I recently read an article entitled five ways to build a $100 million dollar business. It discusses different business models that vary in the number and size of your customer base. Some businesses work with a few enterprise scale clients while others work with a larger number of smaller customers. Patrick Mackenzie mentioned on Twitter that “The math here is equally applicable if you are trying to build, say, a $200k a year business”.A $200k/yr consultancy is a goal that seems both attractive and attainable, so I decided to try and answer the question “How can you build a $200,000 consultancy?”
When I left my job to become a freelance programmer, I was charging $50/hr in the beginning. I met other freelancers, consultants, and agencies in town, and a few of them charged $150/hr. Even the agency that I had worked at previously billed my time at $120/hr, which means that my level of programming skill was not the deciding factor. If they could charge that much for my services, why couldn’t I? There was a broken record in my head asking me the same question:
“what’s the difference between a $50 freelancer and a $150 freelancer?”
So I decided to start spending time learning about pricing, value, and all that “business stuff” programmers and designers love to avoid.