Pricing and commercial model

The commercial model is a monthly retainer for a running function. No timesheets, no rate cards, no scope-change theatre. The client buys the outcome — their digital and IT function exists, works, and is accountable — and pays for it the way they pay for any other operating function.

The anchor: what the function is worth, not what it costs us

The pricing comparator is not consulting day rates; it’s the cost of the alternative. A formation-stage energy company that built this function internally would hire a CIO/CTO ($350K+ fully loaded), plus delivery and operations capability, plus the 12–18 months it takes to assemble — a seven-figure annual run-rate before its first asset earns revenue, for a function it only needs a fraction of at this stage. Our base retainer of $15K/month ($180K/year) delivers the function — executive judgment included — for half the cost of the one executive hire alone.

We are deliberate about not anchoring to our own cost base. AI gives us a production layer at near-zero cost; that is the source of our margin, not a reason to discount. The market evidence says premium pricing for AI-delivered professional work holds when the outcome is real: Harvey charges ~US$1,200/seat/month into law firms (a ~US$288K annual entry point) and is oversubscribed at an US$11B valuation; Unity Advisory sells senior-only AI-native CFO advisory on outcome-linked fees with US$300M of institutional backing. Clients pay for working functions and accountable judgment. They always have.

The traditional comparator is now anchored in market data (2026-08, → [[sources/sophia-pricing-model-anchors-2026-08-02]]). The like-for-like Big 4 alternative — a Partner and Director part-time over a Manager, Senior Consultant, and Consultant full-time — runs A$1M+ a year at discounted government-panel rates and A$1.7M+ at rack (blended realised rates A$1,200–2,000/consultant-day; M). The base retainer is therefore a 6–9× undercut of traditional embedded delivery, not the 2–3× a light comparison suggests. And the ceiling is proven from the AI side: per-outcome agent vendors (Sierra, Decagon) land A$230–690K annual contracts for a single automated function (M) — six-figure subscriptions for working functions clear the market today.

The tiers

The floor is a governance rule, not a negotiating posture: the financial model breaks below ~$12K, and a practice that discounts its way into a loss-making embedded relationship cannot serve anyone well. Premium pricing applies where the senior layer carries genuinely heavier accountability — critical-infrastructure cyber posture, market-operator interfaces, multiple concurrent asset commissionings.

These numbers are deliberately conservative — priced to land, not to maximise the first deal. This is a land-and-expand model: the entry retainer buys reference clients and proof of the model, while the real pricing power compounds later — the premium tier, value- and outcome-linked pricing as ROI is demonstrated, growth with the client, and the equity upside held open below. Measured against the value delivered — a mission-critical function the client often can’t assemble at any price — there is real headroom by design.

The benchmark risk: the MSP heuristic, not the Big 4

The pricing pressure to plan for is not the expensive comparator; it is the cheap one. Australian managed IT converges at A$140–250/user/month (M, five independent guides), so a 100-person company’s fully managed IT lands at A$170–300K a year: the same band as the base retainer. A fund CFO will benchmark $15K/month against “what does managed IT cost per head” before anything else, and second against a fractional CTO at A$8–15K/month for one to two days a week. The answer to both is the same and should be made before the question is asked: an MSP buys commodity operations (helpdesk, devices, patching) and a fractional CTO buys one person part-time; neither buys an accountable executive function — market-systems and compliance judgment, board presence, and the build-and-run of the digital estate itself. Where a client genuinely needs commodity IT operations too, that is a subcontracted or brokered layer under our function, not a substitute for it.

The entry product: the advisory wedge

“Be our embedded digital function” is a large first ask of a board that has never worked with us. So advisory is the way in — and its productised, repeatable form is a fixed-fee market-entry digital readiness assessment: four to six weeks, a defined artefact (the day-one architecture blueprint — market systems, OT/IT, compliance, ERP, security, sequenced and costed), priced in the $40K–$60K range. It does real advisory work, demonstrates the regulatory-knowledge moat, and produces the document the operate-retainer conversation flows naturally from. This is the tip of the spear: a bounded, low-risk first engagement that earns trust and leads into the recurring function. It is small enough for an infrastructure fund to commission for any portfolio company without committee anxiety, and it is referrable: a fund that buys one assessment can buy five. (Where we already hold a warm, embedded position, the first entry can instead ride a live engagement — see section 12 — but the assessment is the repeatable wedge for every entity after the first.)

How the retainer evolves

Formation stage: full function, base or premium retainer. As the client scales and internal capability grows (section 6), scope deliberately narrows and the retainer steps down with it — we’d rather hold ten right-sized relationships than cling to scope and be managed out. The mature-stage relationship (roadmap, major decisions, the standing intelligence layer) is a smaller retainer with very high margin and the durability that comes from having built everything underneath it.

Client equity: deliberately open, deliberately excluded

Whether the venture takes equity or gain-share in clients is one of our named open decisions. The case for: formation-stage companies conserve cash, equity aligns incentives, and the eventual upside on a successful energy portfolio is material. The case against, which currently wins: much of our beachhead cohort is fund-owned SPVs and consortium entities where provider equity is unusual; equity introduces independence and structural complications that interact with the vehicle question; and a model that needs equity to work is a model with an inadequate retainer. So the position is: fee and retainer first, the practice profitable on fees alone (section 8), and the equity question revisited deliberately — with eyes open and the right structure — once the practice has standing. What would have to be true: a chosen structural vehicle that accommodates it, a client segment where it’s culturally normal, and a fee base that doesn’t depend on it.

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