By Scott Handsaker

Web Consulting Doesn’t Have to be a Struggle

By Scott Handsaker

Web consulting is a tough way to make a living.

Or at least, it can be if you suck at it. I’m not talking here about the quality of your code, the polish of your designs or your ability to learn the latest JavaScript library that all the cool kids are talking about.

I’m referring to your ability to generate ongoing and predictable revenue streams. If you suck at that, you’re in trouble.

I should know, having spent five years running my own small web consultancy. To an outsider looking in we probably seemed fairly successful, and there were certainly times when we felt like we were rocking. At our peak we had five staff, blue chip clients, six-figure website projects and our own office in the CBD.

We were even profitable for four of those five years, including reasonable salaries for the founders. So what am I complaining about?

Peel back the layers and you expose two problems that underpin almost every small web development company.

1. Income is incredibly choppy. Some months you make out like a bandit, others you’re on the soup line.

2. The percentage of your income that comes from your top few clients can often exceed 50%. We had two years where more than 50% of our income was attributable to a single client.

It’s a stressful way to run a business, and if we hadn’t moved sideways into a product-based revenue stream we probably would have thrown in the towel after a few more years.

If I was going to do it all again, what would I do differently? How can you protect your lifestyle as a freewheeling web developer without going down the path of 20 cold calls a day to generate new business?

The not-so-secret sauce required is recurring revenue. Revenue that doesn’t depend on the number of hours you can work in a day. Revenue that adds an incremental and predictable incline to your bottom line.

Here are five simple solutions you can use to get your business on the way to a recurring revenue stream.

1. Email marketing

Seems like an obvious one, and I am sure many freelancers and small web shops are already providing a solution. But if the solution you are providing doesn’t at least require a monthly fee or payment for emails sent, then you are leaving money on the table.

If you recommend Mailchimp, hook yourself up to the Creative Agency Discount. If you recommend Campaign Monitor, rebrand it and mark the pricing up. And don’t just add 10% on top like a sucker — double whatever the base price is and make that your markup. Giddyup.

2. Web Hosting

In the early days of web hosting, reselling a single shared server to multiple clients used to be a surefire way of making a metric butt-tonne of money. These days it’s a far more competitive space.

But guess what? Your clients are not technical, and so therefore don’t treat web hosting as a commodity they can get anywhere for the cheapest price. Take that server and cut it up 10 ways for your smaller clients, but price it for the value that you provide.

If a client wants a dedicated server, resell them one but add at least 50% to the monthly price that you are getting charged. Boom — recurring revenue.

3. Maintenance Agreements

This is a bit of a no-brainer, but it’s surprising how many freelancers and companies don’t bother to implement a basic maintenance agreement.

The trick is to charge for a set number of hours per month, irrespective of whether the hours get used or not. Do not roll the hours over into the next month if unused!

4. Content Marketing

As a subset of inbound marketing, content marketing is probably the hottest thing on the web right now; mainly because it works so well.

Every client you have has a deep desire to improve their marketing, and generating great content for their website is a top strategy if done well. But you know most won’t bother, which is where you step in and proactively offer to generate the content required for their blog.

You don’t want to get into the trap of writing the blog posts yourself, though. That’s just charging for more of your own time, which is what we want to get away from. Instead, find a service you trust that generates the content for you on a regular basis and mark up the price.

5. Search Engine Optimization

SEO is another great service you can add to generate monthly income. But you don’t want to be in the business of building links, generating content or optimizing the title tags yourself. It’s hard work and takes time to produce a result, so whatever you can outsource to a specialist you should.

The best path forward is to find a freelancer or small firm that you trust. Reach an agreement with them for a number of packages, then sell them back to your clients at twice the price. If you’re feeling bold you can do a Google search for “white label SEO”, but be prepared to work your way through a number of firms before you find anything suitable.

Each of the ideas above may only add small amounts of income in the early days, but that’s okay. Over time, each step you take towards implementing a recurring revenue plan will add up. Given enough time and enough clients, hopefully one day you will wake up and find you have a stable, predictable and profitable business.

What other ideas have you tried to implement recurring revenue streams for your web business? Let us know in the comments.

