
Lessons from six years as a solo consultant - Edward9
https://www.embeddeduse.com/2019/06/26/lessons-from-six-years-as-a-solo-consultant/
======
zenpaul
I've been there and done that for better and worse. It sounds like the author
wants to create their own agency which is a different game than being a solo
consultant. If you really want to be a solo consultant...

Lessons from 20+ years as a solo consultant:

\- Customers rarely know what they want.

\- Customers always change what they want.

\- Change control in fixed bid work is vastly more important than how smart or
productive you are.

\- It takes an extraordinary amount of effort to find customers.

\- One gets customers by searching, networking, having other good customers
and mastering useful technologies.

\- What matters long term is consistently making money every month.

If you truly want to be a solo consultant:

\- Maintain good relationships with your customers.

\- Bill hourly and get paid no later than monthly.

\- Be willing to work with consulting agencies and accept their markup on your
rate.

\- Always be learning and using new technologies.

\- Always be looking for the next opportunity.

~~~
unreal37
I agree. As 20+ years as a consultant, I can't imagine billing "per project".
That dream project where the requirements don't change and the scope is
perfectly estimated in advance doesn't exist.

~~~
nosianu
Anecdote:

I - then working as a freelancer programmer for a few years - once had a
(German company) customer where the person that I was supposed to work with
was so unpopular and known as "difficult to work with" inside the company that
the manager that had hired me for the job apologized profusely, especially
that he had to place me in the same room with that person. All the people I
had contact with were similar.

Why was he never fired? Well, because he was so good, you could say he was
_perfect_. So they gave him a room for himself - usually it was about four
people per office and accepted the rest. And I say that with decades of job
experience in many software companies in the US and in Germany. The documents
describing what he wanted down to the last detail were just.. perfect! I ended
up doing two programming jobs for them a year apart and both times I simply
took the documents and worked on it from top to bottom until it was done. I
never had to ask a single question, there never were any changes. Sometimes I
had to explain a few things I did, but that was just usual communication,
there never was anything unclear.

And also, I never had any issues with that guy myself, even during the time we
shared a room. He "merely" expected everybody to be on his level, other than
that he was fine. Once a female colleague came into the room to ask him
something, and in an exasperated tone he told her that he had already
described everything she asked for in paper X in section Y. And he was right,
what she had asked was right there. As always, he had everything _perfectly
planned_ and documented well in advance. Of course, that's no way to gain any
social points and that woman was almost ready to cry (I had quite a few chats
with people working in the other rooms and the women disliked him the most,
but the men did too), but for better or worse, he was just too perfect and
expected the same perfection from everybody.

That was the first and only time I ever had such an experience, everybody else
apart from that one guy is just working normally. Right now I have the exact
opposite experience, I program for people who only have very fuzzy ideas what
they want. Works too - you just have to treat it differently and have a
different mind set. That one job is one of my most memorable experiences,
including the social drama.

~~~
tartoran
Had similar experience that you described but with a professor in Uni. He was
documenting everything clearly to the last detail and was unwilling to answer
any question, he was even unwilling to listen to questions asked because the
answer was documented. I learned a lot in that class but I got a pretty bad
taste for this type of this agressive personality. I saw it as logical
sadistic at times... In retrospect I think that professor had some sort of
asperger or was on the spectrum. I wish I knew that them, I’d probably take it
better

~~~
sojournerc
Curious how labeling the personality as "on the spectrum" makes it more
palatable? Not asking from snark, just genuinely curious.

As I think about it, it gets to what's wrong with the idea of expecting to be
friends, or to always get along congenially with co-workers, when in fact the
reason for interaction in a business is to produce something of value.

No doubt this unpalatable person was impressively productive in both yours and
OP's stories, and in a business environment, I wish that could weigh heavier
than the difficult personality...

