Essay

The unfortunate math behind consulting companies

Jason Cohen · A Smart Bear (Jason Cohen) Free Intermediate

This is the clearest honest look at why a services arm quietly starves your product: Jason Cohen (who bootstrapped WP Engine) shows the real math, that a billable person costs roughly double their nominal rate, so consulting rarely throws off the surplus you imagined for product work. He then lays out the five actual levers (scale, charge more, bill more, build a product, use subcontractors) and is blunt that building a product almost never works without deliberate, funded focus. Treat it as a starting point for deciding how much services you can carry before the product stops moving, not a promise that the mix is easy.

• The true cost of a billable person is about double the nominal rate, so consulting margins are thinner than they look and leave less to reinvest in product.
• Funding a product out of services only works if you carve out protected, funded time for it. Treating product as spare-capacity work means it never ships.
• Charging more and using subcontractors protect cash better than hiring a bigger bench, which just deepens the services dependence.