The Big 4 Firms are renowned for their deep knowledge and skills, global footprint, and high rates. A recent survey found that nearly three-quarters of the four major consulting projects end up costing more than U. S. companies anticipate.
However, the Big Four were less likely than major technology companies to exceed customer expectations for project costs, with 76 percent of technology firms' projects turning out to be more expensive than the customer anticipated they would be. In contrast, traditional management consulting firms such as McKinsey, Bain & Company and Boston Consulting Group were the least likely to exceed customer expectations for costs, with only 60 percent of their projects exceeding budget. The survey also revealed that 75 percent of U. companies made reasonable estimates of the project's costs before receiving any proposals from consulting firms. Most clients believe that consulting firms are setting their rates too high, according to senior executives surveyed, and 74 percent of respondents indicate that consultants don't create enough value to justify the prices they charge. However, the survey also found that it is the rule rather than the exception in the U.
to look for discounts on these rates, with consulting firms offering clients some kind of discount on 66 percent of projects. In reality, the big four firms were more likely to offer discounts to customers, with a 70 percent discount on their projects to some degree. More than three-quarters (79 percent) of senior executives surveyed said that all or most of their organization's consulting contracts include some type of results-based element, while 88 percent plan to make greater use of results-based pricing in the future. The two main reasons clients give why they want to do more business based on results are to make consultants work harder (64 percent) and to ensure that consulting firms staff their projects with only their best people (50 percent). Sixty-eight percent of the four major projects examined in the research included a results-based element, suggesting that their appetite for the practice was similar to that of management consulting firms (66 percent), but significantly lower than that of major technology firms (76 percent).
In addition, 96 percent of senior executives surveyed who had used outcome-based pricing said they had a positive effect on project results; 61 percent said it had a significantly positive effect and 35 percent a somewhat positive effect on the quality of the work done by the company consultant. An 84 percent majority of U. companies expect their total spending on consulting projects to grow over the next 12 months. A similar proportion (80 percent) expects their total spending on consulting projects to grow over the same period. Another recent report from Source found that this is also true for shorter terms, as 59 percent of clients forecast that their spending on consulting projects would increase in the next 18 months. When it comes to setting rates for consulting services, it is important to understand how much value you are providing your clients and how much they are willing to pay for it.
You charge based on what matters most to your customer = the results and results you'll create for them. This simple and easy method is ideal for beginners who are working on their first consulting projects. Whereas, since consultant salaries are the highest, the number of consultants (which depends on the scope of a project's work) is the significant influence. For most consulting firms, clients with closer relationships (who have signed one or more projects in the past) usually get a discounted price on their future projects. Finally, independent contractors constitute the large group of autonomous consultants active in the industry. Consulting firms around the world are under scrutiny for the fees they charge their clients.
It is important to remember that this is your starting hourly rate. If you feel it's too low, turn it up. Even in the firms themselves, prices are handled by senior staff and most junior associates and consultants are not aware of all the details. Now that we have a mental model for thinking about the industry and some of the trends that affect it, we can approach and analyze how much Big 4 consultants charge per hour. It is essential to understand how much value you are providing your clients and how much they are willing to pay for it in order to set rates for consulting services appropriately.