Is AI Software? The $230,000 Question Hiding in Every Revenue Dollar.

There's a comfortable assumption sitting underneath every services-as-software pitch deck. It goes like this: the AI delivers the work, so there are no humans on payroll, so the gross margins should be at least as good as traditional software — maybe better, because you're capturing the full value of a service without the labor cost.

It's wrong. The data showing it's wrong is now public, structural, and getting worse on the timescales most founders are pricing rounds on. If you took anything from Part 1, you should be asking the obvious follow-up: if Sierra and Greenlite both deliver outcomes, why is one priced like software and the other priced like a services firm? The answer, which most founders never get told before they sign a term sheet, is that they actually have similar gross margins. The difference is which one is allowed to claim software multiples in the market right now.