Don't think I have a point, but am genuinely curious why having a diagnosis
for the behavior makes it easier to accept

~~~
cerberusss
> Curious how labeling the personality as "on the spectrum" makes it more
> palatable

It eliminates malicious intent. If you know they can't help it, you still
might think it's not worth working with them. But you know that it's not
personal.

------
S_A_P
I cant agree with this article. Ive been a solo consultant for 5 years now.
Here are my takeaways-

-Maintain good relationships with anyone that can give you work. Most of the time you will ping pong between vendors for work.

-Don't be afraid to build in "bench" time into your hourly rate. The rates listed in this article are much lower than I would recommend. I target 85% utilized in my personal model. I work in a niche and will not consider less than 150/hr for anything less than a 12 month contract.

-Remember that despite the best of relationships and intents, contractors are expendable. You can and will get let go before employees. That is not a bad thing. In fact, its a gift. You get to leave before morale and expectations get too far out of control.

-Do put rainy day money away into fungible assets. Savings accounts probably aren't great for that.

-Do try to have multiple clients at once, if you can swing 2 full time gigs, most of the time this can be juggled in the short term.

-If you get told you are rolling off, don't take it personal. I have the hardest time with this part of it. It is my nature to give my all when I am at a gig. When the let me go, I feel that it is an affront or personal. Its not, its business. If you do this, you will make more than many high level executive salaries. That doesn't count the equity side but making 2-400k a year is a real possibility.

-When its time to leave you will know. The biggest upside I see in consulting is I have the freedom to leave when I cant deal with the bullshit anymore. -Every company has bullshit you will grow tired of. Honeymoon periods last 3-24 months, but there will always be bs.

~~~
wtracy
> put rainy day money away into fungible assets. Savings accounts probably
> aren't great

Could you elaborate? Do you feel that the returns on savings accounts are too
low?

What do you recommend instead? (I'm not looking for a very specific answer
here.)

I would think that you would want emergency money to go into something that
isn't very volatile, and savings accounts or money market account are the
first things that come to mind.

(I've been very disappointed by what I've seen of CDs. If you hunt around, you
can find savings accounts with interest rates that beat any CD I've seen, and
they don't have an early withdrawal penalty.)

~~~
lbotos
links to these savings accounts > 2% that don't have any "deposit 200/m" or
"need to be over x balance for 12mo to get the interest?

~~~
celestialcheese
Fed rate dropped - but up until a month or two ago, there were a number of
banks. Discover, Wealthfront, Marcus by GS. Right now the rate i'm seeing
everywhere without crazy requirements and no minimums is ~1.7%

------
k__
If found software consulting a bit boring, but quite lucrative.

If you get a project that takes 3-6 months you make enough money for the year
and a bit left for the next year.

This means that you only need one customer to say "yes" per year. If you
contact only 10 per month your success rate doesn't even have to be 1%.

What I learned is, charge per week or month and never go for full-time.

The month charging filters out all the tiny fishes and the part-time always
gives you plausbile deniability when you can't answer the phone.

~~~
yomly
Sorry I don't fully understand

>the part-time always gives you plausbile deniability when you can't answer
the phone.

Do you mind elaborating as the rest of the comment is good!

~~~
Proziam
Not the OP, but (I think) I get what he means.

If you're working a project on a full-time basis, the client will expect to be
able to call you up and get you on the line at pretty much any time (and yes,
often outside of normal work hours, in my experience). If you're on a "part-
time" basis, you don't have this pressure because the expectations are set
differently.

~~~
gist
> the client will expect to be able to call you up and get you on the line at
> pretty much any time

I get your point but maybe it's the opposite in some cases? People want to
have someone they can get at a moment's notice and when they find that person
they are more likely to a) Use them next time (where price is less of a
factor) and b) recommend them to others.

I say this as someone who has done quite well at consulting (and I do mean
that) and that has no problem taking a call even on Saturday night. Now of
course the devil is in the details and the particular client (goes w/o saying)
but the counterpoint is that is how you build customer relationships and build
a business. Fear of 'door number two' is what gets people to pay more the
comfort of knowing someone is there for them.

~~~
Proziam
I agree with you, and that's how I personally choose to work. There's a lot of
folks who would prefer a different lifestyle if they could manage it though.

Ultimately, the number one thing that gets repeat business is results. Because
of that, I can totally imagine people who offer a smaller time commitment
still being successful. Regardless, I definitely wouldn't recommend going the
'part-time' route to anyone that isn't already established enough to get away
with it.

------
Tom4hawk
_All the customer’s managers including the CEO sided with X, as they concluded
that bending the company X to their will was more trouble than an individual.
And anyway, I would be paid for the extra work._

I absolutely don't understand why this is the problem. Something came-up (not
because of you) and you will get paid for solving it.

