Three Types of Work: Time, Project & Product Based

0:00I want to walk through three types of projects that make up a majority of how consultants work. One is time-based, two is project-based, and three is product-based. The mix of these will vary throughout your consulting journey and you may find you like different mixes from what I've seen most people start out doing time-based consulting. You get paid an hourly rate or some of money for a fixed amount of time per week or per month and then move more towards higher value project-based work or product-based work which can be something like digital products or pairing digital products or services with coaching and advisory work. The first kind is time-based, right? This is where you're getting paid for hours, days, weeks, or months. This is a copywriter, right? And they do a certain type of work for $75 an hour. This is often where people start with freelancing and this can be great, especially if it's something you're uniquely good at or able to position yourself or you're able to get a good wage. The downsides of this are when people become commoditized and it becomes hyper-competitive and becomes a race at the bottom. You never want to be competing in that space.

1:17So this is great to use when you can position yourself as high value. One thing I still do that's hourly is presentation coaching with executives. I clearly say here's the rate I charge which is often above $200 an hour. I do it with this kind of client and I do it per hour and I have it transparently put up on my site. I don't get a ton of action with this kind of work but that's part of the point of charging higher rates as you do less of it but you get paid a little more so it offsets. It's also something which can be really good to create a floor or a consistent piece of work that you do and it gives you a foundation or financial stability to gain confidence to do other types of projects. So somebody might sign a consulting project where they do 10 hours a week part time for a company and it's at a set rate and that's something that's over a six month period.

2:16A lot of people really like this because it gives some predictability and stability to some of the downsides of consulting which can be financial insecurity and not knowing how much you're going to make every month. The downsides of this are that sometimes you can either trick yourself into thinking you can't raise your rates or a lot of times clients just aren't comfortable when you have that conversation of saying hey I'm raising rates. Another challenge with this is that people end up creating another full-time job for themselves so instead of just working one job they're working three jobs and it takes up 40 hours a week all of a sudden they're doing this for six to nine months and they realize wait why was I freelancing in the first place. The second type of work that is often a signal that you're progressing to higher value work and it's hard to get there right it takes this leap of confidence saying I'm going to charge a much higher rate than if I simply converted the amount of hours to an hourly rate and often what you're doing the first time you do this is raising your ambitions for what you're able to do right so you may think oh this is too much to be charging for my work but when you raise the rates you also find that you often deliver a higher

3:34value of work you end up putting more time in you might hire freelance consultants to help you project-based work is often around a defined problem but an unclear end you don't know what it looks like you don't know what success looks like but you follow a process to get there and what you're selling is an agreement on a process a methodology or an approach that you and the client are aligned on so when to use this this is often perfect for ambiguous projects this is when you have those scoping conversations and the client says we need x and you realize they don't need that at all and you say hey let's take a step back maybe we do this up front phase a diagnostic phase where we start to figure out what you actually need to solve and this is the process we're going to follow and here's the dollar amount I'm going to charge for this another way to think about project-based consulting projects is that you're charging for a project right so you might say I'm charging x for this project and you're giving yourself some wiggle room it's more than you might charge if it was an hourly project but then if you're needing to solve something that is outside your expertise or domain you can then bring in other freelancers to help you part of the benefit of being a freelancer

4:53is that you're a contractor and they can't really control how you execute on the work so if you want to hire other people to do data analysis for you some design work something outside your domain of expertise to help your work look better that's something you can do and it also can help you deliver on some of the higher ambitions you set with a higher price project that you might feel little unsettled about the downsides of this are that if you're not used to this kind of ambiguous project I think I was an added advantage because this is the majority of what you do at a bit consulting firm but if you're not used to it it can be very unsettling to go through the ups and downs go through phases of not really knowing where you're headed what's happening next if the problem is shifting if they're happy with end products and different things like that but this is what this course is about giving you some of that nuance to help you navigate this whole process the other challenge with these type of projects is selling something as a project is that scope creep can happen instead of saying I'm going to do this many hours of work and you're going to pay me this rate for this work it's much more ambiguous right so they're hiring you for a set price

6:11usually and you're delivering on a number of agreements or process or working towards a number of deliverables but to the client they may just see you as part of the team they might start throwing stuff at you and since you're not getting paid hourly you may end up in a worse spot where if you calculated your hourly rate it's way worse than you imagine most consultants make this mistake early on in their journey where they underpriced this type of project and it's a learning journey key is you want to be charging a much higher rate for a project based engagement then you would for hourly work so I often say double it even you'll find that by raising the ambitions you'll probably work more than you expect but then it gives you some wiggle room so you always want to make sure if you're estimating how many hours it might take add a big buffer such that it gives you room to make a little more profit and hire people and work a little more if you need to to over deliver so an example of product base is digital products so I do this with my course now I teach a course

7:26around strategy consulting skills there's a self-paced version but there's also a version where I do add it on coaching the people that end up purchasing this are often mid-level to senior executives in big companies and this works well because they're looking to basically learn on their own but add on consulting and it works for me because it's not a huge time commitment for me but they're able to get access to me to help them and it builds on a lot of what I've already thrown into the product so I've spent hundreds of hours building the product so they're purchasing that and then they're layering on a little consulting on top of that a good way to learn about these types of engagements is to look at what big consulting firms do this is what they do they often productize their services they build them around processes or frameworks and you can look at the different frameworks that are in your domain and look at how they're communicating it to clients so here's an example of BCG they have a post merger integration process essentially what they're showing here is they have 12 types of work that they could do for you right they're creating this

8:42framework they're breaking it down into three phases but what they're really doing is giving you a menu for how to think about engaging with them and this can be a way of progressing from hourly or project-based work to product-based work you do something once and then you take the end products from what you did you create a process and then you start creating a package that people can buy and understand and you have a good understanding of how this process goes here's another example from something I actually worked on while I was at BCG transformation project so these are often multi-year-long projects with large companies and driving a change this is a part we created just for new CEOs how they may want to think about leading these changes it's created with the intention of giving them an imagination for how to think about this process but also how to hire BCG and internally against all these bullet points BCG has different analyses approaches and consulting solutions that they can sell and offer and deliver to clients that match these when to use this digital products it's perfect for product-based solution you want to articulate

10:00what you're offering you can often stack hourly or project-based consulting on top of a digital product which can often be an entry point of how you're engaging and thinking about a problem it's also something you can offer as a repeatable process so you might decide I really like helping companies understand their culture their values develop mission statements right so then you create a product where you say okay this is the product I offer this service this solution for $15,000 here's an example of work I've done with other clients here's the process we follow and here's how you work with me and here's what I need from you at its best these things are productized and turned into menus when you walk into a place like McDonald's you see 10 items and it gives you an idea of what to actually order there and you can pick off those 10 easy items and consulting it can help if you often have the same menu traditionally a lot of people were a little more begging consulting and consulting was always around okay how do you get them to have a conversation and then have a little very flexible pricing but as a freelancer it can be

11:16advantageous to just be transparent especially if you're sharing things on the internet people can just find you see what something costs and say oh okay I'm down to purchase that service some of the pitfalls here to watch out for are that these things often require maintenance if it's not a one-off service offering you've packaged and sell to a client and it's more of a digital product it may require maintenance and over time that may add up and may not actually scale with the product or service you're offering so just something to think about and watch out for