In Defense of Consulting Businesses

At conferences and meetings with other freelancers, a common desire I hear is to shift more of their revenue from “trade-time-for-money” services to “mailbox-money / scalable” products.

As a successful service provider with no plans to shift business models, I’d like to explain my reasoning and start a discussion. I’m not criticizing those who choose to make this shift – there’s many successful people I know who have, and I’ll highlight a few of them below. But I feel like everyone knows the reasons for making the shift and not many of the reasons for not making the shift.

There’s more than two business models

You can never be rich trading your time for money. You need to shift to selling products, so increases in revenue do not result in increases in time spent working.

Avoiding the obvious response to the first line (keep raising your rate until you ARE rich trading time for money), let’s focus on the second. Some people believe the decision is binary – you are a service provider or a product provider; small businesses are at one end, and startups are at the other.

I like to think of it as a spectrum. On the left you literally are trading time for money. For every X increase in revenue, it requires an equivalent increase in time. These are the people who work on an hourly basis. On the right, every X increase in revenue requires absolutely no increase in time (or other costs). This is the ideal, but is for the most part unobtainable. All businesses fall somewhere in the middle.

Brian Gardner has built a hugely successful business with StudioPress. He builds a theme once and can sell it an unlimited amount of times without increasing the time spent developing it. BUT, each new customer does result in a marginal increase in his support costs. The theme development aspect of his business is perfectly scalable, but the support business is not (X number of customers results in Y number of support staff). StudioPress is on the right side of the spectrum, but not all the way.

I’m a WordPress developer that converts designs to themes. Rather than working on an hourly basis, I charge on a per-project basis. While still on the left side of the spectrum, I’m able to lean towards the right for the following reasons:

  1. The more projects I work on, the faster I can develop a site through experience and reusing code written earlier. This increases my effective hourly rate.
  2. The more projects I work on, the greater value I can provide to my clients through my experience. A site I built in 2012 is substantially better than the one I built in 2010 (even though that one was pretty good too :)). This increases the rates I can charge, most evident through my project minimum. For the past three years, every January my minimum for a standard project has gone up. But I personally believe the value I’m providing to my clients goes up even more than my rate has.

For these reasons, even though I’m putting in about the same amount of time of work each year, my revenue for 2012 is much higher than 2011, and I expect the same for 2013.

As a service provider, find the more scalable aspects of your business and focus on them. Likewise, find the aspects that are less scalable and decrease your focus on them. Here’s a few examples.

I’m able to increase my efficiency at developing simple sites more than I can complex sites. Complex sites usually involve more site-specific features that you can’t leverage across projects. Clients can see a huge value in a site built at my $2,500 project minimum, but as the price increases the value I provide approaches a linear trend. The higher the project cost, the more of the project is non-reusable “time-for-money” work. For this reason, I try to focus on the smaller sites where I can deliver more value.

I can increase my efficiency at coding, but I have a hard time increasing my efficiency on the phone. An hour long call I have with a client two years ago will still take an hour today. For this reason, I try minimize phone calls and other one-on-one communication.

  • When you land on my homepage, you’ll see the services I focus on. If you don’t want those, you’ll leave.
  • Once you’ve moved past that to my specific service pages or portfolio, you’ll see my project minimum. If that’s outside your budget, you’ll leave.
  • If you’re interested in starting a discussion, you’ll send an email using my contact form. I’ll read it, see if I have any canned responses that address the questions you have, and modify it as needed (a lot of the initial emails ask the same types of questions).
  • If you’re satisfied with our initial discussion, we’ll hop on the phone for 30 minutes to resolve any additional questions you have.

This is much better than my old process, which was to post a phone number and let everyone who lands on my website call me.

Products are an Investment

When you say you want to build a product that provides recurring revenue, you’re actually saying you want to invest your time (and possibly other resources) to establish an income producing asset.

The two factors that are most important to an investment are often not considered by freelancers turning to product development: risk and return. People want the recurring revenue, but don’t extend the thought process out to how much revenue they want, how much time they’re willing to invest, and how likely they are to hit their target.

Thomas Griffin committed months of work to the development of Soliloquy. It paid off, and he’s now able to scale back his consulting services as Soliloquy supplements the income.

But for every successful product released, there’s many that never made it this far, or made it to launch but didn’t generate enough revenue.

