It has come to my attention that the day rates my firm charges may be out of kilter with the rest of the market.I was just speaking to a client who told me how much they pay MBB type firms for a director-level member of staff. This is only hearsay and he may well have been pulling my leg - but what he told me was TEN times more than the day rate I'm used to. I didn't ask what it would be like for a more junior level of staff... but would be a lot, I'm sure.So guys, how about we start sharing some info about day rates? And any tips for getting clients to pay them.

£150 per hour of which we typically recover about 40%, so approx £60/hr (£480/day).Such a boss... haha

[quote]It has come to my attention that the day rates my firm charges may be out of kilter with the rest of the market.I was just speaking to a client who told me how much they pay MBB type firms for a director-level member of staff. This is only hearsay and he may well have been pulling my leg - but what he told me was TEN times more than the day rate I'm used to. I didn't ask what it would be like for a more junior level of staff... but would be a lot, I'm sure.So guys, how about we start sharing some info about day rates? And any tips for getting clients to pay them.[/quote]What do you charge for a senior manager grade (i.e just below partner)

€5k a day.

Wow. I really am charging the wrong amount. We charge a flat fee of £1,075 irrespective of the grade of staff. We work mostly with SMEs though rather than multinationals or central government. We're a good little firm and we do really excellent work (right up there with the best of them in terms of quality) but I definitely wouldn't say we're prestigious - we're basically unheard of in most circles. However even at that rate (which now looks like a bargain) we struggle with clients who think it is way, way wayyy too high. Where am I going wrong?

My previous employers partner rates are about 2500 compared to that of 8k+ by mbb! Managing consultant/senior manager around 1700

I can't help but think this whole £8K+ day rate for a MBB partner might be a bit phoney. I'm sure they do actually charge that on a pro-rata basis... but I'd be surprised if much of their time is actually chargeable. They might perhaps do the odd couple of hours here and there. Certainly not 3 months of continuous 100% utilisation on a project. It's easy to stick £500 for half an hour's work on the final bill for a project but that doesn't mean your day rate really is £8,000.

You'll see a high degree of variability between clients, resource geographies and type of work....

[quote]Wow. I really am charging the wrong amount. We charge a flat fee of £1,075 irrespective of the grade of staff. We work mostly with SMEs though rather than multinationals or central government. We're a good little firm and we do really excellent work (right up there with the best of them in terms of quality) but I definitely wouldn't say we're prestigious - we're basically unheard of in most circles. However even at that rate (which now looks like a bargain) we struggle with clients who think it is way, way wayyy too high. Where am I going wrong?[/quote]Blended rate then for a mixed team? £1075 seems high for a junior resource but I guess it depends on how many more senior people you have on the team?

Yeah, basically that's our blended rate. Say a 1 to 1 ratio between junior (aged late 20's or so) and senior (aged 45+) staff.

[quote]Yeah, basically that's our blended rate. Say a 1 to 1 ratio between junior (aged late 20's or so) and senior (aged 45+) staff.[/quote]Cheap as chips then!

Perhaps TOO cheap...But not as cheap as our clients, who I think expect £600-700 per day. How can I better get them to appreciate that £1,075 is as cheap as chips?

It's actually a very interesting dilemma. As a client, I want to know a MC firm is giving me a good deal, but I don't want to think they are 'cheap' vs the ret of the market. I would have to assume the work they do is poor, or I could receive a much better level of service elsewhere.I might want to hear something along the lines of "as we want to build a lasting, mutually beneficial partnership with your company, we are prepared to offer you an extremely competitive rate...Bla Bla..." If they seriously doubt how competitive this rate is, have them send a RFP to McK.

Another point to add - if you truly want to make cash (serious cash) - tie your fee to results. Forget the daily rates and have your senior guys negotiate a gain share approach. Typically works best in spend reduction / cost optimization projects (so we're not necessarily talking SI work here) - but it's making the daily rates concept unfashionable....Of course then you have to achieve your results and get your client to pay up - that is a different story altogether...

