How I went from $100-an-hour programming to $X0,000-a-week consulting

This is all well and good, but the biggest reservation I have about all of these consulting blog posts is who should do this and who shouldn't? I feel like consulting is easier to consider when you're a seasoned programmer (10+ years) because you have the accumulated knowledge to really provide value to a company when you're not an employee. I'm almost 27, is my lack of years of experience going to prohibit me from attaining consulting gigs? If I can optimize your front-end code, get you higher performance and SEO rankings, are you going to hesitate / ignore me because of my lack of years in the field?

As someone who has both been and hired a lot of freelancers/contractors, I would say that there is a genuine difference in game level between freelancers and consultants. It's a matter of professionalism and willingness (and ability) to steer the project/engagement. Consultants are experts who come in and figure out how to achieve a goal, who investigate the clients' needs, who tell the client "these are the steps we will need to take to figure this out, and then to make it happen." At an advanced level, they will even help figure out the right goal to begin with.

Freelancers typically have to be told these steps by the client (and managed).

If you can come in and steer a project, and let the person hiring you relax his/her no doubt overworked brain for just a few hours, you can charge practically whatever you want. That's how we were doing $500+/hr (each) before we quit consulting, because I led the processes for our clients. They didn't mind paying $2k simply for meeting with us both for 2 hours because they got to be the subject of conversation, instead of the leader, and they'd get a valuable report out of it at the end (for an additional price, of course).

Never once had to worry about price shopping, because if that's the service you want, there is zero competition!

Foolishly, I thought this was just Normal Professional Behavior until I started hiring people for my business.

Sadly, it seems most people out there prefer the unprofessional and haphazard approach where they take on too much work/too many clients, wait for the client to tell them what to do, then jump between clients like a scalded cat to whichever project causes the most screaming at the moment.

Here are my lessons after 6 years running a consulting firm in a pretty specialized business (high end ARM/embedded stuff), from the top of my head:

1. Avoid billing by hours, exactly for the reasons listed here. You can only lose like this; it carries more administration overhead, more friction with the customer and at the end there's a max budget allocated on the customer's end anyway - it's not like you can bill indefinitely if things don't go as planned.

2. Always charge fixed price for projects. Remember the budget allocation from #1? Use it. Bill twice as much in the beginning but avoid charging the customer even a penny more for delivering the work you're committed to, even if that means 'losing' money (you don't really lose when consulting, only earn less).

3. Work alone. Hiring people may seems like a good idea but then you've got a financial burden in the slower periods (and these always come when you least expect them). You can make good money alone, and you can make good (and great) money when you have 8+ people working for you but between 2 and 8 employees, you're busy full time getting enough work for the team and your margin on these employees simply isn't big enough (just think of the office costs). Besides, I don't like the whole pimping thing where you sell someone else's skills; YMMV.

4. You are a business problems solver. Don't tell a customer "no", just jack up the price if needed. If you intend to have a large project with them, don't charge them for general consultancy around the project. Happily give them your time for free; make your money on the project itself, not the meetings around it.

Edited to add something quite important, IMO: Whenever first meeting a customer, I try to get a high level picture of the business they are in, the product they are looking to develop, who will use it and so on - even if they are just looking for me to develop a specific component. It's very easy to fall into "XY Problems", and understanding the project environment would make it easier to assess the work and rates.

5. Remember there are people in a corporate environment on the other side. Make them look good in their company; give them whatever help needed and be their go-to guy. It's really important for the long term (and as fellow human beings). Don't ask for money for small modifications or changes, think of the administrative process they need for each line item - it makes them look incompetent or just annoys them with bureaucracy. You'll more than make up for that in the following work.

6. Long term, your entrepreneur skills are better spent at build your own business. Consulting is good for the free spirited folks that don't want a corporate environment, or for making a quick buck on some lucrative projects, but it's hardly a way to get rich and it's quite wearing in the long run.

Nevertheless, I think that professionally, consulting has been the greatest thing I could have done. The variety of projects, technologies and corporate environment (30+ customers here, most repeating) is great for your own development.

Hi flyinglizard, I'd love to pick your brain about consulting on ARM/embedded stuff as it's a field I'm interested in. Do you have an email address that I can send a few specific questions to (that I promise won't take more than a few minutes to answer)? Thanks in advance.

I bet Team Romney / Orca would have paid handsomely for this at zero-hour, despite all the cost-cutting they did up front.