Consulting

I am forever amazed at the fees paid to business consultants.

The distribution around what would be a fair market price is quite large.

There are a few reasons why:

1. Very few consultants use agents to negotiate fees, as should be the case after an in principle agreement is made on the services to be delivered.

2. Similarly, few companies that are hiring consultants refer the deals to purchasing officers.

3. Except for  generic services, crowd sourcing -explicit (web) or implicit (tendering) – is mostly absent from purchasing, often reflecting the laziness and self serving desires of those hiring consultants.

4. The price-making job of the consultant is to create the impression that their services are unique and highly value adding. The price-taking client should decide not to believe this primarily because, if true, the consultant would be fully occupied with existing clients and wouldn’t be pitching for business. Such logic rarely applies.

5.Certain company officers, CEOs, directors and GMs for example, should be completely banned from hiring consultants simply because the strict rules that apply to the rest of the company don’t apply here.

Meandering through that discourse, I see a template for consultants on how to pitch and who to pitch to.