CFO1AQS38V © 2008 Corporate Executive Board. All Rights Reserved.
Guide to Pricing
in the Consulting Industry
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
Entry Level
Midlevel
Upper Level
Advanced
Highest Level
120
140
170
200
250
275
200
250
300
300
Entry Level
Midlevel
Upper Level
Advanced
Highest Level
100
125
150
150
187
190
200
250
275
300
Rates for most staff are higher
for Strategy and Management
consulting leading to more
expensive engagements.
Standard
Realized
CFO18RAP69 © 2008 Corporate Executive Board. All Rights Reserved.
3
IT Services Are a Relative Bargin in Consulting
© 2008 Corporate Executive Board. All Rights Reserved. CFO1AQS38V
HR consulting rates are in line with operations…
HR, Organization Consulting and Training
…but far higher than IT services rates
IT Services and Consulting
Entry Level
Midlevel
Upper Level
Advanced
Highest Level
100
100
150
170
200
225
250
263
300
300
Entry Level
Midlevel
Upper Level
Advanced
Highest Level
99
105
125
150
150
175
175
190
200
220
Source: Consulting Industry 2008: Fee and Pricing Benchmarking Report, Raintoday.com; CFO Executive Board research.
Standard
Realized
More Expensive Does Not Mean Better
Branded fi rms 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
Source: Consulting Industry 2008: Fee and Pricing Benchmarking Report, Raintoday.com;
Entry Level
Midlevel
Advanced
Upper Level
Highest Level
$100
$150
$150
$200
$200
$225
$250
$250
$300
$300
Bearing Point
McKinsey
Booz
Accenture
Deloitte
Bain
IBM
AT Kearney
PwC
KPMG
E&Y
Mercer/Oliver Wyman
BCG
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
7.6
7.6
7.2
7.2
7.1
7.1
7.0
6.9
6.8
6.4
6.4
6.0
5.3
25thPercentilePercentile50th Percentile75th
Brand Leaders
Not Very Well
Known FIrms
Do Not
Recommend
Recommend
Strongly
n = 172.
Most branded
fi rms are
below the 50th
percentile.
CFO18RAP69 © 2008 Corporate Executive Board. All Rights Reserved.
5
The Details Matter in Billing
© 2008 Corporate Executive Board. All Rights Reserved. CFO1AQS38V
Range of Standard Billable Rates
U.S. Dollars Per Hour, Quartiles By Level
Range of Realized Billable Rates
U.S. Dollars Per Hour, Quartiles By Level
Source: Consulting Industry 2008: Fee and Pricing Benchmarking Report, Raintoday.com; CFO Executive Board research.
List prices and realized prices vary widely based on the individuals
involved, making it critical that staff hired are staff that do the work
—
—
—
—
—
400
350
300
250
195
—
—
—
—
—
200
168
150
110
75
300
250
200
161
125
0
200
400
0
200
400
—
—
—
—
—
400
340
262
225
170
—
—
—
—
—
175
150
125
100
75
250
225
200
150
100
0
200
400
0
200
400
75th Percentile
Median
25th Percentile
Highest
Level
Upper
Level
Advanced
Midlevel
Entry
Level
Highest
Level
Upper
Level
Advanced
Midlevel
Entry
Level
Median
Discount
17%
10%
0%
7%
20%
Bargain Firms Offer Some Price Relief
Source: Consulting Industry 2008: Fee and Pricing Benchmarking Report, Raintoday.com;
Premium Price Firms
Median Hourly Billing Rate
Bargain Priced Firms
Median Billing Rate
Unbranded fi rms can reduce engagement rates by approximately 20%
Entry Level
Midlevel
Advanced
Upper Level
Highest Level
$125
$150
$170
$195
$200
$225
$250
$280
$300
$300
Entry Level
Midlevel
Advanced
Upper Level
Highest Level
$100
$100
$140
$150
$168
$190
$200
$225
$250
$250
Standard
Actual
n = 207. n = 174.CFO18RAP69 © 2008 Corporate Executive Board. All Rights Reserved.
7
For You, Because I Like You…
© 2008 Corporate Executive Board. All Rights Reserved. CFO1AQS38V
Source: Consulting Industry 2008: Fee and Pricing Benchmarking Report, Raintoday.com; CFO Executive Board research.
Typical or Average Level of Discount Versus Intially Mentioned Rates
Firms Discounting Price and Fees For Services Versus Initially Mentioned Rates
Rates are most often negotiated, with 6-15% discounts from list price being most common
11%
39%
25%
13%
12%
2%
0%
4%
1–5%
6–10% 11–15% 16–20% 21–25% 26–50% More
Than
50%
Don't
Know
0%
20%
40%
65%
35%
Yes
No
n = 417. n = 647.Percent Discount
Percentage of
Consultants
Offering
Discounts
Haggling in White Shoes
While most fi rms offer price discounts…
Firms Offering a Price Discount by Pricing Tier
…some also offer free services instead of price breaks
Source: Consulting Industry 2008: Fee and Pricing Benchmarking Report, Raintoday.com;
Bargain Priced Firms
Equivalent Priced Firms
Premium Priced Firms
55%
71%
68%
Buyers Market
“There’s little doubt that the consulting fi rms
are feeling the effects of the fi nancial crisis.
During diffi cult times like this consulting
support becomes a discretionary spend that
gets cut back. All fi rms 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 fi rst place.”
Executive
Pharmaceuticals Company
$20 Billion in Revenue
CFO1AQS38V
