How to Price Consulting Services (Without Underselling Yourself)

Here's the most common mistake I see new consultants make:

They charge $500 for work that's worth $5,000.

Not because they don't understand the value. Because they're terrified the client will say no.

So they underprice. They rationalize: "I'm just starting out." "I need to build my portfolio." "I'll raise my rates later."

Then they get trapped.

They have clients who expect cheap work. They're working 60-hour weeks for poverty wages. And they can't raise prices without losing everyone.

If you've ever felt this way, you're not alone. And more importantly, there's a better path forward.

Why Underpricing Kills Your Business (Not Just Your Income)

When you charge bottom-dollar prices, you don't just make less money. You attract the wrong clients entirely.

Here's what actually happens:

Problem 1: Wrong Clients

Clients who pay the least are almost always the hardest to work with. They complain more, pay late, and churn faster. High-paying clients respect your expertise and trust your process.

Problem 2: No Scaling Path

At $500/month, you need 20 clients to hit $10K (impossible to manage alone). At $2,000/month, you need just 5 clients. Higher prices mean fewer clients, which means less total work.

Problem 3: Zero Leverage

When you're charging $50/hour, you can't afford to hire help. You're stuck doing everything yourself. Forever.

The math looks like this:

Price	Clients for $10K	Hours/Client	Total Hours
$500	20	5	100
$1,000	10	8	80
$2,000	5	12	60

Higher prices = fewer clients = less total work = more time to grow.

Calculate Your Minimum Viable Rate (Your Floor)

Before we talk about value-based pricing, you need to know your floor—the minimum you can charge and still survive.

The Formula:

Step 1: Calculate monthly expenses

Personal: Rent, food, healthcare, transportation, debt, savings
Business: Software, marketing, contractors, legal/accounting
Total monthly expenses: $X

Step 2: Double it (your target revenue)

Why double? Because:

Taxes eat 25-30%
Unbillable time (admin, sales) is 40-50%
You need buffer for slow months

Step 3: Divide by billable hours

Realistic billable hours per month: 80-120

Target revenue ÷ Billable hours = Minimum hourly rate

Example:

Monthly expenses: $8,000
Target revenue: $16,000
Billable hours: 80
Minimum rate: $200/hour

This is your floor. You cannot charge less than this and survive.

But this is just the floor. You should charge way more than this.

Value-Based Pricing: How to Charge What You're Worth

Forget hourly rates. Forget "what you need to make."

Charge based on the value you create for the client.

The Value-Based Pricing Formula

Price = Value to Client × 10-30%

Step 1: Identify the value

In your discovery call, ask:

"How much is this problem costing you right now?"
"What would it be worth to solve this?"
"How much revenue would you gain if this was fixed?"

Step 2: Quantify the value

Example:

Problem: Contractor losing $50K/month in deals because customers can't pay upfront
Solution: Implement financing that closes 30% more deals
Value created: $15K/month in additional revenue

Step 3: Charge a percentage of the value

$15K/month × 12 months = $180K/year value created

Price: 10-20% of value = $18K-36K/year

Step 4: Present as ROI, not cost

Don't say: "This costs $2,000/month."

Say: "You'll pay $2,000/month to generate an additional $15,000/month in revenue. That's a 7.5x return."

When presented this way, clients say yes.

The Pricing Progression: What to Charge When

Here's the realistic progression for your first 24 months:

Months 1-3: $2K-$5K/month

What you're doing: Learning, delivering, getting testimonials
Pricing rationale: You're proving yourself. Charge enough to survive but not so much you scare people away.
Client expectation: High-touch, responsive, slightly over-deliver

Months 4-6: $5K-$10K/month

What you're doing: Building confidence, refining process, getting case studies
Pricing rationale: You've proven you can deliver. You have testimonials. Time to charge more.
Client expectation: Professional delivery, clear process, solid results

Months 7-12: $10K-$20K/month

What you're doing: Systematizing delivery, showing clear ROI, positioning as expert
Pricing rationale: You have case studies. You know your process works. You're no longer "just starting out."
Client expectation: Expert-level delivery, predictable results, premium service

Months 13-24: $20K-$50K+/month

What you're doing: Premium positioning, enterprise clients, building leverage
Pricing rationale: You're known in your niche. You have proof. You can charge premium rates.
Client expectation: White-glove service, strategic advisor, guaranteed results

The progression works. I started at ~$2K/month per client. After 6 months, I raised it to $3K-$5K for premium clients. Now we're testing group programs at $10K-$15K for cohorts of 5-10 clients.

When to Raise Your Prices (The 4 Triggers)

Trigger 1: You're at 90%+ capacity

If you're turning down work because you're too busy, raise your prices. Supply and demand. If demand exceeds supply, prices go up.

Trigger 2: After 5-10 successful projects

Once you have proof your method works, you can charge more. You're no longer selling promise—you're selling results.

Trigger 3: When 90%+ say yes immediately

If almost everyone accepts your first price without negotiation, you're underpriced. A healthy close rate is 70-80%. If it's higher, raise your prices by 25-50%.

Trigger 4: Every 6-12 months (calendar-based)

Review your pricing twice a year. Even if nothing else changes, your experience is worth more than it was 6 months ago.

