The pricing math nobody actually does
What your business coach might have forgotten to flag. PS: Founding pricing ends tonight for the Sales Summer Camp.
Hola Familia,
Years ago when I was building my consulting practice, my first financial advisor told me something I’ve never forgotten, that I now pass on to all of my small business clients.
“Time is money. Even if you’re not charging hourly.”
It sounded like a basic line. It wasn’t. That one sentence changed how I price every single thing I do in my business twelve years later.
The math most consultants are running
A lot of newer consultants tell themselves a version of this. “I work 40 hours a week. If I see one client per hour, I can see 40 clients a week.”
Read that back. Forty clients. Per week.
That’s eight client sessions a day. No breaks. No prep. No follow-up email. No marketing. No brainstorming. No learning. No coffee. No life.
If you zoom out for two seconds, it’s kind of crazy. But most consultants build their pricing on some version of that math.
The non-billable reality
The thing my advisor was actually telling me is this. Every billable hour you spend with a client requires non-billable hours behind it. Marketing. Brainstorming. Strategy. Follow-up. Admin. Email. Learning. Recovery. The work that makes the work possible.
How many non-billable hours per billable hour? Depends on the business, but for most service providers at most stages, it’s at least one. Often two. Sometimes three.
Run that math against your actual life.
If you can realistically see three to five clients a day (which is closer to the truth for anyone doing thoughtful work), and you have one or two non-billable hours behind every client hour, your actual revenue-generating capacity is way smaller than the “40 hours a week” framing suggests.
If you priced your work on the 40-clients-a-week version of the math? You’re operating at a permanent loss and calling it a business.
What I’ve actually done over five years
I’ve raised my rates slowly. Not because I suddenly got better overnight. Because cost of living went up. Because I had a baby. Because my expertise grew. Because the business has to keep funding the life I’m actually living, not the life I was living in 2021.
A lot of consultants set rates once and then never touch them. As if the math should stay frozen while everything else in their life moves. It can’t. The math has to keep moving because your life keeps moving.
This isn’t just a service-provider thing, by the way. Membership businesses, product businesses, hybrid models. Same problem. We don’t do the math. So our actual investment in the business ends up costing more than we’re bringing in.
We just don’t see it for a while.
The hidden cost most people don’t calculate
Here’s the part nobody talks about.
Underpricing doesn’t bankrupt you in one quarter. It kills your longevity.
You can run a business at unsustainable rates for a long time. Months. Years. The cash keeps coming. The clients keep coming. From the outside, it looks like things are working.
What’s actually happening is you’re depleting. You’re putting in 70 hours to make what 40 hours should make. You’re cutting your own corners. You’re missing things that matter. You’re saying yes to clients you should have said no to because you can’t afford to be picky. You’re tired in a way that’s hard to name.
And eventually, you can’t keep doing this. Not because the business failed. Because you ran out.
The hidden cost of underpricing isn’t financial. It’s longevity. You can keep going until you can’t.
A few questions worth sitting with
When you set your current rates, did you actually calculate your real non-billable to billable ratio? Or did you guess?
Have your rates kept up with cost of living, your expertise, and your phase of life over the last 24 months?
If you ran your current business at your current rates for the next five years, would you be okay? Or do the numbers only work because you’re not really doing the math?
If you don’t love your answers, we can change this! You are NOT bad at business, you’ve just inherited the wrong math.
Here’s the chisme on the Sales Summer Camp
This is most of Week 3 of Sales Summer Camp. The math behind sustainable rates, the minimum viable rate calculator, and the conversation framework for raising your prices without losing the clients you actually want to keep.
Founding rate ends TONIGHT Tuesday, May 19 at 11 PM PT. Public rate is $397 ($297 for Reframe Room members).
Afterwards standard rates kick in (up $50+).
One last thing
My financial advisor didn’t tell me what to charge. She told me what to count.
And once you know what to count, the number figures itself out.
Need help? Reply to this email or drop a comment. I can’t wait to hear what you’re working on.
xx,
Ashley