| I've run a consultancy. They're not making anywhere near the money you likely imagine. There are several major sets of costs to consider. One set is costs directly related to employing you. Benefits, employer paid taxes, equipment, insurance, office space, a fraction of your manager, and so on. These alone are hefty. A second set is buffer to pay you when you aren't being utilized. A well-run consulting company might expect 80% utilization, so 20% of the time you're incurring salary plus all the above costs and they are receiving absolutely nothing for it. A more typical consultancy might have even lower utilization rates. A third set is the costs of customer acquisition and account development. There are expensive staff who do a lot of expensive things solely to get the contracts signed in the first place. And if a consultancy stops attempting to grow, it's at grave risk that a few existing customers will leave for one reason or another, and they'll be left in a terrible spot. A fourth is the cost of finding somebody like you in the first place. If I'm hiring a junior employee it might be something like $10k direct, plus the time associated with sourcing, vetting, and interviewing candidates. For a senior employee, it could be a lot more than that. Put all of these factors together, and the profits simply aren't nearly as hefty as you'd imagine. |