If you don't have time (other plans) or you just don't want to do that (good
example: request is stupid and you know it will cause more trouble in the
future) you can just tell that to your customer (or bump-up rate for this
extra work).

How value base pricing would solve the above issue?

~~~
tra3
This is a problem from the perspective of the customer. Company X delivered a
substandard product based on a fix bid. The customer then had to turn around
and pay 10 weeks of hourly fees to this guy to finish it.

Presumably, if magic of value pricing was realized X would be incentivized to
finish it.

Pretty unprofessional on X's part I'd say, so I understand why the OP nearly
lost it.

~~~
iakh
I think that just highlights the downside of fixed bids, value based or not,
that the author ignores. You come out ahead and are incentivized to finish
early, but are deincentivized to do any additional work if you go past your
costs plus margin

------
rgbrenner
This would be better if it was about his experience from the past 6 years...
whatever he's been doing definitely works.

Instead it's ideas about what he wants to try in the future.

In fairness, those ideas sound great... but this is more like an advisory
notice to his existing clients about how things might change.

------
cosmodisk
I did both hourly and project based pricing models when consulting. Each have
pros and cons but for projects that aren't "off the shelve" and do require
discovery days, lots of inputs from client and a level of solution design from
the consultant, the key thing is milestones. This way you can fend off scope
creep and also be very specific on deliverables.I.e.:created x feature: 10
hours( 15% of the overall project). As for the rates, one hits the ceiling
pretty quickly with hourly rates: try pitching $500/h if you not a lawyer.
That's why value based pricing is the only way to push it up as high as
possible. It's one thing to say that you'll be charging $200/h for the next
few weeks and another when you say you'd build something for $24K that'll make
the company $500K over next 12months.

------
flyinglizard
I shifted from mostly fixed price to mostly hourly based billing over the past
year, and increased the rates. It’s very easy to start a project with hourly
billing, adjust the scope and expand as you go. It’s very difficult to do that
with a fixed priced project.

But the biggest issue against fixed price is that companies are quite bad at
pricing R&D activities (which is why they’re usually running late and require
office heroics to complete). When you try to put a realistic price on such an
activity you may give your customer a sticker shock.

I still do fixed price at places but only when the work stands alone and it’s
something I’ve done many times in the past.

Working hourly, if you spread the work across multiple clients and provide
good value for each, creates a structure where you cost each of them slightly
less than a full time employee. My experience is that this is quite
sustainable for everyone.

~~~
ghaff
There are a few general prerequisites for fixed pricing. They apply to hourly
pricing as well but they're more important when the price is fixed.

1.) The project needs to be well-scoped with any significant out-of-scopes
also explicitly specified.

2.) Client responsibilities/deadlines are specified.

3.) As you suggest, the work is predictable based on past experience and there
aren't likely to be unexpected things that come up and significantly increase
the time required.

------
Const-me
Not sure I agree about fixed price point.

When I'm spending 90% of the time developing software, especially if that's a
stand-alone or well specified isolated components - I can quote after some
initial research, and I agree it's a good way to go.

For other clients I'm doing a job of technical lead. In that case, too much
time is spent defining requirements, reviewing other people's work, writing
project documentation, etc. These things are borderline impossible to estimate
in advance. For these projects, I prefer hourly contracts.

~~~
chiefalchemist
Scrum is more or less a time & materials approach.

Agreed. If it's small and finite - similar to an oil change - then a fixed
price is doable. On the other, if the resuest is "the engine sounds odd and
acceleration is off" then it could be anything.

Anyone who is the latter but expects a fixed price must be avoided. They'll
cost you more than you'll make.

------
iakh
> They call you. Your acquisition costs are close to zero. The million-dollar
> question is: How do you make potential customers contact you? >...a strong
> brand makes finding new projects so much easier: New projects find you! Be
> aware that building up your brand easily costs you 60 hours per month.

Not sure how this is a compelling argument. 40% of your time seems like a lot
more than close to zero

~~~
ghaff
I took it as just a statement of reality that people should be aware of.
Especially for higher-level advisory work, i.e. not primarily writing code, a
large percentage of time is "off the clock." Most of the independent
consultants I know spend a lot of time writing newsletters, doing podcasts,
speaking for free at events, in addition to whatever 1:1 marketing/sales they
do.

