Normally this newsletter contains tips on growing your consulting business and improving productivity for solo-professionals. But not this time! It’s the time of year to look at how we are earning compared to our peers.
How much does the average, senior, and top-end consultants earn? How do you compare?
The charts below show earnings for average, senior-level, and super-high earners. But, if you can take just a moment, I want to tell you a short, personal story that illustrates the difference between consultants and their range of earnings.
In my 30+ years as a consultant, first technical and later corporate strategy, I’ve seen wide ranges in consultant's skills, experience, and earnings. Earnings often aren't comparable to expertise. It doesn’t seem fair.
This difference in earnings became very apparent to me at one of Microsoft’s first conferences.
In 1984 Microsoft asked me to be one of their first independent consultants. A few years later, at one of Microsoft's first large conferences, from the midst of hundreds in attendance, a consultant stood up and spoke into the open mic,
“It’s just not fair! Some of my competitors get more work than I do and make more money. I know more than they do. It’s not fair.”
The laughter was long, and I’m afraid, embarrassing for the questioner. He shriveled back into his seat.
Of course, expertise matters. It’s a ticket you need to play in the game. But, after that the game goes to those that know how to build relationships and create systems that build a thriving consulting business.
I’ve dedicated the last two years to studying the differences between high income and average income consultants and solo-professionals. The difference is more than experience or technical expertise. What makes the difference is the systems that high income earners build.
Before we talk about these differences look at the two tables below. The first table shows average consulting incomes from the last week of January 2019 for the average job posting and senior job postings on Glassdoor, PayScale, and Indeed for any job that included “consultant” in the title. It also does not include salaries for senior consultants or partners from large consulting firms.
The difference between average income and senior consultant income is about what you might expect for the difference between average income and senior income.
Click the thumbnails below to see the full-sized charts corresponding to the table.
Average Consulting Incomes
Senior Consulting Incomes
What is surprising is the difference between these incomes and the income of high-earning outliers in the table and chart below.
This second table shows the income distribution for solo-professional’s from analysis Elaine Pofeldt did of US Census data from 2015. The outliers earn amazingly high-incomes. They are using business systems the average solo-consultants and solo-professionals are not.
I know these high six- and seven-figure incomes can be earned as a solo-consultant. I’ve done it for multiple years without selling over the internet. But, the internet does make it easier to earn these incomes.
There are almost one-million solopreneurs making more than $250,000 and there are 35,584 making between $1,000,000 and $2,500,000. (The number of high-earners is even greater now as this census data is from 2015.)
$1,000,000 to $2,500,000
$500,000 to $999,999
$250,000 to $499,999
$100,000 to $249,000
If you add up the long tail to the right of $100,000 on the curve below there are more than 2.7 million solopreneur’s making more than $100,000 per year.
Even if you shoot for the top and fall a little short your income will still be in the high-six figures. Duplicating even a few of the business systems used by these high-earners can significantly improve your business.
Why do some solo-consultants and solopreneurs make so much money? What do they do differently?
Books like “Outliers: The Story of Success” by Malcolm Gladwell, “The Million-Dollar, One-Person Business“ by Elaine Pofeldt, and my own business experience and two years of research show that following the systems used by these outliers can dramatically increase your performance.
For her book, Elaine Pofeldt interviewed thirty $1,000,000 solopreneurs to learn what they did differently. She found six things they did that average earners do not do.
In parallel to Elaine’s findings, my research found seven stages of systems that used specific business building practices and systems. In fact, Elaine’s six systems and my seven stages incorporate many of the business systems experienced investors demand of new Silicon Valley startups.
Solo-success isn’t magic. It isn’t one-off productivity tips. Success comes from building your solo-consulting or solopreneur business using well-proven business systems that anyone can follow.
In next week’s newsletter I’ll describe Elaine’s six things and my seven stages. Using these in your consulting or solo-profession will produce significant impact. I'll also get back to including a few consulting tips and productivity tips. (Some do work.)