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5 Types of Consulting Business Models

Consulting business model

In most cases, people go into business to make money from an opportunity they’ve identified. Making a profit however requires a plan and having a business model is just that, how you plan to increase its yield year on year. Many times, businesses will look to a consultant to help them reach their goals.

In this article, we’ll be looking at different consulting business models. We’ll examine individuals or teams who are specialists in a particular field service offer their services independently.

What is the Consulting Business Model?

Consulting is a business model where an individual or a company provides expert advice or services to another organization in a specific area. This expertise may be in a variety of fields such as management, technology, marketing, finance, law, human resources, etc. The fundamental aim is to help the client improve their performance, solve complex problems, or create value.

In the consulting business model, consultants generate revenue by charging clients for their time, expertise, and the outcomes they deliver. This can be on a per-hour, per-day, per-project basis, or based on specific deliverables.

The first things consultants do is carry out an analysis. This is done to understand the client’s situation, problem or objective. This phase, often called the discovery phase. It involves data collection, interviews, and research. Next, they develop a solution or strategy. This could involve creating models, forecasts, or strategic plans. The information is then presented to the client often in a report or presentation.

In many cases, consultants are also involved in the implementation of the recommended strategies. This is to ensure the recommendations are applied the right way. Sometimes, consultants may also provide training to the client’s team to ensure sustainable improvement.

The success of using this model, however, doesn’t only depend on the experience you acquired from previous work. It also relies on the industry connections you’ve made over the years and your ability to market your consulting business.

Although this model offers the flexibility to achieve work-life balance, all income depends on you. It also requires that you market yourself and your offering over and above doing the actual work you’re engaged to do.

What to Consider When Starting a Consulting Company?

There are several models within the consulting model to choose from. All depending on the size of the operation you want to build. Here are some of the things that you’ll have to turn over in your mind before deciding which is the most suitable to achieve your business goals:

  • Do you want to spend your time creating products and services or working with clients?
  • Is your goal purely to make a profit to make big payouts? Or, do you intend to reinvest surplus income back into the business to upscale it?
  • How many employees do you need to deliver the products and services you envision?
  • Are you willing to travel or would you prefer a virtual consulting model?

There are several other questions you should ask yourself before choosing this or any business model. Take the time to really find these answers before you launch.

Types of Consultant Business Models

These models are so named because you conduct the work yourself, that is, without the help of freelancers. This makes this model difficult to sell in the future because it’s not built on saleable assets such as employees and their skills sets:

Time-based Model

Here the consultant charges a predetermined rate per hour or day of work. The benefit of this is that you can’t underestimate the time a job will take and therefore don’t risk undercharging the client. The disadvantage of this model is that it comes with the pressure of looking for income because of fluctuating revenue.

Project-based Model

This model is outcomes-based. This means the customer pays when you deliver on a specific job. Although this allows for a more predictable income, precession is key. The risk is that you miscalculate the time it will take you to complete a project if you have unexpected delays.

You can, however, put measures in place to deal with this. For example, communicating to the client that should the setback be due to something on their side, there will be additional charges.


Here, you charge the customer a recurring fee for ongoing or as-and-when-needed service. Although it differs from the project-based model where you need to provide a specific deliverable, it is similar to it in that you can expect a consistent source of income. Should it happen, however, that you’ve had to put in more work than usual, you can’t charge more than the agreed amount.

Consulting Firm Model

In this model, you hire freelancers to work on your behalf. To be profitable you’ll need to charge the client higher than you pay your team members. This model lets you grow your company’s offering because outsourcing frees up your time to generate more business. Also, compared to solo consultant business models, consulting firms have a higher asset value should you decide to sell.

The challenge with this model is having to manage others where, apart from having contracts in place so that employees know what’s expected of them, you’ll have to have to set up procedures to ensure effective operations. 

The risk associated with this model is that your reputation rests on the quality of your freelancer’s work. You can however maintain standards by having quality control checks in place.

Productized Model

This model is based on packaged solutions with a fixed fee. There needs to be a system in place so that you can easily repeat the service you offer. advantage of the productized model is that you aren’t needed for the day-to-day running of the business. Because of the recurring revenue that comes from this type of model, there is an opportunity to scale. Scalability makes it more attractive to potential buyers.

The disadvantage, however, is that because the focus of this model is on solving problems for your client, these small-scale solutions require that you have more clients to be profitable.

Examples of:

Now that we’ve looked and the different types of consulting business models and the pros and cons of each, let’s refine our understanding by checking out existing companies that use them:

  • Sole Consulting Model. Tom Critchlow Consulting assists startup owners market their businesses through digital content creation.
  • Consulting Firm. Navalent, instead, is a team of individuals who offer coaching services to organizations that are in different stages of business development to help them optimize their performance and meet their strategic objectives.
  • Productized Firm. Brasstacks Collective is a creative agency that provides a range of services including branding, digital solutions, and promotions to help companies enhance their visibility.



In summary, we’ve seen that the consulting business model is comprised of sub-models. Depending on what your business goals are you can either choose to operate as an individual or offer your products and services with the help of freelancers or employees.

Success using this type of business model relies on you having a plan in terms of your financial and personal goals. The main difference between models is whether your strategy is to establish a self-sustaining company or one that requires your full-time participation and input.

Also Read:

10 Online Consulting Business Ideas

Mary Francois Robinson on Linkedin
Mary Francois Robinson
Staff Writer: Mary Francois is a writer with a strong footing in the adult learning space. Her focus is creating valuable content based on her experience in business development. She takes inspiration from Maya Angelou’s wise words, ‘when you learn, teach. When you grow, give.’

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Business Models · Find Your Way · Grow Your Business · Leading Your Team · Marketing · Sales

Staff Writer: Mary Francois is a writer with a strong footing in the adult learning space. Her focus is creating valuable content based on her experience in business development. She takes inspiration from Maya Angelou’s wise words, ‘when you learn, teach. When you grow, give.’

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