Spending More Bucks for Pro Consultants in '24: A Slight Uptick Over Previous Year, Below Forecast
sar Frankfurt
Business expansion for consulting firms slows down more than anticipated
If you're eyeing a consultant in 2024, brace yourself for an extra pinch — 84% of service providers bumped up their rates from the year prior, according to a survey by Lünendonk among 180 market players. Come the end of 2023, a whopping 91% of the bunch aimed to lift prices even higher.
Here's the lowdown on why service providers are packing it in:
- Inflation Bites Back: The bite of inflation isn't skipping the business sector, affecting costs like labor, materials, and operational expenses. With these costs creeping up, service providers need to hike prices to preserve their profit margins.
- Economic Storms: Turbulence in the global market and supply chain hiccups can give businesses a good reason to beef up prices, helping them navigate uncertainties and shore up sustainability.
- Talent & Skills Cost: Finding and retaining top talent doesn't come cheap, be it in IT or consulting. To offset these added expenses, businesses need to up their pricing game.
- Demand Outstripping Supply: When demand runs high for services, providers can profit by increasing fees to maximize revenue during booming market conditions.
- Market Muscle: Even in a competitive market, if most providers are hiking prices, it's not hard to see why others might follow suit. Keeping up with the pack helps companies avoid getting priced out.
- Profit Margins on the Line: Hoisting prices can serve as a safeguard for companies that face rising costs or market pressures threatening their financial stability.
All these factors contribute to B2B service providers' decisions to jack up prices — factors that stem from broader economic and market trends. The specific reasoning may shift based on industry and the unique challenges faced by each company surveyed by Lünendonk.
In the business landscape of 2024, it's expected that finance-oriented consultancies may follow the trend set by the service providers, as they have projected a surge of 91% in price increases, seeking to maintain profit margins despite inflation, economic instability, increased talent costs, and demand outpacing supply. In such a competitive market, it's crucial for businesses aiming to seek consultation to be prepared for potentially higher fees to secure expertise and remain competitive.
