ask of each thing you sell what it is worth now, not what it was worth when you priced it.

Take the product list from November. For each line, ask which parts of the work a customer could now do themselves, or get done cheaply, and which parts still need you: the judgement, the relationship, the accountability, the thing that is only valuable because a person with your experience is standing behind it. Then reprice. The parts being repriced from underneath either get cheaper, faster and delivered with the tools, or they stop being sold on their own. The parts that still need you get priced for what they are, which is often more than you charge now, because the market is about to discover how much it needs them.

Then put the new prices into the financial model and look at the second line again. For most businesses this is where the second line gets better, not worse, because the owner has been giving away the valuable part at the price of the part that is now cheap.

Then adopt the tools yourself, in the operating plan, for the work that no longer needs a person. Not as an experiment or a side project but as a line in the model: the hours saved, the cost removed, the capacity created. The owner who does this in December has a 2027 model built on 2027 prices. The owner who does not will find out what 2027 prices are from her customers, one lost quote at a time.

I want to be clear that I am not forecasting the technology. Nobody knows exactly where the tools go next year, and I have watched too many confident predictions about technology fail to make one here. What I am saying is narrower and more useful: the price of the work you sell has already changed, your customers already know it, and the model should say so before January rather than discover it in April.

Tomorrow, the second reason the default line is not safe this year, which is the room the offer is being sold into.

Continue reading: A Smaller Room, and a More Careful One →

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