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One should remark that the price of your services does not depend solely on how much value you're providing. That value is just the upper bound of what you can

One should remark that the price of your services does not depend solely on how much value you're providing. That value is just the upper bound of what you can charge. The other factor is what somebody else would charge to do the same service (it doesn't even to be a service of the same value, just a service perceived to have the same value --and people are notoriously bad at estimating that value in software). That's why in practice consultants find it impossible to increase their rates above market average unless they have a very strong brand. I would certainly be curious to know how much patio11 is really making from his consulting business. It sounds like he would be making at least $300,000 (a lowball estimate of $x0,000 would be $15,000, and a lowball estimate of how many weeks he works in a year would be 20). And possible up to $1.2M (40 weeks at $30k).

reubenswartz 11y ago
Great point about value. The true ceiling to your price is the perceived differential value of your offering. So, if your client perceives that you will create $1M in value, you may be able to charge $300K for that. However, if the client perceives that someone else can deliver the same $1M for $100K, you can only charge $100K. However, too many people get caught up in the $100K vs $300K, or, even worse, the $100/hr vs $300/hr, rather than the "here's why you get $1M in value instead of $200K in value."
tomjen3 11y ago
You are right, assuming the market is liquid. The market in these types of consultants isn't liquid, it is very possible that, if they don't hire patio11, they will have to search extensively for somebody else, whom they perceive as qualified to do the job. Given that they still make a lot of money of of the deal, that isn't going to be too smart. Note that if I am right, this suggest an arbitrage opportunity, uber for small business consultants. It's most important issue is vetting the people who are doing the job and making sure clients know that they can count on them.
- reagency 11y ago
  Your uber idea is exactly how the decades -old traditional consulting shop works (Accenture/Anderson, McKinsey, etc). The "partners" are well-reputed deal-makig salespeople, and they farm out work to associates .
cocoflunchy 11y ago
He went up to $50k/week at the end: http://www.kalzumeus.com/2015/05/01/talking-about-money/ http://www.kalzumeus.com/2015/05/01/talking-about-money/
- fchollet 11y ago
  That seems surprising, given that he recently stated having spent a month full time (worth $200k to him) on the sale of BCC... which makes $19k/year and sold for $57k. Doesn't sound like an economically rational move.

reubenswartz 11y ago

Great point about value. The true ceiling to your price is the perceived differential value of your offering. So, if your client perceives that you will create $1M in value, you may be able to charge $300K for that. However, if the client perceives that someone else can deliver the same $1M for $100K, you can only charge $100K. However, too many people get caught up in the $100K vs $300K, or, even worse, the $100/hr vs $300/hr, rather than the "here's why you get $1M in value instead of $200K in value."

tomjen3 11y ago

You are right, assuming the market is liquid. The market in these types of consultants isn't liquid, it is very possible that, if they don't hire patio11, they will have to search extensively for somebody else, whom they perceive as qualified to do the job. Given that they still make a lot of money of of the deal, that isn't going to be too smart. Note that if I am right, this suggest an arbitrage opportunity, uber for small business consultants. It's most important issue is vetting the people who are doing the job and making sure clients know that they can count on them.

reagency 11y ago
Your uber idea is exactly how the decades -old traditional consulting shop works (Accenture/Anderson, McKinsey, etc). The "partners" are well-reputed deal-makig salespeople, and they farm out work to associates .

cocoflunchy 11y ago

He went up to $50k/week at the end: http://www.kalzumeus.com/2015/05/01/talking-about-money/ http://www.kalzumeus.com/2015/05/01/talking-about-money/

fchollet 11y ago
That seems surprising, given that he recently stated having spent a month full time (worth $200k to him) on the sale of BCC... which makes $19k/year and sold for $57k. Doesn't sound like an economically rational move.