The profit margins of an advisory business
Advisory work looks like pure profit until you count your time, software, insurance, and the rest. It's closer to 70 percent, so price for it.
Kevin C. Whelan
Selling advisory services is a 100% profit margin business.
You show up, sell your time, keep all the money.
Right?
Not so fast. You have to include things like:
- Your time, which is limited and valuable
- Opportunity costs (you could be doing other things)
- Sales conversations (see: your time)
- Bookkeeping and virtual assistance
- Transaction fees
- Professional development (coaching and education)
- Software expenses
- Insurance and legal
- Design, development, and other contract support you need
- Office space and equipment
- And a variety of other little things you might not be thinking about
Advisory work is a high-margin business, to be sure. But it’s not all profit. If you’re lucky, it’s closer to 70%.
Running a business is more expensive than people think—even high-margin businesses like advisory services.
Plan and charge accordingly.