Consulting pricing comes down to four decisions, whether you run a consultancy, an agency or a managed service provider: what a day of your work is defined as, what rate you put against it, who carries the risk when the effort runs over, and whether the client buys the work once or every month. Every page in this cluster is about one of those four decisions. A productised (productized) service, a retainer, a per-application managed service fee and a graded day rate card are not different philosophies; they are different answers to the same four questions.
What this cluster covers
The cluster runs from the first price a new firm writes down to the fee structure of a managed service several years in. It starts with the rate card, because everything else refers back to it: the day rate guide sets the numbers on it, the fixed price and time and materials comparison applies those numbers to a piece of work, the pricing strategy playbook decides which parts of an engagement get charged for, and the managed services pages cover what happens when the unit of sale stops being a day. The glossary entries sit underneath all of it: what a rate card is, what separates a consultancy from an agency or a contractor, and why positioning is a pricing question.
The order to read it in
| Step | Read | Why it comes here |
|---|---|---|
| 1 | What is a rate card? | The vocabulary: rate card, billing rate, blended rate. Ten minutes. |
| 2 | Consultant day rate in the UK | Cost base, billable days and margin turned into a day rate you can defend. |
| 3 | How to build a consulting rate card with no billing history | Grading that day rate into a ladder, putting the commercial terms on the card, and modelling a blended rate. The rate card builder is the companion tool. |
| 4 | Fixed price vs time and materials | Who carries the risk of effort, and what the statement of work must say either way. |
| 5 | Consulting pricing strategy: paid discovery, then a P&L per phase | Which parts of an engagement are charged for, and how to see whether each phase pays. |
| 6 | How to price managed services and the MSP pricing model | When the unit of sale becomes a month rather than a day. The application tiering model does the counting. |
Steps one to three are enough to quote from this month. Steps four and five matter the moment a buyer pushes back, and step six when a client asks you to stay.
The guides on becoming a consultant, working as an independent consultant, writing a consulting business plan and doing market research for a services business are the approach roads. Each arrives at pricing from a different direction and hands off into the sequence above where a price has to be written down.
The house position on pricing
A rate card is a strategy document, not a price list: the card you publish in year one decides what you can sell in year six. Set the rate from your cost base, the billable days you can honestly expect and the margin you need, then check it against a published ladder that buyers already recognise, rather than guessing a day rate and defending it for two years. When a buyer says the price is too high, hold the rate and change the scope; a discount teaches the client that the number was never real. Charge for discovery, and run a profit and loss for each phase of an engagement, so a profitable build cannot hide a diagnosis that cost more than it billed. Price a managed service against something the client can count, and design the fee to fall as their estate improves, because a fee that only goes up is a fee the client eventually resents.
Where this comes from
Steve and I started the business that became DevOpsGroup, a services company helping other businesses build and run software, in 2013 with no billing history, a borrowed rate card and two people to do the work. An early card was copied from a published public-sector structure and described the company we hoped to become. We quoted the same job at a fixed price and on time and materials and let the buyer choose who carried the risk. We learned to sell a paid assessment before a programme, and to hold the rate when a buyer said the proposal was too expensive. By the time the business sold for over $30m in 2021, the pricing model had changed less than people expect; what changed was how well we understood which parts of the work paid.
Those stories are told from my notes, diaries and recollections in the newsletter as they publish; the method drawn from them is what the playbooks and tools teach. The playbooks and tools are in development, and each page carries a waitlist.
Playbooks and tools
- How to build a consulting rate card with no billing history: How to set a defensible published rate card with no billing history, instead of one guessed day rate you spend two years defending.
- Consulting pricing strategy: paid discovery, then a P&L per phase: Price a paid diagnosis worth buying on its own, then run a separate profit and loss per phase so a profitable engagement cannot hide an unprofitable phase.
- MSP pricing model: price managed services per application: When your fee is a proxy for the customer’s spend, you get paid more when they do worse. How to price per unit of responsibility, with a fee designed to fall.
- Consulting rate card builder: model a graded day rate card: Build a graded rate card from a borrowed ladder, with the day defined and the blended rate modelled on the rung you will actually sell.
- Application tiering model for managed services pricing: Sort a client estate into tiers that justify what you charge to support it, split across Core, Remediation and Kaizen.
Guides
- Consultant day rate in the UK: how to set one you can defend: A day rate you can defend is worked back from what the firm costs to run and how many days it can honestly bill, then graded, so that a buyer picks a rung rather than argues with a number.
- Consulting business plan: the working-backwards brief, with the sections a lender or partner expects: Most business plan templates are written for companies that sell a product many times; a consulting firm sells skilled people's time, so its plan should start from who will pay, at what rate, for how many days, and what that leaves once the people are paid.
- How to become a consultant: the honest version from someone who did it twice: You need a problem you have solved repeatedly for an employer, one person willing to pay you to solve it for them, and a price you can explain; the company, the website and the business cards can all wait.
- How to price managed services: per user, per device, per cent of spend, per application, and a fee designed to fall: The unit you price a managed service on decides whose side of the table you sit on. This guide compares the five common bases, argues against pricing on a proxy for the customer's spend, and sets out application tiering with a fee designed to fall.
- Independent consultant: how to set up, price your work and win the first client: Setting up takes a week. What you charge and who you talk to in the first month decide whether you earn anything, so do those in the right order.
- Market research to start a services business: ten questions, ten conversations, and a ranked list of what hurts: A services business needs one buyer, not a market size. The cheapest research a founder can run is a short list of pains, ten conversations and a scoring rule.
Comparisons
- Fixed price vs time and materials for consulting work: hold the rate, flex the effort: For consulting work, hold one defensible rate under both models and move the scope instead: quote fixed price where you can specify the result and its acceptance, time and materials where the work discovers its own scope, and never discount the rate to make either one fit.
Definitions
- consultancy: A consultancy is a business that sells the judgement and skilled time of its people to solve a client's problem, priced by the day or by the engagement. Agencies, MSPs and contractors differ in what they sell and how they are valued.
- positioning: Positioning is the decision about which clients, problems and competitors a firm wants to be compared with, stated so plainly that a buyer can place it in a sentence. For a services firm, the quickest route is negation: say what you are not, then publish it.
- productised service: A productised service is expert work packaged with a fixed scope, a fixed price and a repeatable delivery process, so that a client can buy it without a proposal, a discovery call or a negotiation over hours.
- rate card: A rate card is the published list of what a consultancy, agency or managed service provider charges for its people's time: one price per grade per unit, usually a day, with the commercial terms that travel with the price attached.