We went through this and failed with Quepid (<a href="http://quepid.com" rel="nofollow">http://quepid.com</a>).<p>Here's the problem. The business models are radically different. They're even, IMO, at odds with themselves and can put you in an ethical dilemna.<p>Products you have a set, upfront cost of product development, you hope to acquire enough customers at scale, to make up for those costs and turn them into a profit. Any investment in product you want to be matched on the other side by either retention of existing customers or acquisition of a new segment of customers.<p>The market analysis and product leadership work needed to do that looks very little like what it takes to run a consulting company.<p>Consultancies are about buying / selling expertise to help customers _make better decisions_ IMO. Your there as advisor, coach, mentor, and sometimes implementor. You're like a therapist or lawyer. Just like those positions, I feel you want to have a somewhat neutral demeanor helping clients evaluate a solution (commercial, open source, otherwise). If you feel pressure to hock your product, that turns you from a consultant into a sales engineer. I feel fairly strongly that compromises your position to offer the client ethical advice free of conflicts of interest.<p>From a business perspective, doing consulting work well looks different than product dev. You do much less upfront, fixed-cost work, and the costs directly scale with the client load. Even acquiring a new client, which is costly, can be predicted somewhat, letting you incorporate those costs into the services that follow. The good thing about the consulting model is that if you keep consultants busy, you stay on top of sales costs and getting paid, profit is nearly guaranteed. The downside is scale - your income is always tied to your technical team's time.<p>-- Two business models, one company...<p>It's not inherently bad to have two business models in one company. But at the scale you're probably asking (small consulting company) it makes very little sense. You need focus your limited time on one model, and executing it. Most small companies can barely keep up with doing one business model well.<p>Consulting takes _a lot_ of focus to do right. You need to come up with good offerings, you need to know how you'll deal with payment risk and complex contracting. It's a huge split of focus trying to do _two models right_. I'd say nearly impossible in fact.<p>In the end, in our story, we decided to 100% focus on being the best consultancy we could in our domain and dramatically increased our rates until 50% of our customers were blushing at the price. If they blushed at the price, that was a sign they weren't serious about going down the path we wanted to take them down to help them with their fundamental prodblems.