When transitioning from hourly to project-based pricing as a consultant, it’s essential to consider the terms and conditions of the contract carefully. This includes defining the scope of work, deliverables, timeline, payment structure, and any provisions for changes or termination of the agreement. Establishing clear communication and expectations with the client is crucial to ensure a successful project outcome and avoid any potential disputes or misunderstandings. In today’s podcast, Mandy Pearce from Funding For Good, Inc. and Stephen Halasnik from Financing Solutions discuss contract considerations for consultants and from hourly to project-based pricing. 

Contract Considerations for Consultants and from Hourly to Project-Based Pricing

As a consultant, one of the key decisions you must make when structuring contracts with your clients is whether to charge hourly or project-based pricing. Hourly pricing involves charging clients for the number of hours worked on a project, while project-based pricing involves setting a fixed fee for completing a specific project or deliverable. Both approaches have pros and cons, and transitioning from hourly to project-based pricing requires careful consideration. 

This article will explore contract considerations for consultants making this transition and highlight important factors to remember.

Clearly Define the Scope of the Work

When transitioning from hourly to project-based pricing, defining the scope of work in the contract is crucial. This includes specifying the project deliverables, timelines, milestones, and other relevant details. Clearly defining the scope of work upfront helps avoid misunderstandings or scope creep during the project, ensuring that both parties clearly understand what is expected.

Determine the Project Fee:

Project-based pricing involves setting a fixed fee for the entire project or deliverable rather than charging clients based on hourly rates. When determining the project fee, it is essential to consider various factors such as the project’s complexity, the estimated time and effort required, and your desired profit margin. Conducting thorough research and analysis will help you arrive at a fair and competitive project fee that adequately compensates you for your expertise and effort.

Specify Payment TermsContract Considerations and Pricing 

Payment terms are a critical aspect of any contract, and they become even more important when transitioning from hourly to project-based pricing. Specify the payment terms in the agreement, including the total project fee, the payment schedule (e.g., upfront payment, milestone payments, etc.), and any late payment penalties. It is essential to establish a payment schedule that is fair and reasonable for both parties and ensures timely compensation for your services.

Include Contractual Protection Clauses

As a consultant, protecting your interests and mitigating potential risks is crucial. When transitioning to project-based pricing, consider including contractual protection clauses in your contracts, such as limitation of liability, indemnification, and dispute resolution clauses. These clauses can help protect you from legal and financial risks that may arise during the project and ensure that both parties clearly understand their respective responsibilities and liabilities.

Communicate Expectations Clearly

Clear communication is critical to successfully transitioning from hourly to project-based pricing. Clearly communicate your expectations and deliverables to the client, including the project timeline, milestones, and any other relevant details. Set expectations regarding communication channels, response times, and feedback processes to ensure smooth project execution. Regularly communicate progress and updates to the client, and be transparent about any changes or challenges that may arise during the project.

Have a Change Order Process in Place

In a project-based pricing model, work scope changes are inevitable. To manage changes effectively, establish a change order process in your contracts. A change order is a written agreement that outlines any changes to the scope of work, timeline, or project fee and requires both parties to sign off on the changes. Having a change order process in place helps avoid scope creep and ensures that any changes to the project are adequately documented and compensated.

Review and Update Contracts Regularly

As a consultant, it is essential to review and update your contracts regularly to reflect changes in your business, industry trends, and legal requirements. Periodically review your contract templates, pricing models, and contractual protection clauses to ensure they are up-to-date and aligned with your business goals and strategies. Seek legal advice if needed to ensure that your contracts are legally sound and provide adequate protection for your consulting business.


Overall, transitioning from hourly to project-based pricing as a consultant requires careful consideration and planning. It is crucial to clearly define the scope of work, determine a fair and competitive project fee, establish payment terms, including contractual protection clauses, communicate expectations clearly, have a change order process, and review and update contracts regularly. Doing so allows you to successfully transition to a project-based pricing model and provide value to your clients while ensuring fair compensation for your expertise and effort.

Learn About Our Guest

In 2009, visionary Mandy Pearce founded her flagship company, Funding for Good, to equip organizations with all of the skills and tools needed to become successful and sustainable. She continues to enjoy evolving this company to meet the changing demands of the nonprofit world.

For over two decades, Mandy and her team of experts have worked with US-Based Nonprofits as well as nonprofit consultants looking to establish and grow their consulting companies. Mandy loves supporting other entrepreneurs so they can realize their dreams more quickly. Mandy and her team offer services to build the capacity and sustainability of nonprofits and for-profits alike, including the Nonprofit Consulting Conference Online and the 60-Day Nonprofit Consulting Bootcamp.

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