All You Ever Wanted to Know about Contracts & Rates

⏰ Today in 5 minutes or less:

• The best contracts do three things: protect you, set expectations, and give leverage. 

• You can use contract clauses to set boundaries and send signals around expectations and trust.  

• Offering a termination period instead of a kill fee adds more value over time. It shows clients that you’re there to generate value, not just make money. 

The Contract + Rate Rules That Will Keep You in Business

Being great at client work isn’t enough. 

Not in consulting. Not in 2025. 

Client work is only half the business. The other half? Contracts and rates. 

They may not be the most interesting part, but after working with hundreds of consultants, one pattern keeps showing up: 

The ones who last aren’t just talented. They know how to run the business side, too. 

And it usually comes down to two deceptively simple elements: the agreements they make and prices they set. 

Here’s what I’ve learned over my long career as an indie, along with what others have generously shared with me. 

We made a special podcast episode talking about the common questions I get asked about contracts and rates, so make sure to check it out here:

Why Contracts and Rates Make or Break a Consulting Practice 

Consultants could deliver knockout results. And clients could love them. 

But if they’re billing at 40% of their market value or operating under a handshake agreement that makes it easier for clients to ghost them, then that business isn’t stable – or scalable.  

What became clear over time is that strong contracts and well-considered pricing protect more than just a consultant’s revenue. 

They also protect time, energy, and boundaries. 

They remove friction from client conversations. 

They are leading indicators of the value you deliver.  

Contracts: Not Just Legalese, But Leverage for Your Business

The best contracts do three things: protect you, set expectations, and give leverage. 

At the very least, a contract should cover the scope of work and payment terms. 

Most consultants keep it simple by offering time-based or project-based contracts. 

 These basic types have their own advantages and limitations: 

• Time-Based – these contracts bill by the hour, day, or month. They’re simple, transparent, and great for early-stage relationships or advisory work. But time is finite. And unless you’re increasing your rate regularly, you’re anchoring your income to a ceiling. 

• Project-Based – these contracts are structured around deliverables, not time. If scoped well, they let you price for value. But the catch is you need a tight scope. Otherwise, you’re on the hook for infinite revisions that eat your margin. 

Download our templates above to save time.

Some Advanced Models to Consider 

Most consultants in the early stages of their indie career get by with either a time-based or project-based contract, but things eventually start getting more complicated as they work more. 

The reality? Many consulting engagements blur the lines. 

Some consultants might need to sell a project and staff it with time-based resources, or they might frame an advisory retainer but include project-based milestones. 

But what matters is clarity for both parties. 

With that in mind, some consultants prefer these more advanced models: 

• Retainers: Best for advisory gigs or ongoing executive roles. 

• Equity agreements: Occasionally appropriate for early-stage startups, but not without risk. 

• Advisory arrangements: Often used when you’re not delivering work directly but offering strategic guidance or introductions. 

Some Critical Clauses to Include 

In the perfect world, contracts wouldn’t be necessary. 

But in the real world, we depend on it to set expectations and boundaries. 

Projects don’t always go smoothly – so when issues arise, consultants can protect themselves by including certain clauses in their contracts. 

And after talking to other consultants and reflecting on our own contracts, here are some often overlooked but important clauses: 

• Termination, if you need to include a termination fee or prioritize flexibility in agreements. 

• Non-competition, some clients require it, so make sure to be very specific about your list. 

• Recruitment, because you deserve a recruitment fee for introducing someone valuable. 

• Survival, to make sure that your estate gets paid for the work you did. 

• Severability, to avoid exposure to more liabilities and legal headaches. 

But the bottom line here is that consultants should still get a lawyer to review their contract. 

Even if it’s a one-time investment, it’s cheaper than defending a lawsuit or losing months of unpaid work. 

Find the full list and some examples of these essential contract clauses here.

Rate Setting: Your Business Depends on It 

Rates are personal – and a common concern of independent consultants and fractional execs. 

They’re the reflection of a consultant’s experience, niche, business structure, and most of the time – confidence.  

I’ve seen A LOT of consultants set their rates too low early in their careers because they underestimate their own skills. 

But after working independently for decades, I think I have a better grasp on how indies should rate their services. 

And I recommend basing it on these three important questions: 

• What’s the expected range? 

• What’s your rate when working full-time? 

• What's the financial impact of your work? 

What’s the Expected Range? 

For this one, there are three more factors to consider: market rate, client expectations, and the value of expertise. 