~~~
RHSeeger
> Your acquisition costs are close to zero

I think the point was that the acquisition costs are _not_ close to zero.
Rather, the acquisition costs are no longer specific to individual clients,
they're general in nature. If you spend just as much time/money but don't
spend it on specific client, then the cost for each client doesn't change
(it's just the total divided by the number of clients).

~~~
ghaff
Good point. There clearly are acquisition costs. In marketing speak what he's
basically saying is that your bottom of funnel acquisition costs are low. (I
don't think they're quite zero because you still need to close a specific
contract.) But top of funnel awareness/education/etc. is a large chunk of your
time. Which for some types of consulting/advisory work rings absolutely true
to me.

e.g. [https://trackmaven.com/blog/marketing-
funnel-2/](https://trackmaven.com/blog/marketing-funnel-2/)

------
zoomablemind
It's an ages old dilemma, per-hour vs. per-project. There's no single right
approach. It's a choice, often circumstantial. Both options have risks.

Solo/freelancing awards us that freedom to balance the risks. After all we do
sell our time - we either bill our client for it OR give the account of it to
ourselves (man, that design took me awile....).

So eventually it's supposed to bring out that feel of one's own time value.
Raising rate is what logically comes out of this too.

Being solo also means facing one's own anxiety and insecurity. So we need to
be flexible and choose whatever works to boost our professional and personal
confidence, then review what outcomes this turned us. This, again, will
eventually harmonize what you bill your client to what you really want to be
paid.

The real question is how soon this balances out before bills would choke us.
So it makes sense to not routinely under-charge just because of anxiety, as
this only will make it stronger next time.

------
warlog
I'm curious to learn about your adventures in value based pricing.

I've worked as an independent consultant for 3 years and have priced by the
hour, and using value based fixed prices...the latter with mixed results.

I love Jonathan Stark's Ditching Hourly podcast... And I must recommend the
2bobs podcast with a shout out to Blair Enns on value based pricing and David
C. Baker on expertise advice business.

~~~
ghaff
Not the OP but, when I did consulting/advisory work, we mostly did a
combination of value-based and nominally value-based.

What I mean by that is our large clients had subscriptions with us for
advisory services, which included or could include some specific deliverables
like reports but was mostly fairly open ended access for inquiries, press
references, etc. I put these mostly in the value-based category.

Then we had things like advisory days, speeches, etc. we priced on the basis
of the deliverable value--but in practice there was a fairly close
correspondence to time spent. In practice also, clients would end up turning a
one day session into two half-day sessions for different groups, so from their
perspective they were mostly buying our time on-site (plus travel, etc.). We
tried to hold the line on pricing for value but I'd say we only had some
success here.

We'd also do custom research etc. for clients which, from their perspective,
was almost certainly more value-based as much of our work was out of their
sight. (Of course, from our end, we were mostly coming up with that pricing
from a desired internal day rate.)

I think the only time we nakedly charged by the hour was when we were doing
legal work because that was just the way the law firm which was our direct
client worked. (TBH, it was pretty nice to get a healthy hourly rate for
_everything_ and it was a substantial job. Also somewhat open-ended work we
weren't particularly familiar with, so an up-front quote would have been
difficult.)

~~~
warlog
My biggest challenge with value based pricing (VBP) was that it required an
upfront discussion about the perceived value of the work, and my
prospects/clients were often totally in the dark about "value".

I don't think VBP works well for tech/biotech startups:

-founders/exec can't define value

-founders/execs are selling the dream (= infinite value) and don't want to pay for it.

-startups want to hire brains, but pay for hands

-founders/execs and especially managers want to focus on (minimizing) "costs", rather than unearthing or creating "value" with consultants.

[Edit: formatting]

~~~
ghaff
Yes, we worked for (or at least were paid primarily by) mostly old-line
enterprise IT companies. We talked to plenty of startups. But they mostly
couldn't/wouldn't afford us even when we had good personal relationships with
the execs. ADDED: I do know at least one firm that does mostly value-based
advisory work for small companies; their approach is to have a fair number of
low dollar small clients in addition to some larger ones.