I once tried the fees linked to results thing, but the clients just didn't understand it. When you work in the fluffy public sector where every meeting seems to talk about "thinking strategically" or "cultural change", nobody seems able to understand hard numbers and how KPIs and suchlike could be mapped to £ fees. They do however understand "our fee is £X, you pay it on X August". Cost reduction consultancies must do well out of this but our work is more along the lines of SI advice, planning, project advice and so on. We also tried doing the fixed price thing but clients always come back and ask what the day rate is.

BEP - you surprise me as you usually have sage advice!As far as I can tell the market in general IT change type work (including public sector) goes a bit like this:Contractor: 300-800 per day depending on whether techy grunt to programme manager or expert in field. A few exceptional people get over this for high rent work (or where they just have the right contacts!).IT consultancies (usual big names) from 500 for a grad to 1000 for a 'manager', more for world experts and partners but breaking £2k a day is very rareManagement consultancies (the big ones) are about double the above rates. Although the sales process and different firms seem to alter the balance of cheaper to more expensive firms. E.g a mid sized UK consultancy used to have expensive lower value staff but the Management Consultant rates were relatively cheap due to the way they accounted for internal costs into day rates.Strategy MCs were about double again.I'm a couple of years out of date with this but hope its useful. The next question is the relationship of day rates to staff salaries!

I'm pretty sure the UK central procurement office (or some office) lists the contracted rates with consultancies. I've seen it before, but forgive me I can't remember the link/site off hand. You'll find the typical Big4/Accenture/IT consultancy rates, but won't find the top strat rates. You'll have to dig harder for those rates.The general rule of thumb I've always worked with:- £500-£800 / day for contractor/body shopping rates (pure delivery work)- £1000-£1200 / day for smaller, less well known brands (could be advisory, but still mainly delivery)- £1200-£1600 / day for Big 4 - £1700-£2000 / day for high end boutiques or tier 3 strat firm- £2000-£3000 / day for tier 2 strat houses- £3000-£4000 / day for MBBThese would be blended rates. Please anyone correct me if I'm really far off.

Pretty decent table - reliable for general usage I'd say.I've managed quite a few MBB "strat" teams (1 part time partner, full time team if engagement manager , two "managers" and two "juniors". A team like that will burn you close to 100k a week, plus VAT. Even an MBB junior will bill at 2k a day.That's why senior contractors are so in demand. I have all the experience of a director and I'm half the price of a junior!

My employer charges around £2150 a day for partner. £1400 for senior manager.

Crikey. Been out of it a while and all my experience was Big 4. I think the lowest I was ever charged out at was £1200 a day or something on some eternal public sector job but I also did plenty of FS stuff at over £3000.In contrast some of your firms appear to charge derisory amounts. These rates really compare badly with other "professions" - not just lawyers but surveyors, architects etc. I pay our lawyers at least £350 an hour. In fact they compare badly with car mechanics and plumbers. You are at over-the-shop-on-the-high-st conveyancing solicitor level.Draw your own conclusions as to how the market values. you. BEP, you surprise me with your suggestion your firm.charges less than "market" rate. You must know this is a nonsense.

Woah, woah, woah everyone just calm down. Turnover is vanity, profit is sanity.Billing rates are only part of the equation. What's your EBITDA? If you're charging 1000 a day on 40k staff with an 80% utilisation and a sub-20% staff attrition, you'll be driving a Bentley to work.If you're charging 2k a day on INSEAD grads on a 60% utilisation with a 40% staff turnover then you're skrood.

And the former is indeed the Big 4 model.

[quote]Woah, woah, woah everyone just calm down. Turnover is vanity, profit is sanity.Billing rates are only part of the equation. What's your EBITDA? If you're charging 1000 a day on 40k staff with an 80% utilisation and a sub-20% staff attrition, you'll be driving a Bentley to work.If you're charging 2k a day on INSEAD grads on a 60% utilisation with a 40% staff turnover then you're skrood.[/quote](£1,000 * 330 days * 80%) - £40k salary = £224k return(£2,000 * 330 days * 60%) - £80K salary = £316k returnNot sure how to factor in the cost of staff turnover, but to summarise I think your post misses the real important factor - bulk. Better off billing out three people at 1k per day (per above) than two at 2k!

100% utlilisation is more like 230 days (assuming you let people have the weekends off)

I thought we were talking about MC? Haha.Point stands anyway.

