Software agency prices are about to collapse

Tools like Cursor and Lovable are making it way easier to build software. Software agencies will not be able to justify their previous prices and timelines in this new world.

Previously, software agencies could quote six figures for 3-6 months of work on a marketing website or minimum viable product. They calculated those prices by making a cushioned estimate, pro-rating the market salaries of a designer and a couple engineers, and adding a 20-40% margin.

Now, a solo developer can build the same product in a matter of weeks – or even days. Solo developers with good stakeholder management skills will use tools like Lovable to collaborate directly with clients on prototypes. This should make the overall experience better for both parties and improve the end product.

In fact, I'm going to test this hypothesis myself. If you're interested in building a good product fast and cheap, reach out.

For legacy software agencies, there's an arb opportunity right now to continue to quote legacy prices and timelines while adopting new AI tools internally. I wonder how widespread this is, and how long it will last.

In the future, not all software agencies might suffer. In fact, in a world with way more software, it's harder to stand out, so the demand for the best agencies may increase.

But for the median agency, I don't see how the legacy terms are sustainable.

I'm not the first person to realize this. Here are a couple examples: Tessellate Labs and LovableMVP (can't vouch for quality).

I'll post case studies, with client permission, on this site in the future.