Start with the market rate – the standard deviation for indies is between $1500 to $3000 a day. 

Anything higher and you’re dealing with C-level senior advisors in PE/I-bank deal flow. 

Anything lower and you’re looking at ‘doers’ - like program managers and project managers. 

Second is the client’s possible budget and their expectations. 

Companies who regularly work with consultants have a number in mind – PE firms tend to pay more, enterprises fall in the middle ground, and startups usually offer less. 

Lastly, the rate also depends on the consultant’s area of expertise. 

Those with more experience can charge more. 

Similarly, work involving strategy and finance will command higher fees than marketing work or HR. 

What’s Your Rate for Working Full-Time? 

Your salary when working full-time is also a helpful benchmark. 

When setting the rates for an indie practice, think of it as the opportunity cost of leaving a full-time job. 

It should reflect what a consultant might earn working a corporate job, including full-time earnings, bonuses, benefits. 

You can use our rate calculator to determine a fair rate for your time. We’re launching a better version, so keep an eye out.

What's the Financial Impact of Your Work? 

This might sound complicated, but there’s no need to pull out a calculator. 

Just answer this simple question – is the financial impact big or small? 

Think of it this way: a consultant working on a $50 million project will definitely earn more than another consultant working on a $5 million project. 

Consider the value that the project holds for the client and see if you deserve to increase your rate for helping them solve it. 

And sometimes it’s not your rate that needs to change, but your framing. 

A strategic comms advisor can charge more than a “writer.” 

A business architect commands more than an “ops consultant.” 

Your title matters. And so does how you package your offer. 

Some Advanced Fee Clauses to Protect You (and Your Rates) 

 As your consulting practice grows, so should your contracts. 

Most consultants cover the basics, including the scope, payment terms, and deliverables. 

But seasoned consultants know the true value of including a few strategic clauses that help your business grow without burning out and losing leverage.  

My take is that you use these and write them as messages that show how you are in the service of a long-term relationship. 

These are not to protect you per se. 

I think of them as ways to set boundaries and send signals around expectations and trust.  

Here are some situations indies might face (and how they can protect themselves with a contract): 

Signal An Annual Rate Change 

Before considering the possibility of raising prices, it’s important to check the duration of the engagement first. 

If the agreement is for 12 months or less, then you don’t have to worry about baking the rate change into the contract. Consultants can always renew agreements at whatever price they want. 

On the other hand, an agreement that spans more than 12 months should include a clause that says pricing will be adjusted based on the Consumer Price Index (CPI). 

Your new rate can be higher or lower than the previous one, but the clause ensures that your rates are still within the expected range. 

Signal Your Agility and Flexibility 

There’s a lot of debate about whether consultants should still get paid for the full agreement in case of early termination. 

Consultants often do this because they believe that they should get paid for their time invested. 

But I have a different opinion. 

Instead of a kill fee, we offer a 15-day termination period where clients can cancel the contract within 15 days after it was signed. 

This kind of flexibility in your contracts adds more value over time because it shows clients that we are there to generate value, not just make money. 

Having this clause also helps us close more deals because people feel more secure that if the situation changes, there won’t be a penalty for them. 

Including this kind of contract is almost useless because it’s rarely used. 

We’ve only used it in extreme budget situations. And in those cases, we still would have waived the fee anyway because maintaining good relationships with clients is far more valuable than money. 

Signal How Your People Are High-Value 

I’m always happy to help vendors and team members find meaningful opportunities, and support clients in finding great people for a job. 

But I understand other people’s concerns when it comes to recruitment and solicitation. 

And I think the best way around this is to include a recruitment fee in your contracts. 

At KRS, we ask for a fixed fee for clients who want to directly hire vendors or team members as full-time employees. 

For my vendor contracts, I also include a non-solicitation clause. 

This means they can’t go and work for the client directly for a period of time without my written approval. When the situation arises, I give approval after I've confirmed that the client has paid the fixed fee. 

This way, we recaptured the revenue, and the client found a great employee. 

That’s how you become a value provider to them. 

One Last Thing About Your Work 

No consultant goes indie to work more and earn less. 

They chose this path for freedom, fulfillment, and (let’s be honest) better margins. 

And my advice? Get your contracts right. Price your work with intention. 

Your work is valuable, so make sure your business is too. 

Remember, the path to success is paved with continuous learning and embracing fresh perspectives.

Let's stay connected, share ideas, and elevate your consulting business.

Stay curious, friends.

The 2×2 is brought to you by Keenan Reid Strategies

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