How I structure my contracts... all the deets on a consulting agreement

Pricing, Deliverables, and everything else around how I'm structuring my agreements

The absolute number 1 question I get all the time from people wanting to monetize their experience…

How do I structure my agreements.

I’ve learned this one the hard way but in this article I’m going to share every detail around how I structure my agreements and even share the agreement I’m using currently.

#1 - Never do hourly work

The first few customers I signed up, I was structuring my agreements on an hourly basis:

40 hours * $450 / Hour. 1/2 billed up front, 1/2 billed once 20 hours is achieved

This was terrible.

Let me explain.

The main reason I didn’t want to go back to working a W2 was because I wanted to own my calendar. I didn’t want to be at the mercy of someone else putting meetings on my calendar when I was sick of being on calls.

With that in mind, as soon as I started doing ‘hourly’ work I fell right back into the feeling of being at the mercy of someone else’s priorities.

• I hated feeling like I was ‘punching a clock’ every-time I was doing work with a customer. I was a complete pain in the ass to track what things I was doing for each customer.

• I had to create this elaborate spreadsheet with each customer and exactly what I was doing at any given 30 minute interval. It was miserable.

• I wanted repeatable income and working on an hourly rate was nearly impossible to do this. I had no way to knowing what I’d invoice each month. My wife was equally not on board.

• Lastly, I could often be working on things for multiple customers at once. For example: I would be creating sequence outlines that all my customers could use. I would then share it with each of them individually. How was I supposed to track these hours?

I thought customers would never agree to a flat monthly rate, but I was pleasantly surprised.

#2 Start short, but quickly extend

For the first 30 days I only focused on getting a few deals done. The first contract I did was month to month. The second was a 3 month commitment.

I quickly realized I needed 4 months to have my customers begin to see success and started anchoring here. I’ve had little to no push back on this.

As I’ve filled up my calendar (>$30k / month starting in Feb 2023) I am only anchoring on 6 month agreements. This gives me flexibility and time to prove success with my customer base.

It’s also given me confidence on what I should be focusing my time on in the coming months and allowed me the opportunity to focus on revenue generating activities outside of consulting.

Start short, get some wins, then build repeatability from there.

#3 Pricing Strategy & breakdown

Initially, I had no idea what to charge, so I just made it up.

$400,000 / year (VP of Sales Salary + Commission for Series A company) divided by 2080 (average working hours in a year) is $192.3 / hour.

I then multiplied that by 2 and get ~$384/hour. That number seemed low based on the value I could add, so I did 3x. $576/hour.

This seemed better so I assumed I’d work with each customer ~2 hours each week (I’ll break this down later) which got me to ~$5,700 a month. This felt like a great start.

I anchored at $6,000 / month with my first customer when I went back to re-negotiate my hourly rate.

We landed at $5,000 / month and re-extended our contract 3 more months. This gave me predictable income for the next 3 months at a minimum.

I’ve built out 2 main offerings to date as I’ve learned more about my ICP.

1. Full engagement: Typically ~$10,000 / month for 6 month agreements. I’m pretty hands on in co-authoring the sales playbook with them. I tend to spend 2.5 - 3 hours a week on each customer depending upon the stage and needs.

2. Advisory: Typically ~$1,000 / Hour for up to 4 hours a month. They get to choose how much time they want to commit to each month for the next 6 months. This tends to fit well with early founders that are still selling but not quite to the point of getting ready to hire sales reps. The building of the playbook is on them, I can give guidance and feedback a long the journey. But I DO provide frameworks for these things.

#4 Deliverables

This is likely the question I get asked about the most from prospects. The hardest part right now is ‘committing’ to anything as there are so many factors into taking a company from $100k - $500k ARR that are out of my control.

With that said, here’s what I found works well:

1. Sales Playbook - I can at a minimum deliver a sales playbook that your reps will be able to execute against at any time. It’s a VERY tactical detail of how a sales rep should do their job

2. Cold Outbound frameworks - These are frameworks I’ve already built and the co-authorship that needs to happen mostly comes down to filling it in and beginning testing

3. Recruiting - I have a deep network of talent always looking. This is incredibly beneficial for these early stage founders as they don’t have access to these people. I connect them to potential sales / marketing hires of people that I know

#5 Working Cadence

When I’m kicking off a customer, I have found that I need a few extra sessions to get ramped. A 1 hour kickoff call often doesn’t provide enough time to learn the details necessary to get up to speed

(Week 1) First KO call: 1 hour session with a high level overview of current state of the business and alignment on goals for the project

(Week 2) Second KO call: 1 hour session where we tend to go deeper into the current sales motion, channels that are working, sales process and systems.

(Week 3) Begin Regular Cadence

Obviously this depends a bit on my understanding of where they are at and how they will get to the goals we’ve outlined.

My commitments after I’m onboarded are 1 hour a week face to face (zoom or in person when I can). This time is used as a strategy session to review how were pacing towards goals and other important pieces in the business including pricing strategy, marketing efforts, business ops, post sales, etc.

Then my full engagements have access to my anytime via a-sync communications. I use Slack, email and text. I get added to slack channels where we can iterate on the GTM motion in real team as we’re learning. This allows me to scale my efforts across more clients at once and not have to be on calls all day.

Summary - how to tie this all together

There needs to be clear expectations established early on which is right at the top of my agreements.

Purpose and Scope: To provide strategic insights, frameworks and playbooks to achieve accelerated success of selling into net new and existing customers that fit the ICP. The goal of my work is to teach a company to fish, rather than try to catch the fish for them. I will provide ideas, frameworks, blueprints, examples. I want to build WITH you, not for you. I do not believe in one-and-done training which is why I want to be a PART of your team for 3,6,9+ months.

The goal of the engagement is to build a repeatable sales motion including an initial playbook for the early sales team to execute against.

Execution is key - nothing will work if not fully executed, and my expectations are that you will give your best effort to execute. There is no crystal ball or silver bullet, it will take learning, effort, testing, and adapting.

I’ll break this down next week in a sales process that I’m running right now that closes >30% of the calls I’m taking in 2 - 30 minute calls.

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I’d love to hear your feedback. What's missing from here? What else is helpful to learn?