Professional Service Consulting - Pricing Models

Goals

To obtain the pricing models for professional service consulting firms. This information would help in developing a short to long-term pricing strategy for a marketing consulting firm.

Early Findings

  • According to Joel Barolsky of Barolsky Advisors, creating a pricing model for professional services is a tricky process. If the pricing is too high, a firm might lose clients; if this pricing is too low, the firm might also be losing potential revenue.
  • A major reason for this complexity is the fact that different clients perceive value differently. Also, there is a varying value perception for different kinds of projects.
  • It is advisable to tailor pricing to the specific needs of a client and context. Barolsky asserts that "a one-size-fits-all approach to pricing is a recipe for profit disaster".
  • According to ConsultantJournal, consulting fees can be set using the following strategies:
  • Richard Allen, a consultant at Burcher Jennings, made the following conclusions after studying an Altman Weil survey which sampled 1,100 lawyers in the United States:
  • In addition to this public search, we scanned our proprietary research database of over 1 million sources and were unable to find any specific research reports that address your goals.

Proposed next steps:

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Our background search reveals that there is sufficient public information to guide professional service consulting firms on how to structure their pricing. Therefore, we recommend additional research to provide 2-3 case studies of professional service firms that generated higher profits because they transitioned from hourly pricing to another pricing model (such as value, performance, or project-based pricing). The research team would attempt to identify case studies from firms whose revenues are within $4 million to $5 million. However, we may expand our scope if this specific revenue range is not available.
Also, we recommend providing 2-3 best practices for creating pricing models/structures for professional service consulting firms.