As I said, even with the big cos, a good chunk of what we did was at least
roughly day-based. At one point, for example, we experimented with trying to
price more strategic advisory work higher than make-your-product-launch-deck-
better type of work and it never really flew.

------
pnako
I'm not really convinced by the argument regarding value-based pricing,
because that's just not how markets work.

The clearing price (in this case, of labor) is based on demand AND supply; it
has nothing to do with how much value you bring to the table. Yes, it's true
that maybe writing some piece of software will save some company ten million
dollars per year. Should you get one million dollar for writing it? Maybe not,
if I can find someone charging 60K to develop that same piece of software.

There is one way to do that with software, though: royalties. It's used for
middleware for games and movies. But it's more a risk-management tool for
buyers than a sure path to profit for providers (i.e. with royalties you limit
your losses if the game or movie does poorly).

~~~
madsbuch
So, in the end everything boils down to negotiation. Obviously, if you can't
negotiate the $1mil deal, then you won't get it.

Furthermore, the market is not perfect. Just because somebody wants to do the
job for $60k it not mean that the company can even get into contact with this
person.

~~~
hectormalot
Crucially: if you’re more likely to deliver successfully you’ll be able to
price accordingly as well. E.g. if the perceived change of success with the
60k person is 80% and with you it’s 90% then you’re arguably worth a few 100k
extra.

(Now: that %-chance-of-succes is difficult to measure. Which is why it’s a
relationship business IMO :)

------
weinzierl
> An easy way to build up productised services is to keep the rights to use of
> the software that you write or that you oversee others writing. This works
> best for software that doesn’t give a competitive edge to customers and that
> is not specific to customers. Your leverage is to give a discount on your
> fees, if you are allowed to keep the rights to use.

I have never seen this going well. It is in my experience very rare that
companies are willing to let the consultant keep the rights and when they do
there is a big chance that they regret it and want the rights for a small fee
later. I've seen this damaging the customer relationship in the past. I'm
curious what other consultant's experiences are?

~~~
wtracy
I don't have firsthand experience, but anecdotally this sort of thing seems to
be more common with government agencies and large corporations than small
business clients.

I suspect that negotiating it is a _lot_ more complicated than just offering a
discounted rate. Honestly, it probably involves wining and dining key decision
makers. (Hence, why it happens with government agencies and large
corporations.)

~~~
iudqnolq
> I don't have firsthand experience, but anecdotally this sort of thing seems
> to be more common with government agencies and large corporations than small
> business clients.

Dumb question: is "this sort of thing" keeping or not keeping the rights?

~~~
weinzierl
Not parent, but I suppose that government agencies in the US are more willing
to not insist on keeping the rights. There is the idea that tax-paid work
should (or must?) be available to the general public. Therefore the agencies
don't have a good argument for keeping the rights anyway. As far as I know
this is very much a US thing and doesn't exist elsewhere. At least where OP
and I work it is - to the best of my knowledge - unheard of.

For a prime example see SQLite, which is in the public domain because its
author worked as contractor for the Navy, when it was created.

------
flimflamm
Please take also the consultancy buyers perspective when assessing the value
you bring in.

Are you the only consultant who could figure out how to bring down the cost of
the appliance (in the articles example) down by 1$?

If not then your value is not as high as you used in the calculation. The
potential client could find other consultants to do the same thing (price
optimization of a mass product - service well available in the market). As
there are more providers then estimating the "value" should take in to account
that there are several offerers of service. It is now a tendering situation. I
am now excluding a remote situation where all the offerers of the optimization
service would collude in their offers.

~~~
wayoutthere
Consulting is a relationship business. The quality of your relationships
determines how much you can sell your services for. Furthermore, solo
consultants tend to specialize in a few specific niches where their services
aren't a commodity. For commoditized consulting services, buyers will just go
to a body shop.

~~~
ghaff
The same applies to advisory type consulting as well. Even people who are more
generalist than others are still fairly specialized in the grand scheme of
things. On the one hand, you don't want to be so specialized that almost no
one is a potential customer. But get too broad and you're getting out of the
realm of having knowledge/experience that people will pay a real premium for.

I've long felt I had to keep pulling myself back a bit from dabbling in too
many things at a relatively cursory level.