Very true. I could name a few firms where the number of chargeable days in a year is about 700.

OK guys, so what are your tips for getting those day rates up?What do you do when a client almost faints and looks at you with shock and horror when you say your day rate is £1,000?We're talking SME type clients here by the way, not public sector accounts where everything has already been set out in a framework agreement.Yes, I could tell them that plumbers in London charge £120 per hour and on that basis I should be charging £10K/day. Or I could tell them that they pay their lawyers £250/hour so I should be paid that too. But somehow I think it won't wash. So what do I do? I'm finding it really difficult to justify a day rate of £1,000 these days. We do excellent work and our staff are well-qualified. But, being honest here to help you help me, we don't have a prestigious brand name. People know when they pick up the phone for Olivery Wyman that it's going to cost them a bob or two. Similarly they expect KPMG is going to have a price tag. But it seems that when they speak to us they expect us to be charging pro-rata salary rates for our staff. Where am I going wrong, guys?

Bushy you are, I think, looking in the wrong part of your sales cycle for the answers. Yes when your clients call OW or KPMG they will expect a certain price tag. But for all the marketing those firms do, when it comes down to it that brand doesn't justify the price, it gets the sales opportunity. After that you are on a more level playing field. You will miss the trick if you are focusing on them, rather than how you sell your own company.

Very good point, Mars... maybe I need to try and get myself into situations where I'm pitching against more expensive firms, rather than against IT companies and the like that claim to do "consultancy" (but with IT contract day rates)...

[quote]Very good point, Mars... maybe I need to try and get myself into situations where I'm pitching against more expensive firms, rather than against IT companies and the like that claim to do "consultancy" (but with IT contract day rates)...[/quote]Bit off point, but is that the general case with all IT companies in your opinion? So for example someone mentioned the Cap CDC scheme yesterday - is that generally accepted to be IT work rather than true consultancy? How about IBM GBS - are they "consultants"?Not a loaded question, just genuinely interested as I'm not sure either way.

I like to remind myself of this..Good + Fast. It will be expensive but worth it.Good + Cheap. It will be worth eventually. It wont be fast.Fast + Cheap. It wont be good. Buy cheap buy twice. When I'm pitching a retainer my thinking is, if you balk at the price, you probably don't appreciate the pain of not getting the solution. If you think you can get results with a cheap option you probably don't have a problem I can solve. Oh and if you are working on a blended rate, up that then position that separately so that the first price they see is non-blended, then a lower but still good blended rate (with a pro rata involvement from the most senior of the team) then finally a good blended rate (still higher than now) which brings in the most senior of the team into a f/t commitment on the project and underline the impact on deliverables (and particularly timescales) these models cause to vary.This is the stuff I try to keep front of mind when Im pitching and generally find people want to do [i]good[/i] business not [i]cheap[/i] business. Probably not too useful, but maybe something to prompt some more useful commentary in the thread.

Very useful, but sadly a lot of the people who call me expect to have it good, fast and cheap. They sit on a deadline for 18 months then expect to bring in the consultants to complete the project by next Friday. So actually they expect us to be good, fast, cheap AND immediately available. It drives me nuts.

I can imagine. Sounds frightful. But they clearly see you are the go to call when the manure hits the rotating thingy..

Good point... maybe we just need to stick to our guns and look at them as if they're the weirdos for expecting anything less than £1,000/day...

Liked the Coolio comments and Mars.I think I said this before on this forum:Good / Fast / Cheap - Do all of them off course, but choose any 2 that will be our focus and you'll succeed. In relation to rates;- BEP, when you see the client and he is baulking at your rate, worthwhile having an appendix of "previous similar projects" mini pack. For example, 1 pager per project previously done. Especially if there is a nice mix of big names, government areas and SMEs (very good if one or two are going on now)- You can then look the (potential) client straight in the eye and confirm that these other clients are paying the same rate and the previous ones did the sameNothing like a handful of big names mixed with similar sized companies to theirs to remind them they are getting a good deal

How does a Saville Row tailor convince the residents of the Bellmarsh Estate to pay 3k for a hand made suit?How on earth do Ford manage to produce cars cheaper than Bentley?If they're "the best" why don't MBB dominate the SME consulting sector?Why don't I just charge 2k a day and retire in three years instead of five?

