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

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!