~~~
wayoutthere
I was actually meaning it in terms of advisory consulting since that's what I
do :)

But my experience has been very similar to yours -- I find myself focusing
more and more on product strategy and less on engineering process as I move
forward in my career. Clients are increasingly going to body shops for that
kind of work, and I have no interest in competing in a race to the bottom.

------
DrNuke
It is products designed, made and shipped from you in the past that help set
your personal brand as a consultant. You show something so that prospective
clients can assess and trust your potential contribution in advance. Portfolio
is the name, right?

------
m0zg
"Don't charge hourly" doesn't work for "researchy" work where you can't be
certain things will work in the end or indeed how long they will take. I
charge hourly. Setting a high hourly rate (if you can do it) prevents the
"bullshit work" situation described in the article. Customer then finds it
more cost effective to have their junior FTEs do bullshit work.

------
JoeMayoBot
Rather than say one way to bill is better than the other, I view this as
situational. I've worked a fixed price project on occasion, but most of my
work is hourly. The approach is a result of the negotiation process.

I also believe ethics is subjective. A consultant is running a business and
has a fiduciary duty and a right to make money. If I can make money and keep
the customer happy then all is good.

------
brw12
From my own 4 years' experience, I echo what zenpaul said, and would add:

* Understand _who_ your client is, and stop and check in if they change. I once had a manager at a client company change mid-project, and the politics (and sense of trust) completely reversed -- in retrospect, I should have insisted that we start the relationship over, clarify expectations, etc.

* It's not always a good idea to agree to disagree. I estimated one sub-project would take 3 weeks, and a client insisted it should take more like one; we decided to proceed, it took 3 weeks, and the client was unhappy. Looking back, I think we should have more seriously considered dropping the project if we couldn't agree on expectations. This can be proposed gently and respectfully: if you don't think that plan is worth it, I'm happy to do my best to help you find someone else.

------
zackmorris
I just want to say a big thank you to the author for sharing the derivation of
a consultant's profit.

I've always struggled as a consultant, generally scraping by and feeling
spread too thin. That’s because I subconsciously gave up on the idea of
profiting from my business. If you stop and think about that for a moment, it
means that I had internalized this idea that I would always be working
linearly at my hourly rate. There would never be residual passive income from
work that I had done, whether it was SAAS or building an app or frankly just
reselling something that I had already made. That death of faith in a better
future is one of the most toxic and detrimental blows to a maker’s psyche that
I know of.

The full profit formula is:

    
    
      profit = (price you charge) - (your cost as hourly rate * hours)
    

Your cost here is the time that you would have put in coding, as if it were
any other job. On top of that, you have the periodic struggle to find more
gigs, as well as the logistics of handling your own taxes, health insurance,
etc. So if you don’t charge something above your own cost, you’ll burn the
candle at both ends just getting by, and eventually burn out after 2-4 years
just like at any other job (tech especially).

I’ve always said that I feel that consultants should charge at least their
overtime rate to account for the overhead and headaches involved. So if you
make $30 per hour as a developer, your overtime rate (time and a half) is $45
and I would recommend starting around there or round up to $50. That's only
part of the answer though, because an agency will charge between 1.5 and 4
times your hourly rate, so between $50 and $120 per hour, often more. So
really you are competing with agencies. Which means that there is nothing
wrong with charging the same as them, and probably more if you are experienced
in your target market.

But there are also physical laws to consider. It’s hard to beat a pair of
coders making something, so that limits an agency’s maximum value to a
customer to just twice what a single consultant can provide. Keep in mind that
this ignores an agency’s existing infrastructure, ability to absorb failure
costs, and scalability. But if we’re just talking raw coding velocity, an
agency is limited to about twice the velocity of a consultant, no matter how
many people they through at a problem (see The Mythical Man Month). Knowing
that, it makes sense to me that a consultant might typically charge about half
the flat rate fee of an agency. And if they always deliver, why not charge the
same amount!

------
fao_
> I couldn’t believe my ears. After regaining my composure, I answered: “I
> regard such behaviour as unethical, because our customer would suffer a
> substantial and unnecessary loss.” [...] In hindsight, I should have
> terminated the project at that point [...]. The example shows how ingrained
> hourly billing is. Customers accept it as God given, although they know that
> they are ripped off.

But that's the thing. Companies exist solely to make money.

Let's say it again.

Companies do not exist to create value.