wait wait wait Coolio,BEPs whole point is that he is quite competitive but he is a small consultancy trying to sell to SMEs, so its more of;"How does TM Lewin convince the residents of the Bellmarsh Estate to pay £125 for a suit instead of a £99 suit from Asda? "How can BEP get the client to buy a Ford Focus ST instead of a VW Passat?" BEP already knows that MBB and Big 4 can charge far more than him, but he is trying to work out how to re-confirm the value for money his clients will definitely get with his company at his current blended rate. His competitors are not MBB (ie he knows his Ford Focus doesn't beat a Bentley, plus his SME clients shop at Car Giant in Hull andnot £1m+ Cars Kensington. Hence he has a Ford Focus)Its more about how we can get BEPs company (more of a Lidl / Aldi / small Corner Shop near your house) to compete against a Tesco or Morrisons

Hi Anons, yes you've got it in one... that's exactly the type of situation. We're a good little company but we know we're not MBB. You also won't see us advising the board of Unilever on their next product campaign... it's more likely to be advising the FD in a SME about what he should do with his IT. Most of our staff are MBB calibre (or close to it), but our company has nowhere near the same brand power (or size) as MBB or the Big 4. As you say, we're like "Bob's mini-market" in a world populated by Walmart Inc. and Tesco Express. We're in that tricky middle ground - we're not big (but we're not miniscule), we're not the best quality (but we're still very good), we're not the cheapest (but we're not the most expensive either)... basically we're a safe bet but in this day and age people seem to prefer "exciting" to "reliable". We always do a good job but (and I'll be the first to admit this) we don't have the glamour of the better-known firms. We don't have a huge impressive office that we can invite clients to, for instance. Nor do we have a household brand logo that everybody immediately recognises before we walk into the room (usually, we have to explain who we are). So... help! What should we do?

How about looking to how you are actually differentiating? And are you - effectively? Those small retailers who survive aren't the ones competing with Tesco, where they cannot win on price or range (or even convenience) they are offering things which Tesco and the like don't - customer focused, specialist products and knowledge etc. The local deli isn't competing with Tesco - nor would they want to.The thing is those big brand MCs don't understand SMEs - they simply cant think that granular. You are delivering work where the stakes are at their highest - a fail means people you have met, worked with, advised directly - lose their livelihood and probably more with it. They have skin in the game and you know this because you do too. Sorry but MBB couldn't care less if they damage or kill your business Mr Client, you are just a quarterly reporting contribution.

AgreedI still think the "past examples and current programmes" is one of your key selling points. The big ticket items that you have done previously and what you are working on now. As someone who now works as a client of MCs, you get some shoddy looking ones.Suggest 1 pagers, all in the same format that provide in a short / sharp / succinct manner what you did. Use STAR (situation, task, action, result) to help. A few graphs / pics / with some writing here and there, short bullet pointsA handful of these are then added as appendix and you make sure a couple are mentioned when talking to the client. ...there is no magic bullet, its lots of little things that are going to help you. Coolio no doubt has the gift of the gab, you need some strong delivery examples behind you and hopefully a couple of clients who are happy to be contacted if someone wants a ref?

You sound like the ideal candidate firm for no-win-no-fee consulting. Or risk-reward pricing if you prefer those words. Probably best to frame the 'saving' against the typical big 4 rates.i.e.: you could employ Big 4 for £2k per day. But they may not deliver. Employ us for £1k per day, and if we deliver then add on 30%.Worst case? You have lost a lot less money on consultants. Best case? You have saved £700 per day by employing a leaner, focussed consultancy.

[quote]You sound like the ideal candidate firm for no-win-no-fee consulting. Or risk-reward pricing if you prefer those words. Probably best to frame the 'saving' against the typical big 4 rates.i.e.: you could employ Big 4 for £2k per day. But they may not deliver. Employ us for £1k per day, and if we deliver then add on 30%.Worst case? You have lost a lot less money on consultants. Best case? You have saved £700 per day by employing a leaner, focussed consultancy.[/quote]or "Value Based" as it's also called. Certainly has a higher risk/reward element to it!