| Topic Name: |
Consulting Fees |
| Message Name: |
Not enough info to answer |
| Date Posted: |
02/21/2002 |
| In Reply To: |
As an MBA student in the south I am working on a detailed business plan for a new "consulting business".
Of course, to do an industry analysis properly, I would like to include pricing strategies of "competing consulting firms". I know that in most cases the firm charges by the hour times the amount of associates/analysts working for the client, but how can I find the average fee charged per firm w/o directly contacting and lying about my intentions about the information.
Believe me, this is just an attempt to add as much information as possible. |
| Message: |
Your question is fair, but it's entirely unclear what a "competing consulting firm" would be.
Will you do IT? Process? Stratgey?
Will you specialize in a functional area, like Marketing, CRM, Finance, Ops ?
How good are your connections with executives ina position to influence decisions and buy your services?
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Although there is not enough info to answer, let me float a trial balloon based on the consulting practices of the "Big 5" acctg firms ...
Figure "rack" rates running from $120 for the lowest level junior managers, to $300 for managers, to $450 for senior / experienced managers, to $ 550+ for partners. In "normal" years, assume 75-80% realization (20-25% discount) for hours worked, and assume average 75% utilization.
In decent sized process transformation / re-engineering projects, figure a leverage ratio of 15-20:1 staff:partner, resulting in a blended rate of approximately $200 per average staff hour worked.
In large it projects, 30:1, $150. In more stratgeic projects, 5:1, $275.
For government clients, deduct 20-30%.
For higher end strategy comparables like M/B/B, focus on the blended strategy rates quoted above and add 25%.
etc., etc ...
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What do others think of these estimates? They represent my experience in the Big 5 world pretty well.
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You should be able to get good benchmarks for established firms in *selected* subments by looking at the SEC reports of some semi-comparables ...
e.g. (a) Specialist boutique with a non-price sensitive segment (litigation): See Charles River, ticker CRAI, (b) CRM boutique, see Braun Consulting, (c) large firm, see Accenture, ticker ACN or KMPG, ticker KCIN.
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Other perspectives?
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