Fees & rates

Consulting firms across the globe regularly come under scrutiny for the fees they charge their clients. In particular, the high hourly rates billed by the most prestigious consultants in the marketplace tend to invite debate. The key question is: what fees do consultants charge?

Consulting firms – especially those active in the higher segments of the market – do not unveil their fee structure. Consultancies regard their rates as one of their key competitive assets and, therefore, manage their fee structure as a 'trade secret', similar to salaries, which are also shrouded in secrecy. In addition, fees commonly vary per region/client/service offering, so firms keep tight control over their fee structure to minimise the threat of reputation risk, public debate or having to renegotiate their fees with clients.

As a result, there is relatively little information available publicly on the fees and rates charged by consultants. What is known, though, is that rates can differ widely, from an hourly rate of R250 for an interim consultant working on an operational level to R1400 or more per month for a consultant from a leading strategy consulting firm. Based on available data in the market* Consultancy.eu presents a simplified and indicative view of fees in the consulting market:

The figure uses the revenues pe consultant per annum as a proxy for average rates and the number of consultants as a proxy for firm size. 

The highest rates in consulting are charged by the Global Strategy Consulting Firms, such as McKinsey & Company (the largest firm with roughly 17,000 employees), Boston Consulting Group, Bain & Company, Strategy&, Roland Berger and A.T. Kearney. Strategy Boutiques, high-end firms that have a national/regional focus, follow in terms of rates.

The mid-market fee range is populated with three large types of consulting firms. Global Functional Specialists – such as Hay Group, Mercer and Willis Towers Watson (focus on HR) or FTI Consulting and Navigant (focus on financial advisory) – typically have a revenue per consultant between $300,000 (R4 million) and $400,000 (R5.5 million) per year. The Big Four – Deloitte, PwC, EY and KPMG – compete in the same range, but also offer lower fees in some services areas. Typically, the strategy and management consulting practices of the Big Four sit at the top-end of their fee model, while lower hourly rates are billed by lower value-adding services offered by other business units (e.g. Accountancy, Audit) or operational disciplines within IT Consulting.

National / Regional Functional Specialists position themselves, in terms of rates, similar to the Big Four and their larger global counterparts, although their exact fee structure will depend on their reputation and track record, functional focus and service portfolio among other factors.

Three types of firms find themselves in the consultant revenue range between $150,000 (R1 million) and $220,000 ( R3 million) per year. The Small and Mid-size Technology Players tend to have comparable rates, yet vary in size, ranging from small local players to large mid-sized firms with thousands of employees. The category Mid-size Global Accountants refers to the top 20 global professional services providers, excluding the Big 4, such as BDO, Baker Tilly, Grant Thornton, RSM and PKF. The slightly larger difference in their rates compared to technology players is explained by the full suite of service they offer, varying from Accounting and Tax to Consulting and Corporate Finance, as well as from price differentiation used for SME services.

Global Technology Firms are players that centre their business model around IT Consulting services and include players such as Atos, Accenture (with nearly 370,000 employees one of the largest), Capgemini and CGI. Note that the average fees of the purely management consulting practices (e.g. Accenture Consulting or Capgemini Consulting) are significantly higher, generally comparable to the range of Functional Specialists and the Big Four.

It is important to keep in mind that the above analysis from Consultancy.eu presents a simplified and indicative view of rates. Differences in firms, market segments and service offerings across regions and countries, for instance, will inevitably lead to exceptions in the typology.

Lastly, Independent Contractors comprise the large group of self-employed consultants active in the industry. Their annual fee income can range from anywhere below $50,000 (R700,000) a year (for operational support) to above $400,000 (R5.5 million for executive consultancy/interim). In essence, there is no ceiling to the hourly rates consultants can charge (with some exceptions in the public sector). They are, therefore, entitled to charge whatever they feel they are worth and what the market bears.

* Market information from representative bodies in the consulting industry, reports from analyst firms, management and consulting books and desk research from Consultancy.eu, based mainly on data publicly available from government contracts and interviews with (senior) consultants.