  • Sam

    6. Social Media

  • Thanks Scott, you opened up my eyes with this post, even though all of them I looked at and went *DUH!*

  • These are some very nice and simple revenue streams. I like it. Thanks for the post.

  • Scott, I’d appreciate if you could elaborate on point #4, Content Marketing. You recommend finding a service that generates the content, but haven’t given any examples. Does this service write full blog articles for the customer, with pictures and the whole shebang?

  • Very good observations, we walk the same path! We work hard for our money, we are happy with what we do, but we are also developing our own software package in order to bring in more revenue. We are also thinking about building a website with recurring billing, your article comes in a great moment.

  • Neal

    Sounds like the act of *consulting* is fundamentally not working for you and a lot of other people. You’re having to compensate by finding a few residual streams that augment your income. I’m guessing this does not fundamentally change the equation though, just makes it more tolerable. Would you generally not recommend going into consulting? Also, are you primarily a production shop (design/development), or are you also providing strategy and analysis to clients?

  • #Brian

    There are a range of services that generate all the content you required, some better than others. It really depends on what your client is after. If they want the 10-20 posts a month that are targeted at the long tail of Google, then you can get someone off Odesk or Freelancer.com to spit out a 500 word post for about $10-15. It’s not the kind of content that will get any traction on social platforms, but for that money you can’t expect too much.

    Their are also marketplaces that will deliver similar content, but will manage the whole process for you. They charge by the word or by the article, but if you Google “whitelabel article writing” or “outsourced article writing” you should find a few. I don’t necessarily recommend any specific services, so caveat emptor and all that.

    If your client has some serious budget and wants to spend in the thousands per month for super high quality content, then a new player in the market is Contently. They offer a range of packages which you could mark up and onsell, but you need to find a client with deepish pockets.

  • #Neal

    Nothing inherently wrong with consulting as a way of making a living. Certainly give it a try, as many people turn it into a fantastic career.

    But I guess what I was trying to get across is that consulting brings with it 2 key areas of concern:

    1. Choppy income (some months great, some months poor)
    2. Over dependence on 1 or 2 clients for a large portion of your income

    If you are aware of these two issues and put in place measures which help to spread the risk, then consulting can be great.

    We no longer do any consulting and are focused full time on http://www.attendly.com. We took venture capital money to grow that business, so it seems only fair that we give it 100% of our attention :-)

  • You need to develop your own website or software solution that you are actively developing and supporting to make the operation and administrative costs worthwhile.

    You can never depend on your clients for all your revenues as they change their minds on what they are doing, change service providers (yes including you for reasons you can never understand), and are erratic – even the regular ones.

    • I agree completely – in my opinion, this should be #1 on that list!

  • 7. PPC Setup & Management

  • Matthew P.

    These are definitely good suggestions overall and commonly brought up on sitepoint and elsewhere, it’s always a good idea to even out and broaden your revenue stream with value added services like this regardless of whether your focus is on consultation, development, design etc.

    The one point on that list I’m not so sure about is the web hosting though, I’ve read and heard elsewhere many wise words cautioning against getting into reselling hosting and would agree that it may not be the best thing for everyone – On the surface it looks like easy and reliable long term revenue source, but you also need to think about what will happen if something ever goes wrong – What if that dedicated server you have 10 clients on encounters a problem, you’ll need the resources to be able to fix it as fast as possible and handle all those clients as they call in a panic about their broken site… and what about your other projects which may need to all be put on hold while that’s happening? Essentially you’re assuming responsibility for a service you have no control over – Any problem or error is likely to stem from the original hosting provider and their service, and they’ll usually be the ones who ultimately have the power and ability to fix it with minimal input from you, while it’s entirely your reputation on the line with the client.

    For those clients who really don’t want the hassle of dealing with anything related to hosting it could be a good idea to offer to deal with the hosting provider for them and charge a regular fee to do so – this way the service you’re providing and what you are actually doing yourself is clearly defined and understood by the client and you’re not assuming responsibility for matters that are out of your control such as service outages or data loss as would be the case if you were acting as the clients hosting provider.

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