Before spending months or years developing your product, make sure there’s a healthy demand for it. Since you’re a freelancer already, maybe it’s something many of your clients have been wanting. You can decrease your risk by subsidizing the development cost through client work (a few clients hire you to develop this feature and you retain the rights to distribute it).

Make sure you can generate a reasonable return on your investment. If you can charge $200/hr for client work, and instead spend 1000 hours developing a plugin that sells for $20, make sure you can sell at least 10,000 of them. Also consider the time value of money. Yes, you might sell 10,000 of them over 10 years, but a dollar earned 10 years from now is worth less than a dollar earned today. It’s also a riskier dollar.

There are markets where you can trade your cash for income producing assets. Stocks, bonds, individual loans…. Building a product or scalable business is not the only way to have recurring revenue. These alternatives are less risky and don’t have a waiting period.

Consider the Long-Term Costs

Since WordPress is GPL, and all derivative, publicly distributed works are also GPL, many developers who sell themes and plugins are actually in the support business. You need to make sure your revenue per customer covers the lifetime cost of supporting that customer.

Let’s say you’re selling a theme for $50, and you’re getting 100 sales a month. You’re doing pretty good! At first the money is rolling in, and the support costs are low because you don’t have many users. Two years down the line, sales have dropped to a trickle, but now you have a customer base of 2000 that’s still requiring support.

Make sure that $50 you earned from the first customer can pay the cost to support that customer. Don’t build your business in a way that the current month’s sales pay the support costs of all the existing customers, and you need to keep growing sales in order to maintain your actual product: support.

Do as Gravity Forms does and limit your support to a defined period. Or, separate the cost of the scalable item (the product) and the non-scalable item (the support), and charge accordingly.

In Summary

Since even your consulting business has scalable, “startup-y” elements, it’s beneficial to think like a startup. This means your time is worth $1,000/hr, and read everything else Jason Cohen has written.

Before changing your business strategy from consulting to products, consider if there’s ways you can improve your consulting business to include some of the benefits of a scalable business.

Enjoyed the article? Check out my WordCamp Austin talk on Managing a Freelance Business

Bill Erickson

Bill Erickson is the co-founder and lead developer at CultivateWP, a WordPress agency focusing on high performance sites for web publishers.

About Me
Ready to upgrade your website?

I build custom WordPress websites that look great and are easy to manage.

Let's Talk

Reader Interactions

Comments are closed. Continue the conversation with me on Twitter: @billerickson


  1. Andrea_R says

    There’s tons here I could add about support not being scaleable. 😀 It’s the first place a I see new theme and plugin sellers burning out on and the first pain point for.. well, any shop. I’ve long said that people don’t scale, so you do have to work smarter.

    That being said, there’s a whole pile of things anyone can do to mitigate how much support is needed and how much is given. Clear outlining expectations, TONS of docs, loads of standard responses as well as making the product easy to use from the get-go.

    And also? Lifetime means the lifetime fo the product – not the lifetime of the user. 😉

  2. Chad Warner says

    I’ve spent the last few days thinking about product versus service businesses, because I just re-read The 4-Hour Workweek. In it, Timothy Ferriss presents the way to wealth as creating a product business that the owner can quickly scale through automation and delegation. He discourages service businesses because they’re not as easy to scale. He says if you have a service business, you should convert it into a product business by turning your services into information products like ebooks, webinars, audio recordings, etc.

    I’m a web designer who creates WordPress sites and provides WordPress consulting for small businesses, so I’m definitely on the service end of the spectrum. This conversation interests me because I’m also a business owner looking to maximize profits with the least effort.

    • Bill Erickson says

      I think that book has done more harm to WordPress developers than good. I agree with it in principle – developing a product business can scale and be successful with minimal ongoing work.

      BUT, with everyone chasing these product businesses (like theme shops), the prices have been driven to rock bottom, and most people selling public themes are making less than they could doing client work, and doing more work (ongoing support).

      You need to analyze all your options, look at your expected (and risk-weighted) returns, and choose the best option.

    • James Dalman says


      The 4 Hour Workweek is a great book, but you should also take it with a grain of salt. I think so many books like this present a “pie in the sky “lifestyle that is neither achievable for a majority of people or that require years of hard work to achieve – and even then, businesses require more work. 🙂

      I will say that the advice of making your business scalable and delegating are very legit business points. I recommend reading The E-Myth by Michael Gerber, as it transformed by business.

