Playbook

Consulting pricing strategy: paid discovery, then a P&L per phase

Price a paid diagnosis worth buying on its own, then run a separate profit and loss per phase so a profitable engagement cannot hide an unprofitable phase.

The methodSell the diagnosis, then the cure, with a P&L per phase

This playbook is a consulting pricing strategy for project work sold in phases: price the diagnosis as a productised (productized) engagement worth buying on its own, sell the first build under the same signature, and run a separate profit and loss for every phase so a profitable engagement cannot hide an unprofitable one inside it. It is for founders and commercial leads in consultancies, agencies and engineering services firms selling into larger organisations, where discovery is usually given away in the proposal and the whole engagement is priced, sold and tracked as one number.

Free discovery is a pricing decision, whether or not you treat it as one. When you assess a customer's estate before writing the proposal, to work out what the work actually is, you are delivering the most senior thinking in the engagement at a price of nothing and betting that the build will pay for it. Sometimes it does. When it does not, the loss disappears from view, because the engagement was sold as one figure and run as one figure. The project shows a margin overall, the people were busy, and the phase that lost money sits inside the total unexamined, sometimes for years. The customer, meanwhile, has received your best work for free and is now shopping the findings.

The method names and bounds the phases first. Every phase carries five things: the question it answers, the deliverable it leaves behind, its price, its delivery estimate, and a decision point at which the customer may stop. The diagnosis is the first phase and is priced like a product: fixed scope, fixed price, and a deliverable the customer owns and could take elsewhere. The playbook then shows how to sell the diagnosis and the first build together, in one proposal and under one signature, so the customer never faces a second buying decision at the point where momentum matters most. Finally, each phase gets its own profit and loss: the revenue for that phase, the full cost of the people who delivered it, and the margin left on that phase alone. One engagement is followed through the whole arc, from first proposal to a signed scale phase, with the worked figures labelled as invented.

It does not tell you what a discovery should cost, and it does not argue that every engagement should be phased. Some work is a single piece and should be priced as one. It does not cover retained or managed services pricing, which have their own playbooks here. And it is not a proposal template; the five things every phase carries can be written into whatever proposal format your customers already expect. The subject is project work with a beginning and an end, sold to a buyer who has to justify each stage to someone.

The business that became DevOpsGroup, a services company helping other businesses build and run software, sold assessments early. A maturity diagnosis was the first thing many customers bought from us, and it was a good product: senior people, a few weeks, a written finding the customer owned. What I had not done was run it as a business of its own. I knew our margin every month at company level; the diagnosis lived inside engagements that made money overall, so the question of whether the diagnosis itself billed more than it cost was never forced. When I did the arithmetic phase by phase, some of the discovery work was a loss leader that led somewhere, and some of it was simply a loss. The difference between the two was almost always whether the build had been sold under the same signature. Where it had, the discovery earned its keep. Where it had not, we had done our best thinking for free and then competed for the work it revealed.

The playbook is in development, with a phase profit and loss worksheet alongside it. Joining the waitlist means you hear when it is ready and that I know who the work is for while it is being written. Nothing is for sale yet and there is no date.

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