Like many others have said in this thread, it's hard to make any meaningful dent in your profit from being a middle-man between your clients and who's hosting their sites.
I'm a fan of bundling — which sounds a bit like what luckyisgood was getting at.
Every consultant wants diversified and/or recurring revenue. This is why just about all of us inevitably create (or try to create) products of our own. Eventually, many consultants get wind of the idea of retainers, which can have the predictability of SaaS but without needing to build and market software first.
The issue arises with how most consultants put together retainers. It's usually something like "I'll sell you in advance 20 hours a month of my time for $2000."
Here's the problem:
Any first grader can figure out that you're effective hourly rate is $100, which is probably less than your real rate — but hey, it's a retainer and it'll relieve your need to always be selling, so that's OK for most.
Since you'll be making $100 an hour on this retainer, your income potential becomes constrained (you're now on the hook for 20 hours a month @ $100/hr) and the client knows what your hourly rate is. "Brennan, I need more this month. I'll pay you $2500 for 25 hours" or "Can I just pay you $100 an hour when I need you?"
And this is where the retainers of a lot of the consultants I've talked with go south, and the relationships sour.
A better approach (which is something patio11 and I talked about during an event we hosted last year) is to instead sell bundles — which could include your time, and hosting — and make these bundles really tricky to divide.
I could sell a client on:
- Hosting
- Backup management
- Framework / security updates
- A/B test experiments and management
- Up to 20 hours of upgrades and modifications
Now it's not so easy to divide the invoices I'm sending my clients monthly by X.
And I could charge... $5000 a month for that. Or whatever would make it so that my client gets both the peace of mind they're looking for (smart guy managing hosting, backups, security issues, etc), a product that's becoming more valuable (running a/b tests, analyzing their funnels, etc), AND a pool of time for me to do whatever random updates they need.
I've done, and know quite a few people, who are currently selling framework updates (https://railslts.com), a/b testing as a service (https://draft.nu/revise/), and not to mention selling blocks of time upfront — e.g. the retainer model a lot of agencies employ.
(Re)selling hosting, webapps, etc. situates you as a middleman; The margins are much better if you not not only sell them on an Optimizely account, but run it for them also.
Optimizely takes minutes to sign up for - and they're always looking to make that easier, and to make more people aware of the value they provide. In contrast, the expertise to conduct tests that alter revenue outlook takes somewhat longer to develop.
Sure, people could go out and spend the time to learn just about anything. In practice, they won't, because that's competing with all the other anythings they could be doing.
Sell the thing that actually has significant barrier to entry.
You take care of the easy thing too, because making the client spend meaningful attention on something that would take you five minutes is just silly, and you're there so they don't have to worry about that stuff. But sell the hard thing.
I'm a fan of bundling — which sounds a bit like what luckyisgood was getting at.
Every consultant wants diversified and/or recurring revenue. This is why just about all of us inevitably create (or try to create) products of our own. Eventually, many consultants get wind of the idea of retainers, which can have the predictability of SaaS but without needing to build and market software first.
The issue arises with how most consultants put together retainers. It's usually something like "I'll sell you in advance 20 hours a month of my time for $2000."
Here's the problem:
Any first grader can figure out that you're effective hourly rate is $100, which is probably less than your real rate — but hey, it's a retainer and it'll relieve your need to always be selling, so that's OK for most.
Since you'll be making $100 an hour on this retainer, your income potential becomes constrained (you're now on the hook for 20 hours a month @ $100/hr) and the client knows what your hourly rate is. "Brennan, I need more this month. I'll pay you $2500 for 25 hours" or "Can I just pay you $100 an hour when I need you?"
And this is where the retainers of a lot of the consultants I've talked with go south, and the relationships sour.
A better approach (which is something patio11 and I talked about during an event we hosted last year) is to instead sell bundles — which could include your time, and hosting — and make these bundles really tricky to divide.
I could sell a client on:
- Hosting
- Backup management
- Framework / security updates
- A/B test experiments and management
- Up to 20 hours of upgrades and modifications
Now it's not so easy to divide the invoices I'm sending my clients monthly by X.
And I could charge... $5000 a month for that. Or whatever would make it so that my client gets both the peace of mind they're looking for (smart guy managing hosting, backups, security issues, etc), a product that's becoming more valuable (running a/b tests, analyzing their funnels, etc), AND a pool of time for me to do whatever random updates they need.