<story><title>So you have decided to start a free software consultancy</title><url>https://ariadne.space/2022/08/11/so-youve-decided-to-start-a-free-software-consultancy.../</url></story><parent_chain><item><author>nibbleshifter</author><text>&amp;gt; For serious engagements, pricing should be defined as a function of the value gained for the client from the engagement. For example, if the client saves $250k as a result of the engagement, then you should charge a percentage of that savings.&lt;p&gt;Optimyze (later acquired by Elastic) initially tried this pricing model and found that enterprise orgs simply wouldn&amp;#x27;t go for it, despite the cost being effectively &amp;quot;free&amp;quot;.</text></item></parent_chain><comment><author>claudiulodro</author><text>Big companies hate rev share, which is essentially what value based pricing model is. Rev share pricing is great for getting small, money-conscious people in the door, but there is a threshold as you get larger where it becomes more cost-effective for the client to go with standard billing.&lt;p&gt;Substack&amp;#x27;s been running into this problem, where it&amp;#x27;s easy to get people to try it out, but as a content creator gets popular the rev share amount becomes greater than the cost to hire an agency and &amp;quot;self-host&amp;quot;. Someone making $1mm&amp;#x2F;yr is going to chafe at a $200k rev share when an agency at $50k&amp;#x2F;yr retainer can do a similar job.&lt;p&gt;Unrelated to that but related to the main topic: it&amp;#x27;s interesting that people treat FOSS consulting as a weird beast and ignore the thousands of successful WordPress&amp;#x2F;Drupal&amp;#x2F;etc. consultants and agencies. There&amp;#x27;s a lot to be learned from analyzing their strategies!</text></comment>
<story><title>So you have decided to start a free software consultancy</title><url>https://ariadne.space/2022/08/11/so-youve-decided-to-start-a-free-software-consultancy.../</url></story><parent_chain><item><author>nibbleshifter</author><text>&amp;gt; For serious engagements, pricing should be defined as a function of the value gained for the client from the engagement. For example, if the client saves $250k as a result of the engagement, then you should charge a percentage of that savings.&lt;p&gt;Optimyze (later acquired by Elastic) initially tried this pricing model and found that enterprise orgs simply wouldn&amp;#x27;t go for it, despite the cost being effectively &amp;quot;free&amp;quot;.</text></item></parent_chain><comment><author>karaterobot</author><text>Can&amp;#x27;t really blame them. They just want to know how much it&amp;#x27;s going to cost them. Somebody is trying to allocate a budget for this project, and they ask &amp;quot;what&amp;#x27;s it going to cost?&amp;quot; and the answer can&amp;#x27;t be &amp;quot;the result of a function whose inputs are undefined at this time&amp;quot;.</text></comment>