July 14, 2025

How do new consultants end up stuck in The Hourly Trap?

When someone leaves their job to go out on their own as a consultant, they often bring an employee mindset with them.

What’s that look like?

Prospective client: “Hey, we need X. Do you do X?”

Newbie consultant: “Yes, I do X!”

Client: “What’s your hourly rate?”

Consultant: “It’s $Y per hour!”

From there on out, the client just tells the consultant what to do, the consultant does it, and gets paid for how long it takes.

I admit that this is a relatively easy way to start getting some cash flow when you first start out, but there’s a problem.

Eventually, you get stuck in The Hourly Trap.

What is The Hourly Trap?

With an hourly model, the faster you get at delivering good results, the less money you make.

Put another way, hourly billing punishes expertise.

The reason I call it a trap is because most people end up stuck at a maximum income after a few years.

If you have a steady stream of clients and are billing ~30 hours of work per week, every week, you will generate around $200,000 in revenue.

After taxes, insurance, and other expenses, you’ll be lucky to net $125k.

That’s not a terrible income, but you’re stuck there.

The solution?

Stop trading time for money.

As you get better at confidently delivering good results faster, start setting your fees based on the value delivered to the client instead of the time it took you to deliver it.

Once your income is disconnected from your time, it’s not unusual to generate effective hourly rates that are 2x-5x more than your old hourly rate.

Yours,

—J