Misinformation is rife in the consulting marketplace and nowhere more so than in relation to prices. Some organisations agree predetermined minimum rates with consulting firms, especially if they have a preferred supplier list in place, but how do they know what the market price would be for a particular assignment? And does this vary across different consulting services? Some leverage the total volume spent with particular suppliers in order to maximise potential discounts, while others treat each engagement discretely and negotiate discounts depending on how eager a consulting firm is to win the work. Most consulting firms don’t publish rate cards and sometimes the only way for buyers and the users to find out whether they are paying a reasonable rate is to engage in a lengthy process of negotiation or hold an e-auction.
This situation benefits neither buyers nor suppliers in the long-run. Both sides waste time guessing what the relative price of assignments should be; consulting firms which are perceived to charge too much may end up losing business; buyers who pay too little for consulting services may get poorer quality work.
What are we going to do?
In order to throw some light on this subject, Source plans to carry out a study, to try and benchmark the rates paid by organisations to consulting firms. The aim of this project will be to provide the buyers of consulting services with:
· An understanding of the context for their pricing decisions.
· The ability to benchmark the prices they pay against what it is reasonable to expect in the marketplace.
How are we going to do this?
We plan to gather information from buyers of consulting and conduct an annual market assessment of the following;
· Average rate cards by: grade of consultant; consulting firm segment; type of service; and size of project.
· Average discounts obtained by: grade of consultant; consulting firm segment; type of service; and size of project.
· Average size of project: by consulting firm segment and type of service.
· Annual spend by: consulting firm segment; and type of service.
· Where available, average changes in prices and discounts in different countries.
Because of the potential complexity of pricing issues, this information will be gathered via a structured interview with the participating organisations rather than through a questionnaire. This will enable us to interpret participants’ input as accurately as possible and to maximise the value of the end-product. As pricing information is highly confidential and may be a source of competitive advantage in some instances, we will not identify buying organisations or list the rates of individual consulting firms (although we will group them together into segments).
These findings will be written up in two reports, both of which will be available to every participating organisation:
· A report giving a definitive guide to pricing consulting services in the current market.
· A short report benchmarking your information against that of the average, highest and lowest prices.
How can you participate?
If you’d be interested in taking part in this survey, please let us know. We clearly need to have a critical mass of participants in order to make the analysis meaningful. We will also be charging a one-off fee for both reports of £2,500 per participant.