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Top Management Consulting Rates
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Introduction
Management consulting rates are the subject of much discussion in professional services firms and client businesses alike.

In order to provide context for your consideration of the appropriate fee structure to adopt when working independently, I have set out below the indicative daily management consulting rates as charged by a typical global professional services firm.

Clearly these are the indicative fees that are representative of rates at the top end of the management consulting market.



Scale rates

Scale rates are the basic daily rates that are calculated by professional services firms for each grade or level of consulting staff. For example there will different rates for a Partner, Director, Managing Consultant, Consultant and so on.

The scale rates represent the basic daily charge that the firm calculates it needs to recover from clients to cover all costs and generate sufficient contribution (margin) in order that the profit targets as set out in the business plan for the consulting business will be achieved.

For large consulting firms the costs will be substantial and will include:
  • Salaries
  • Bonuses
  • Premises
  • Technology
  • Marketing
  • Finance
  • Insurances including: employer's liability, public liability, professional indemnity
  • A range of costs associated with maintaining, developing and protecting intellectual property
  • Administration

The calculations will take account of the practical reality that employed consultants are not likely to be fully utilized throughout the whole year.

For example it might be assumed that on average a consultant is able to charge 80% of his or her time to clients. Assumptions on utilization will vary depending on factors such as industry sector, grade & focus of the role and the current stage of the economic cycle.



Framework agreements
The actual rates that clients pay are negotiated and recorded in an overarching framework agreement between the consultancy and each client business.

The framework agreement serves two main purposes:
  • Firstly the framework agreement typically reduces the scale (vanilla) rates by a percentage discount to reflect the fact that the client is committing to spend substantial sums on consulting services during the period of the agreement i.e. crudely put there is an element of volume discount
  • Secondly, the agreement will contain tables of daily management consulting rates that are likely to vary by grade of consulting staff, type of assignment / service (M&A, Risk Management, Actuarial, Taxation) and geography.

 



Indicative rates
The management consulting rates set out below are illustrative of the level and range of fees that would appear in a typical framework agreement between a global consulting firm and a major client.

The rates are for the City of London and relate to the provision of higher risk Regulatory and Financial Risk Management services.
  • Partner - £6,000 per day
  • Director - £5,500 per day
  • Managing Consultant - £4,800 per day
  • Consultant - £3,800 per day
  • Assistant Consultant - £2,600 per day

 



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