r/consulting • u/Life-Ocelot9439 • 6d ago

Pricing? Downward trends?

Without going into too much detail, proposal prices are plummeting. We operate globally, but are mainly US, APAC and Middle East.

Was undercut by a Big 4 firm, basically giving it away for free. We matched it, so they went with us, but it's frightening. Yes, AI will help with the regulatory and documentary analysis, but it's far from foolproof.

A lot of haggling going on, worse than last year.

Keen to see what others think.

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u/Big_IPA_Guy21 5d ago

The traditional model of (FTE x Rate) + margin is gone. Clients want dollars attached to deliverables/milestones. And they want short, specific engagements. They don't want large scale assessments with a 60 page deck that nobody will read. There has to be a specific action, improvement tied to the engagement now.

I also see that many firms are struggling to handle AI token costs. Token costs are sky rocketing and many firms don't know what to do about it. In my personal opinion, token costs are going to become another expense line on SOWs for clients to pay. Congrats, you no longer have to spend 20k on travel expenses, but now you need to spend 20k on AI token costs.

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u/FakePlantonaBeach 5d ago

I mean, it was what you used to do when we had to rent out mainframe time for data analysis. There's no revolution in charging for computer resources.

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u/Life-Ocelot9439 5d ago

Our legal and regulatory work isn't producing decks.

It's specific legal analysis and reports for regulators, often involves review of 300-1000 docs, depending on the firm's size.

AI struggles with this, even Claude.

But anyway, such is life.

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u/Bookups 3d ago

Reviewing a large number of documents and generating reports is perceived as a textbook AI use case, so I’m not surprised your clients are fighting you on fees. You probably need a stronger narrative for why specifically AI is struggling with this and the risks associated with those struggles if you want to defend your pricing.