Tabflow
Tabflow.PRICE AN ENGAGEMENT · CONSULTING
Consulting
pricing models
Define the commitment
before choosing a price.
Start with six inputs
Deliverables
Outputs, formats and review rounds.
Effort
Preparation, meetings, research, delivery, revisions and administration.
Dependencies
Who supplies data, who approves and when.
Boundaries
Exclusions, extra stakeholders, implementation and follow-up.
Capacity
Delivery hours and the calendar time you can reserve.
Commercial assumptions
Currency, payments, expenses, tax questions and changed work.
Uncertainty is not unlimited scope. A contingency covers estimation uncertainty within agreed work. If unknowns could change the job substantially, consider bounded paid discovery first.
Compare what the client buys
HOURLY
Approved time
Actual approved billable time at an agreed rate.
Uncertain work volume that can be approved in stages.
Billable activities, records, estimate, spending cap and approval before exceeding it.
PROJECT FEE
Defined deliverables
Defined deliverables for an agreed fee.
A bounded result with clear dependencies and review limits.
Deliverables, acceptance, revisions, milestones, exclusions and changes.
RETAINER
A recurring commitment
Defined capacity, services or a stated amount of prepaid time.
A recurring need with an explicit service rhythm.
Work, availability, period, capacity, unused allocation, excess work and ending terms.
Name the retainer arrangement. Reserved availability, prepaid time and recurring services are different commitments. Review the contract’s treatment of fees and unused amounts for your context.
Use one shared scope
Fictional USD examples — not market rates
Cedar Process Studio / Alder Supply · November 2026
Four interviews. One process map. A five-page memo. One presentation. One consolidated revision round.
Excluded: implementation, extra interviews and ongoing management. Alder supplies records and one decision maker; access dates must be agreed.
40 estimated hours · $150/hour chosen for this illustration
HOURLY ESTIMATE
$6,000
40 h × $150
The bill follows actual approved billable hours.
An estimate is not an approved spending cap.
FIXED PROJECT FEE
$6,900
$6,000 + $900
15% contingency for effort uncertainty within scope.
Same deliverables and one revision round. Ordinary internal effort variance does not automatically reprice the fee.
RETAINED SCOPE
$6,000for November
40 reserved hours
× $150 planning rate
Weekly planning and an agreed two-business-day initial response target.
Prioritize baseline work within the 40 hours.
The retained scope is not an equivalent fixed-deliverables promise if work exceeds capacity. In this example: no rollover into December, a written quote and approval for extra work, and no automatic renewal. These are choices to negotiate and review.
Expenses and applicable taxes are excluded and need separate resolution. The 15% contingency is an illustrative assumption, not a benchmark.
What if effort reaches 48 hours?
Same fictional engagement. Eight more hours. Different decisions.
HOURLY
$7,200
48 h × $150
Only if all 48 billable hours were approved.
PROJECT FEE
$143.75per hour before costs
$6,900 ÷ 48 h
At 40 h: $172.50/hour.
The fixed fee stays $6,900.
RETAINER
Reprioritize,
defer or agree
extra work.
The 40-hour commitment does not automatically include the extra eight hours.
Fee divided by actual hours is a diagnostic ratio before costs, not profit or necessarily the contractual hourly rate. A new estimate is a separate decision; do not silently reapply the contingency.
SEPARATE INTERNAL EXAMPLE
Check annual capacity and costs
Fictional USD assumptions. This planning check is independent of Cedar’s chosen $150 engagement rate.
$72,000
Intended compensation
+ $18,000
Operating costs
+ $10,000
Chosen reserve
= $100,000 annual revenue requirement
46 × 32 = 1,472 h
Working weeks × hours per week
1,000 h billable client work
472 h nonbillable work
Selling, administration, learning and other nonbillable work.
$100/hour
$100,000 ÷ 1,000 billable hours
At 800 billable hours:
$125/hour
$100,000 ÷ 800 billable hours
A planning input, not a market recommendation. Avoid counting a cost twice. This check does not calculate taxes, benefits, cash collections or profit. Replace assumptions with your records and obtain accounting advice where needed. Available hours do not prove client demand.
Complete the pricing worksheet
for one engagement.
- Define scope
- Estimate tasks
- Compare models
- Test higher effort
- Choose a commitment
- Discuss with the client
Confirm scope, commercial terms and open questions before quoting. Review when deliverables change, dependencies slip or effort exceeds assumptions.
Keep compensation targets, reserves and internal estimation notes private unless you choose to share them.