Fixed contracts and "Million Dollar Consulting"

Make fixed contracts instead of time and material – in order to become a millionaire. Well, it’s not that black and white.

I still remember the days when I was naive enough to believe that making a million dollars as a consultant required hard work, dedication, and a genuine passion for helping clients. Boy, was I wrong! After years of experimentation and fine-tuning my approach, I stumbled upon the holy grail of consulting: making precious contracts without breaking a sweat.

It all started when in 2006 I discovered yet another ingredient of success in consulting: fixed-price contracts. Those self-help books that promise to teach you how to become a million-dollar consultant are onto something, but let’s be real – they’re mostly fluff and empty promises. They preach about transforming from selling limited supply (man-hours) to project contracts, where you deliver a specific outcome for a fixed price. The idea is that this approach motivates consultants like me to work efficiently and deliver high-quality results quickly.

"Morals are for poor people; I'm going for gold!"

But I knew better. I knew that with the right approach, I could make a killing without putting in much effort. My strategy was simple: propose contracts just short of the client’s decision-making limits. In big corporations, these limits are usually set by bureaucratic red tape, where projects under a certain threshold – say 50000 USD / EUR – can be approved by mid-level managers without needing to escalate to higher-ups.

In this particular corporation, the director level was divided into three tiers: the lower-tier directors could approve up to 20000 (very low! but again this was 2006), the mid-tier directors up to 50000, and the top-tier directors had no limits. My sweet spot was targeting the mid-tier directors, who were often too busy or too inexperienced to scrutinize my proposals thoroughly.

I had already perfected my Project Ripoff Lifecycle, where I’d take on parallel “time and material” contracts on the side, while hollowing out the content of my fixed-price contracts so much that I barely had to lift a finger. It was a beautiful thing, really. I’d propose a project with a fixed price, and then, once it was approved, I’d start working on it at a snail’s pace. Meanwhile, I’d take on other projects with “time and material” contracts, where I could bill the client for every hour worked, no matter how little actual progress was made.

My big break came when I landed a project with client where my contact was a young dude who wanted a cool lifestyle and loved prostitutes. He was one of these mid-tier directors, and he greenlit all my proposals without hesitation. For six glorious years, I raked in 250K per year, proposing project after project with fixed prices and content so vague it was laughable. We had a lot of fun together outside the corporate worlds as well while searching for a “suitable wife” for him (I will tell you more about this in another post related to .. oh dear, .. corruption.)

One day, like all projects some day, the project ended, but that didn’t slow me down. I just moved on to the next client.

About the dangers of fixed-price contracts.

Fixed-price contracts may seem like a lucrative opportunity for consultants, but they also come with inherent risks. By committing to a fixed price, consultants assume all the risk of cost overruns, scope creep, and unforeseen complexities. If the project encounters unexpected obstacles or requires more resources than anticipated, the consultant’s profit margins can quickly evaporate. Moreover, clients may push for changes or additions that fall outside the original scope, leaving the consultant to absorb the additional costs or negotiate costly change orders. In the worst-case scenario, a fixed-price contract can even lead to financial losses if the project’s complexity or requirements exceed the consultant’s initial estimates. As such, consultants must exercise extreme caution when entering into fixed-price contracts, carefully evaluating the project’s risks and ensuring they have sufficient buffers to absorb any potential cost overruns.