The Women In Consulting team has just finished crunching the numbers from the latest WIC Compensation Best Practices Annual Survey. And, ahead of the final report, here’s the advanced scoop on this year’s research: revenues are up, but profitability is down.
If you’re not familiar with it, every year Women In Consulting does its annual Best Practices in Compensation survey for consultants. This survey reveals the overall trends in consulting revenues and compensation, as well as the best practices of the top-earning (top 20%) consultants.
Because WIC does this survey annually, the researchers can track trends over time. Previous surveys have revealed the ebb and flow of consulting revenues with the economic climate, for example. This year’s data reveals an unexpected anomaly, as revenues and profits move in different directions.
Revenues are up, but profits are down
Over the years, this survey has revealed a number of consulting ‘best practices’ that are correlated with higher profitability. These include charging value-based project fees instead of hourly rates, marking up subcontractor fees, and renegotiating fees when project scope changes.
This year, the survey respondents reported lower adoptions of these practices. For example, more people are working on an hourly basis. And as a result, profitability is declining.
“We always thought that the link between value-based pricing and marking up subcontractor rates and profitability was clear , but this is the first year we have had data that actually proves the relationship.” said Jen Berkley Jackson of The Insight Advantage, who has helped manage the survey for over 10 years as part of her pro bono work for WIC.
Why are we chasing revenues over profitability?
The interesting question is, “Why?” Why are people abandoning the compensation practices that we know deliver results?
- Are there more ‘new’ consultants who are not aware of these practices? (If you fall into this category you, I’d recommend you attend the upcoming WIC webinar and learn about these practices.)
- Is competition getting fierce, making people more timid about asking for their terms?
- Are client expectations changing?
If you have any thoughts, please submit them in the comments below. I’d love to hear feedback from others on what’s behind this shift.
Join the discussion at the October 2 webinar
I’m sure there will be an active discussion of this topic at the October 2nd webinar on the survey results. To join the discussion and learn more about these trends and the best practices of the top-earning consultants, sign up for the October 2 webinar WIC 12th Annual Best Practices Review. It’s going to be a very interesting discussion!
About Anne Janzer
Hello Anne,
Thank you for the information about the survey. I am a freelance graphic designer who has been self-employed for over twenty years. I use value-based pricing and have done so since I started. Ever since the “Great Recession” began, I have seen more competition with regard to pricing. I attribute it to both seasoned professionals who have been downsized to new graduates who don’t know any better. I also think that the advent of crowd-sourcing various types of projects has created an atmosphere where some potential clients expect to receive lots of ideas for very, very little money.
Susan Sharman
Susan – that’s an interesting point as to competition. I think that new consultants often don’t know how to value their services — and some of the crowd-sourcing sites or bidding (10 articles for 100 dollars!) can make people timid about pricing. What’s interesting is that there’s a lot of work out there – revenues were in fact up, but profits down. So consultants must be working harder than ever before. Thanks for your input.