Why Consulting Costs Are Rising

1. Increasing Complexity of Client Problems

Today’s business challenges are rarely simple. Organisations are dealing with:

• Rapid digital transformation (AI, cloud, big data, IoT)
• Global supply chain disruptions and geopolitical risk
• Intense regulatory and compliance environments
• Sustainability/ESG mandates and stakeholder scrutiny

Consultants are required not just to advise, but to bring deep expertise, cross functional insight and execution capability. That premium expertise commands higher fees and thus drives the cost of consulting up.

2. High Skill & Specialisation Premium

Consultants specialising in niche fields (e.g., AI strategy, digital transformation, regulatory change) are in high demand:

• Their pay is high because their skills are scarce and highly valued.
• Consulting firms must pay high compensation to attract and retain top talent — which they pass on to clients.
• For example, a new MBA hire at top strategy firms in the U.S. can earn around US$190,000+ base, plus bonuses.

3. Value Based Pricing & Outcome Orientation

The consulting model is shifting from simply hours and reports to outcomes and transformation. As noted:

• Some major firms are moving toward fee models tied to results, not just time.
• When the deliverable is “business impact” rather than “consultant time”, the pricing becomes premium.
• Clients are willing to pay more if they believe the consultancy will deliver significant value (and risk is higher for the consultancy).

4. Global Reach, Travel & Infrastructure Costs

Consulting today often means global teams, cross border work, high levels of travel/remote coordination, advanced tools and infrastructure. These add costs. Firms must invest in:

• Talent in multiple geographies
• High end tools for analytics, modelling, collaboration.
• Maintaining brand, quality, compliance standards globally.

These cost elements enable premium fees.

5. Reputation, Branding & Risk Premium

Top consulting firms have built strong brands (e.g., “MBB” – McKinsey & Company, Boston Consulting Group, Bain & Company) and command premium pricing because:

• Their clients pay for trust, track record, risk mitigation.
• When the stakes are high (e.g., large transformation, billions of dollars), clients are willing to pay more for reputed firms.
• The “premium” brand thus supports higher fee structures.