I'll never forget Sean.
When he joined our program years ago, he was killing himself trying to sell $15,000 full-service projects. His big goal was to sell THREE TIMES as many of them.
Sounds like a great way to grow a business, right?
Well, one of the first things I have everyone do is run the numbers on their offers to figure out how profitable they actually are.
So Sean put his $15,000 package, the one he was desperately trying to sell more of, next to his $8,000 package, the one he was actively trying NOT to sell.
And guess what?
The $8,000 package was TWICE as profitable.
As soon as he saw the numbers, he said, "Oh my goodness, but that's also way easier to sell!"
And he stopped selling the $15,000 package altogether.
Because why would he keep chasing the bigger project when the smaller one was easier to sell AND made him more money for the time he put into it?
This is something I see ALL THE TIME with consultants and other expert service providers.
We assume that the higher the price, the more profitable the project.
But that's not necessarily true.
Your most expensive offer might actually be your LEAST profitable one.
And until you run the numbers, you might have absolutely no idea.
Why we automatically assume bigger projects are better
If I asked you whether you'd rather sell a $15,000 project or an $8,000 project, which one would you choose?
Most people immediately say $15,000.
Because $15,000 is more than $8,000. Duh! 😂
But my first question is always:
"Which one's more profitable?"
Because I will take a highly profitable $8,000 project over an exhausting, barely profitable $15,000 project ANY DAY.
And I cannot tell you how many times I've watched people discover that the big, impressive projects they've been working so hard to sell are actually the ones making their businesses LESS profitable.
Why your highest-priced consulting offer might be your least profitable
There are two big reasons this happens.
The first is that when we charge a premium price, we often feel like we need to justify it by giving the client MORE.
More deliverables. More meetings. More revisions. More of our time.
And if the price makes us a little uncomfortable, especially if it's more than we'd personally spend on that kind of service, we start throwing in the kitchen sink to make sure the client feels like they're getting their money's worth.
I get it! I've done this too.
But overdelivering because you're insecure about your price is basically lighting a match to your profit.
The second reason is that most of us aren't paying nearly enough attention to our biggest cost: our TIME.
If you sell shoes, you know how much each pair costs to make, what you sell it for, and how much money you keep.
But when you sell your expertise, it's easy to lose track of what each project is actually costing you.
An extra meeting here. A couple of additional revisions there. A client who takes forever to make decisions, stretching a six-week project into six months.
Each little thing feels manageable on its own.
But they ADD UP.
And before you know it, that $30,000 project you were SO excited to land has consumed an enormous amount of your time, leaving you with very little profit to show for it.
Here's the really frustrating part: even raising your prices doesn't necessarily fix this.
Because if you charge more and then feel compelled to deliver even MORE to justify the higher price, you can actually make the project less profitable than it was before!
The $30,000 project that lost money
I saw this play out during a three-day Bootcamp I taught.
One of the first things we did was have everyone enter the amount of time they spent delivering a typical project and compare that with what their business actually needed to generate to support their financial goals.
And OMG, the chat lit up.
One person wrote something like:
"Oh my goodness, I feel like they own me."
Another said something like:
"I lost so much money on a $30,000 project this summer."
A $30,000 project!
That's exactly the kind of big, shiny number that makes you feel like your business is doing GREAT.
Until you look at how much time and money it actually cost you to deliver.
Now, I know this can be painful to discover.
But I always remind people that these are just numbers. They're not a judgment about how good you are at business.
They're INFORMATION.
And once you see what's happening, you can actually do something about it.
Sometimes the changes are much simpler than you think, and they can make your life SO much easier.
How to calculate which consulting offers are actually profitable
You don't need a complicated spreadsheet to get started.
Take your most expensive offer and your least expensive offer and look at three things:
What do you charge? The actual revenue you bring in from each project.
What does it cost you to deliver? Include contractors, software, materials, or other expenses directly associated with the project.
How much of YOUR time does it take? Not just the hours spent doing the work, but also meetings, revisions, project management, and all the other little things that add up.
Subtract the direct project expenses from the revenue, then divide what's left by the number of hours you personally spend delivering it.
That gives you a useful measure of how much money each project generates for every hour of your time.
Now, I don't believe in charging clients by the hour. In fact, I teach the exact opposite! (Here's why in Hourly vs. Project Pricing.)
But you absolutely need to know how much of your time each project consumes.
Because your time is limited, and the whole goal is to generate MORE profit in LESS time.
One important distinction: this calculation isn't your final business profit. You still have overhead, taxes, and other expenses to account for. But it's a great way to see which offers make the best use of your most limited resource.
Is your offer profitable enough to support the life you want?
Here's where I take this exercise a step further.
In my No BS Business Model, which I lay out in my book Scale Solo, I teach something called the 50/25/25 Rule.
The idea is that you should be able to generate ALL the revenue your business needs in 50% or fewer of your working hours.
The other 50% is split between working ON your business, keeping your marketing and sales going, and having the freedom and flexibility to take time off or pursue other things.
Because what good is a highly profitable business if you have to spend every waking hour delivering client work to make that money?
So I have people calculate what I call their Freedom Number: how much their business actually needs to generate to cover their expenses, taxes, and the lifestyle they want.
Then we work backward to figure out what their offers need to cost, and how efficiently they need to deliver them, to hit that number without spending more than half their working hours serving clients.
That's a much more useful way to evaluate an offer than simply asking whether it brings in a big number.
You can learn more about that in my Freedom Number framework.
What to do when your biggest offer isn't profitable enough
Let's say you run the numbers and discover that your $30,000 project would actually need to cost $45,000 to support the business and lifestyle you want.
Well, now you have some decisions to make!
You could raise the price to $45,000, assuming you can communicate and deliver enough value to justify it.
You could redesign the project so it takes significantly less time to deliver.
Or you could decide that this big, complicated project isn't something you even WANT to sell anymore.
And that's okay!
Now go back and look at the smaller offers you've been overlooking because they don't come with such impressive price tags.
Maybe you have a $10,000 package that's incredibly easy to sell, delivers a fantastic result, and only takes a fraction of the time.
If you can deliver three of those in less time than it takes to complete one bloated $30,000 project, you could generate the SAME revenue while spending significantly less time working.
And if your delivery costs are lower, you might keep a whole lot more of that money too.
That's exactly what Sean discovered.
His $8,000 package wasn't a consolation prize for people who couldn't afford his $15,000 offer.
It was actually the BETTER business model.
Stop chasing bigger projects just because they're bigger
I think a lot of consultants get caught up in the idea that growing their business means selling bigger and bigger projects.
And sure, sometimes it does!
But the goal isn't to sell the most expensive thing you possibly can.
It's to build a business that generates the money you want, in a way that gives you the freedom to actually enjoy your life.
Sometimes that means raising your prices.
Sometimes it means making your delivery more efficient.
And sometimes it means realizing that the smaller, simpler offer you've been overlooking is actually the most valuable thing in your business.
So consider this your permission to stop selling that big, bloated, exhausting offer if the numbers don't make sense.
You don't need to sell bigger projects to build a more profitable business.
You need to sell the RIGHT projects.
If you want to figure out which of your offers actually support the business and life you want, grab my Price to Freedom Calculator.
It will help you calculate your Freedom Number and see what your offers need to generate to make that number possible.
Want to learn the whole No BS Business Model?
The 50/25/25 Rule and Freedom Number are just two pieces of the No BS Business Model I teach to consultants and expert service providers who want to make more money, work less, and build highly profitable businesses without needing big teams.
If you'd like to see how the whole model works, I've put together a free masterclass that walks you through it.