      Overall, it’s great to create products you can sell and that you can count on for passive income. It still takes quite a bit of time and investment.

      • Chad Warner says

        James, thanks for the recommendation. I’ve read The E-Myth Revisited and learned a lot from it (my review). I agree that The 4-Hour Workweek approach won’t work for most businesses, and many business owners prefer to be more involved in their businesses anyway.

  3. Mike Bijon says

    This is a much-needed counter-point to the push for products. Considering support costs and the difficulty of providing good support, unless you’re selling a single-use, consumable product with low quality standards (like soda or candy) there are few easily scalable businesses.

    One point you don’t make though, is how the influx of product businesses hurts both WordPress consultants and product shops. Customers of a $30 theme or plugin with mediocre or bad support don’t often turn around and invest in a professional-engagement. Too often they decide that WordPress is the problem and move on to other systems.

    If both sides of this debate would push for more quality, I think both sides would benefit from a stronger base of paying WP users.

    • Susan says

      I totally agree with your comment:

      “Customers of a $30 theme or plugin with mediocre or bad support don’t often turn around and invest in a professional-engagement.”

      And I would add that even customers of a theme/plugin with *good* support don’t often invest in a professional design, either. I have a child theme for sale at StudioPress and I provide quick support for those needing help and lately, it’s been my experience that people come to my website looking for a cheap fix for their sites. Either they want to know when I’ll have more themes ready or they want free support on existing ones. It seems like they don’t value my time and skill like my custom clients do.

  4. Keith Davis says

    Hi Bill
    Loved the piece and it really got me thinking.
    Going back to your projects, you charge a one-off fee for a project and that’s that.

    What about maintenance – Genesis upgrades, WordPress upgrades, plugin upgrades – do you enter into some sort of maintenance agreement?

    • Bill Erickson says

      The clients are responsible for updating themes and plugins (just click the button). If they do have changes they want me to do, I bill them on a time-basis.

    • James Dalman says

      I think the add on services AFTER a website has been designed and developed is something many web design shops/freelancers/consultants should consider. Almost all the clients I’ve ever worked with need these maintenance type services and are willing to pay for them. These services are a great resources for reoccurring revenue.

      • Keith Davis says

        I think we agree on that James.
        I’m wondering how many of my small business clients would like to venture into the WordPress dashboard and “just click the button”!
        Presumably after they’ve done a full backup.

          • Keith Davis says

            Set me thinking about all the other services you could offer…
            Sucuri malware monitoring and cleanup.
            Google Analytics.
            Ongoing SEO.
            Anything else?

            Just can’t imagine delivering a project and saying “that’s that” job done.

        • Bill Erickson says

          That’s why I host them with WPEngine. Daily backups, and before they click update on anything, it asks them if they’d like to do an entire backup right then. They say yes, do the backup, then update.

          Or, they can email me to do the update, I do it, and invoice them $50. A lot of my clients do this for the piece of mind of knowing they won’t break the site.

          I have no problem working on a time basis for small changes like this. I don’t like maintenance/retainer contracts where they pay you $x/month to take care of things. Either they won’t use it and will soon think you’re ripping them off (burn the bridge for profitable work down the road), or lots of your clients do use it and you end up in the WordPress editor business rather than WordPress development.

          It’s the developer’s responsibility to build a site that won’t break in the future from updates. That means:
          1. Building according to WordPress standards.
          2. Only use plugins that solve a very specific purpose, are necesarry, and developed by a top developer who you trust to not break your client’s site. If you can’t say “yes” to all of those, build it yourself for the client.

          Then you can confidently tell your clients they can click “Update” and it won’t break, because you know everything in there.

          If they choose to hire you to click update, that’s up to them. But if the sites you build *require* you there for updating since there’s always something that needs fixing, you’re doing_it_wrong().

          • Keith Davis says

            “…Daily backups, and before they click update on anything, it asks them if they’d like to do an entire backup right then. They say yes, do the backup, then update.”

            That makes sense Bill but my small business clients would be struggling to afford WPEngine and despite our best efforts upgrades do go wrong…. Genesis 1.9 straight to 1.9.1 and a few rather upset people posting comments on Studiopress blog until… comments closed.