Companies do not exist to do cool things.

Those are all secondary.

Companies exist solely to make money.

This is business school 101.

The CEO and the rest of the workers were right in this instance. In this
decision the agency was better off as a company if the person took the deal.
The client at all times had the choice of going to a different firm that was
cheaper, the customer in this case opted not to bother with doing those things
(which might have cost them more in the long run anyway), and therefore had
already committed to the cost that they would be charged.

The job of the client company in this case is to extract as much value as it
can from the consultants while paying them as little as it can. Clearly in
this instance, given they were happy paying that cost, you weren't being paid
as much as you could have been, based on the 'value' that you 'created'.

I don't see why the person in question sees this as unethical. Or rather, I
don't see why the person in question sees this as unethical under capitalism.
Capitalism is an inherently unethical system, where the entire system is (From
the top perspective) about ripping other people off as much as you can, or
(From the bottom perspective) trying to ensure you get paid as much as you are
worth to the company that you serve.

If you don't like it, back projects to change the system, whether that's to
introduce more regulation, or to change the system full stop so that gross
wealth-hoarding cannot exist. Until then, you have to make a living and try
and make sure that you and the people you support are better off. If you can
'create value' for others by doing that, then all the better!

------
gyulai
Element A: PROJECT ACQUISITION & SCALE.

It's not true that, by running a "make customers contact you" strategy, your
acquisition costs are zero, quite the contrary. In order to make customers
contact you, you need to take a lot of risky bets on the acquisition-side of
things.

Things you might do to build a strong brand, like writing books and having a
presence at events come with a likelihood that they won't be effective. By
sinking time into those things, they present a risk of derailing work that
actually pays. Doing a lot of PR & media work is a double-edged sword from the
pov of clients who see the work you do as a trade secret. They want people on
the job who know how to keep their mouths shut.

And the stream of project opportunities you get from that kind of project-
acquisition is highly volatile and unpredictable. Chances are, when an
opportunity comes in, you will be engaged in another project, and when a
project ends, you won't have an opportunity waiting for you at that moment.

This only works, if you can scale it up enough so that the central limits
theorem starts working in your favour and presents you with a constant stream
of opportunities. But as a solo-consultant you wouldn't actually have the
capacity to do anything with them, other than turn 99% of those opportunities
down. At which point the relationship between the costs behind those
acquisition effforts, and the rate at which you monetize them make the whole
economics of the strategy break down. So you need to scale up your capacity
and become a big agency, instead of a solo consultant, to make it work.

Element B: BARGAINING POWER

The other thing: Value-based fee sounds great, but what do you do in a
situation where other people who get paid by the hour compete for the work you
want to charge a value-based fee on? It's a race to the bottom, and can only
work in areas that are so niche and highly-specialized that you are basically
without competition, or where it would be prohibitively expensive for your
prospective customers to line up alternative offers to compete with yours.

CONCLUSION

But then, the requirement to have scale, and the requirement to serve highly
specialized areas so that you can have a lot of bargaining power are difficult
to reconcile.

...so, all of this is just not as easy as the author of this article is making
it out to be. If it were, everybody would be doing it, and nobody would allow
themselves to get paid by the hour and do project acquisition by contacting
the client rather than having the client contact them.

------
yellow_lead
[https://archive.is/JNoLA](https://archive.is/JNoLA)

------
xmly
Any org for solo consultant? How do you guys solve the health insurance
problem?

Thanks...

------
zerxy
How do you arrive at your hourly rate?

------
bullen
There is a broader picture to these lessons that I would like to point out:

Not only is it economical to do bad work if you bill by the hour;

but it is also necessary to build flawed products to sell more of them.

See printer inc, light bulbs, computers, everything that could last 100 years
but doesn't...

The other side of this is that energy is considered free, if we paid the real
price for oil/electricity it would cost many thousands dollars per gallon/kwh.

The only way for this to change is for the whole system to collapse, and that
will happen during this decade.

All arbitrary (not based on experience from nature) human skills are going
away.

But math, physics, chemistry and biology will stay; prioritize in that order.

Build a good computer today, it will not become obsolete technically for the
rest of your life.

Buy a ARM computer that you use as desktop, it will be usable for the rest of
your life AND it will teach you to become a better programmer!