How to Actually Raise Prices (Without Losing Clients)

1. Announce 60-90 days in advance

Give existing clients notice. Respect matters.

Script:
"Starting [date], our pricing will increase from $2,000 to $3,000/month. This reflects the expanded scope and additional value we're now delivering, including [specific new thing]. We wanted to give you advance notice so you can plan accordingly."

2. Grandfather existing clients (or delay the increase)

Example: "As a thank you for being an early customer, your rate will stay at $2K/month for the next 3 months. New customers starting today will pay $3K/month."

This makes existing clients feel valued and reduces the sting.

3. Apply new rates to new clients only

This is the cleanest approach. Existing clients keep their rate. New clients pay the new rate. Over time, your revenue increases as you add new clients at higher prices.

4. Don't apologize

Bad: "Sorry, but we have to raise our prices..."
Good: "We're updating our pricing to reflect the increased value we're delivering."

Confidence in pricing = confidence in delivery.

Handling the 5 Most Common Pricing Objections

Objection 1: "That's too expensive."

Bad response: "I can lower it to..."
Good response: "I understand. Let me break down the ROI..."

Then reframe: "You're paying $2,000/month to generate $15,000/month. That's $13,000 net positive. Does that make sense?"

If they still balk, it's not about price—it's about belief in value. You either need to build more belief or disqualify them.

Objection 2: "Can you do it for $X instead?"

Bad response: "Sure!"
Good response: "Help me understand—what's driving that number?"

Then: "For $X, I can do [reduced scope]. Does that work?"

Never lower your price without reducing scope.

Objection 3: "I need to think about it."

Bad response: "Okay, let me know!"
Good response: "Of course. What specifically do you need to think through?"

Usually, there's an underlying objection they're not saying. Uncover it, address it, and set a deadline.

Objection 4: "Your competitor charges less."

Bad response: "Oh, I can match that price."
Good response: "That's great that you're getting multiple quotes. Can I ask—what specifically made you reach out to us if they're cheaper?"

Then differentiate on value, not price.

Objection 5: "We don't have budget right now."

Bad response: "Okay, let me know when you do."
Good response: "I understand. When do you expect to have budget?"

Then: "In the meantime, is there a smaller Phase 1 we could do now to show results?"

Or offer a payment plan: "Would it help if we split this into 3 payments over 3 months?"

The Three-Tier Pricing Model (The Anchoring Effect)

Instead of offering one price, offer three tiers.

Tier 1: Essential ($5K): Core deliverable. Bare minimum.

Tier 2: Professional ($10K) [RECOMMENDED]: Everything in Essential + extended scope.

Tier 3: Premium ($20K): Everything + bonus features.

Why this works:

Anchoring effect: The high price makes the middle price seem reasonable
Most people pick the middle tier (the one you actually want to sell)
Some people pick premium (bonus!)

Example structure:

Essential ($2K)

4 weekly 1-on-1 calls
Strategy roadmap
Access to templates

Professional ($5K) [RECOMMENDED]

Everything in Essential
8 weekly 1-on-1 calls
Implementation support
Email support

Premium ($10K)

Everything in Professional
12 weekly 1-on-1 calls
We handle implementation
Direct phone support

Most people pick Tier 2. Some pick Tier 3. Almost nobody picks Tier 1.

Pricing Psychology: How to Present Your Rates

Tip 1: State the price confidently

Don't say: "It's, um, $5,000... but we can negotiate..."
Say: "The investment is $5,000."

Tip 2: Pause after stating the price

State the price, then shut up. Let them process. The first person to speak loses.

Tip 3: Use "investment" not "cost"

"Cost" = expense. "Investment" = something that pays returns.

Tip 4: Always present ROI

"The investment is $5,000. Based on our conversation, this should generate $20,000 in additional revenue over the next 6 months. That's a 4x return."

Common Pricing Mistakes to Avoid

Competing on price - Race to the bottom kills margins
Charging what you need vs what you're worth - Your bills don't determine value
Discounting too easily - Trains clients to expect discounts
Not raising prices as you improve - Your year-2 work is worth more than year-1
Overdelivering without charging more - Giving away value for free

The Truth About High-Paying Clients

Clients who pay more are:

Easier to work with
More respectful of your expertise
More likely to implement your advice
More likely to refer other great clients
Less likely to churn

Underpricing attracts wrong clients and traps you in a poverty cycle.

Premium pricing attracts right clients and creates a growth cycle.

Your Next Step: Get the 3-Tier Pricing Template

Ready to implement value-based pricing in your consulting business?

I've created a free 3-tier pricing template that you can customize for your services. It includes:

✅ The exact tier structure that converts
✅ Scripts for presenting pricing with confidence
✅ Objection-handling framework
✅ ROI calculator to justify your rates
✅ Email templates for price increases

Stop underselling yourself. Start charging what you're worth.

Want to learn the complete consulting-first business model? This article is adapted from "The Anti-Unicorn: The Consulting Model," a comprehensive guide to building a profitable services business before building product.

Meet the Author: George Pu

George Pu George Pu is a technical founder building AI-powered companies across three countries. At 27, he's bootstrapped multiple profitable businesses without VC funding, including SimpleDirect (embedded financing) and ANC (global venture studio).

My Free Book: The Anti-Unicorn