This is another question I get asked a lot. And most people don’t appreciate that the two are quite different.
The confusion is understandable, honestly. Both contractors and consultants work outside the traditional employment structure, both get paid for their expertise, and both might show up at a client’s office on any given Tuesday. But the similarities pretty much end there.
In very simple terms, let me explain it this way.
What is a Contractor?
A Contractor is basically just like an employee. A hired hand to do a specific job or task. It’s just that the contractor is not on the ‘pay roll’ of the client’s business, but might operate their own company or be hired via an agency.
The contractor would normally be paid on the basis of a daily or hourly ‘rate’. The client still needs to ‘manage’ the contractor.
Think of it this way—if a company needs someone to fill a seat and do a defined role for six months, they hire a contractor. The contractor turns up, does the work they’re told to do, and goes home. The client decides what gets done, when it gets done, and often how it gets done. The contractor executes.
What is a Consultant?
A Consultant is a specialist in a certain field of work. They are hired not as temporary employees, but to deliver a specific outcome to the client. A marketing plan, a warehouse design, to draft a contract or whatever the requirement might be.
The consultant is expected to manage themself and deliver a specific outcome, on time and on budget. They are generally, though not always, paid on the basis of a fixed fee for a specific outcome. It is the consultant that determines the best way to get the work completed, based on their knowledge and experience.
This distinction matters more than most people realise. The consultant brings not just skills, but judgement. A client might say “we need to reduce our logistics costs by 15%”—they’re not telling the consultant how to achieve that. They’re buying the consultant’s expertise in figuring out the how.
Why This Distinction Matters for Your Business Model
If you’re thinking about starting a consulting practice, understanding this difference shapes everything from how you price your services to how you position yourself in the market.
Contractors often compete on rate. If you’re a contractor, someone can always undercut you. It becomes a race to the bottom, and your income stays capped by the hours you can physically work.
Consultants compete on outcomes. When you’re selling a result rather than your time, the conversation shifts entirely. A guy running distribution for a furniture company doesn’t care if solving his warehouse bottleneck takes you three days or three weeks—he cares that it gets solved.
The thing is, plenty of people call themselves consultants when they’re really operating as contractors. They’re trading time for money, waiting to be told what to do, and wondering why they can’t seem to raise their rates. The label on your business card doesn’t determine which you are. Your relationship with the client does.
Making the Shift
Moving from contractor to consultant isn’t just about changing your job title. It requires repositioning how you think about the value you provide. You stop selling hours and start selling expertise. You stop asking “what do you need me to do?” and start asking “what problem are you trying to solve?”
That shift can feel uncomfortable at first. But it’s the difference between building a practice with real leverage and simply being self-employed.