  5. Chris Ford says

    Long story short–after a year of full time theme development, my business model is moving back to a more project-based one in 2013 😉

  6. Lisa Kalandjian says

    Just wanted to let you know your post made very interesting reading, at the back of my mind there has been a nagging voice telling me I should be producing premium themes for sale, but the support model has been holding me back. Do you think selling child themes for the big well-supported frameworks like Genesis is just as problematic from a support point of view?

    • Bill Erickson says

      I actually sold a Genesis child theme (Driskill), so I can answer this question.

      Yes, even if you’re built on a well supported framework, you’ll end up with a lot of support requests. After about a year of selling Driskill, I still hadn’t made back the amount I spent hiring a designer for it.

      I was providing at least 5 hours a week of support, and many of the customers were very demanding (sending me 6-8 messages on a Saturday, and complaining about how poor my support response time is). For their $60 purchase (of which I got 30%) they demanded more of me than any of my clients who spend $2-10k for my services.

      A lot of the support requests were not specific to my theme. They were asking for customization help, didn’t know how to use WordPress, or general Genesis help (supposed to be in a Genesis support forum).

      I had planned to release a few themes for sale to see how it went, but after the first few weeks of this one I knew it wasn’t the business I wanted to be in. When StudioPress got ready for a redesign and asked the community theme developers to handle their own support, I opted to have the theme removed from their directory.

      • Keith Davis says

        Hi Bill
        “…I opted to have the theme removed from their directory.”
        I was wondering what had happened to Driskill.

        Makes perfect sense now and will help other theme developers more informed business decisions.

      • Greg says

        Thank you very much for sharing this insight Bill; I had no idea that was the reality. However, it is disappointing to learn. I had planned on dabbling in child themes one day to perhaps earn a little extra income and exercise my creativity. Has any one had the opposite experience and found the benefits outweighed the drawbacks?

        • Bill Erickson says

          The simpler the theme, the less support you’ll have. One of the problems with mine was that it’s responsive, and there’s a lot of things you can do to break a responsive site.

          But even with a simple theme, I’d rather release it for free without any support in the hopes that one or two people would hire me to customize it. The theme market is overcrowded and underpriced.

        • Chris Ford says

          Keith–my experience has been the same as Bill’s. I sat down after launching my last theme and looked at how many hours it took me to do everything (probably 80-100 hours). That means I had around $8k of my time invested in the theme before I ever got to launch. That doesn’t include the ongoing cost of testing/updating for every new version of Genesis/WP, creating documentation (which does cut down significantly on non customization/basic CSS/core Genesis support questions) and providing support (especially for those themes included in the StudioPress ProPlus package, for which I earned $0 unless my affiliate link sent them there) means that it takes about a year to break if you can consistently pull in sales of about $650/month every month.

          Don’t get me wrong–I still love making themes–it’s a huge creative outlet for me, and they’re really fun to make. If I could afford to outsource the support as well as the coding, I’d probably release a lot more. But as my main business model, I haven’t found it to be extremely lucrative. For me, it’s something to do as a side project, not my main focus.

          • Greg says

            Thank you for taking the time to reply Chris. I’m a freelance developer specializing in Genesis, trying to find my place in all this. Insight from those who have been through it, is tremendously appreciated.

            Take care,


      • Lisa Kalandjian says

        Thanks for your insights Bill, you were clearly more than qualified to answer my question! :). I suppose the problem with the business model is the same one I experienced starting out as a freelancer when I was charging low rates. The less someone is willing to pay for something, the more demanding they seem to be. Not sure I understand the dynamics of it though.

  7. Mathew Porter says

    Im glad someone has defended consultancy work, I dont see the issue with it if it works. For instance some CRO consultancy I did on a project was charged at x amount, yet increased a client conversion rate from 2.5% average to 4.5% average, paying for my initial consultation in a week at the new rate of sales. Justified quite easily. The issue I find in the industry in the UK is the high level of cowboys and cheap, low standard services available. Nice insight by the way.

  8. Manish says

    Excellent article. I think more than Consulting or Product business, it is about “scalability” really! I have bee conteplating on similar lines and this has given me some good food for thought! Thanks! 🙂