Corporate Executive Board Guide to Pricing in the Consulting Industry CFO1AQS38V 8 Corporate Executive Board. All Rights Reserved.
Strategy and Operations Prove Most Expensive Strategy engagements have the highest rates Strategy and Management Consulting followed by process and operations engagements Operations and Process Consulting Standard Realized 275 275 190 187 140 120 170 Rates for most staff are higher for Strategy and Management consulting leading to more expensive engagements. 125 100 CFO1AQS38V 8 Corporate Executive Board. All Rights Reserved. Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
IT Services Are a Relative Bargin in Consulting HR consulting rates are in line with operations HR, Organization Consulting and Training but far higher than IT services rates IT Services and Consulting Standard Realized 220 263 190 175 225 175 170 125 100 100 105 99 Note: n=varies by levels, approximately equal to 400. 8 Corporate Executive Board. All Rights Reserved. 3 Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
More Expensive Does Not Mean Better Branded firms are more likely to realize list rates Actual Realized Median Rates By Brand Reputation despite overall worse performance as ranked by executives Median Recommendation Rating (1-10) of Best Know Firms Survey of More Than 400 Senior Executives 25th 50th Percentile Percentile 75th Percentile $ $ $ $ BCG Mercer/Oliver Wyman E&Y KPMG 7.6 7.6 7.2 7.2 Most branded fi rms are below the 50th percentile. $225 $ PwC AT Kearney IBM 7.1 7.1 7.0 $100 $ $ $ Brand Leaders Not Very Well Known FIrms Bain Deloitte Accenture Booz McKinsey Bearing Point 5.3 6.9 6.8 6.4 6.4 6.0 n = 172. 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Do Not Recommend Recommend Strongly 8 Corporate Executive Board. All Rights Reserved. 4 Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
The Details Matter in Billing List prices and realized prices vary widely based on the individuals involved, making it critical that staff hired are staff that do the work Range of Standard Billable Rates U.S. Dollars Per Hour, Quartiles By Range of Realized Billable Rates U.S. Dollars Per Hour, Quartiles By 400 75th Percentile Median 25th Percentile 400 400 400 350 340 168 161 110 195 125 75 175 225 262 125 225 100 170 100 75 0 Highest Upper Entry 0 Highest Upper Entry n = 524. n = 417. n = 426. n = 402. n = 389. Median Discount 17% 10% 0% 7% 20% 8 Corporate Executive Board. All Rights Reserved. 5 Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
Bargain Firms Offer Some Price Relief Unbranded firms can reduce engagement rates by approximately 20% Premium Price Firms Median Hourly Billing Rate Bargain Priced Firms Median Billing Rate $ $ Standard Actual $ $ $280 $ $225 $ $225 $ $190 $168 $195 $170 $ $140 $ $125 $100 $100 n = 207. n = 174. 8 Corporate Executive Board. All Rights Reserved. 6 Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
For You, Because I Like You Rates are most often negotiated, with 6-15% discounts from list price being most common Typical or Average of Discount Versus Intially Mentioned Rates Firms Discounting Price and Fees For Services Versus Initially Mentioned Rates 40% 39% Percentage of Consultants Offering Discounts 20% 11% 25% 13% 12% No 35% 65% Yes 0% 2% 0% 4% 1 5% 6 10% 11 15% 16 20% 21 25% 26 50% More Than Percent Discount 50% Don't Know n = 417. n = 647. 8 Corporate Executive Board. All Rights Reserved. 7 Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
Haggling in White Shoes While most firms offer price discounts Firms Offering a Price Discount by Pricing Tier some also offer free services instead of price breaks Premium Priced Firms 55% Equivalent Priced Firms Bargain Priced Firms 68% 71% Buyers Market There s little doubt that the consulting firms are feeling the effects of the financial crisis. During difficult times like this consulting support becomes a discretionary spend that gets cut back. All firms are now willing to make investments either in terms of free resources to do some work that will potentially lead to billable work, or by discounting projects in order to get the work in the first place. Executive Pharmaceuticals Company $20 Billion in Revenue n = 646. 8 Corporate Executive Board. All Rights Reserved. 8 Source: Consulting Industry 8: Fee and Pricing Benchmarking Report, Raintoday.com;
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