The Price Is right? Consulting Deals, Margins, and the Myth of the good Bargain

Claas
Oct 1, 2025
4 min read

This week’s post might feel familiar. Because most of us have lived it. On one side of the table or the other.

The setup looks great. The deal is done. The kickoff slides are polished. The contract is signed, the budget locked in. The price is... impressive. Lower than expected, maybe even too good to be true. That’s where the story begins.

And where the trouble usually starts.

The temptation to believe

For clients, a low price can feel like a win. It’s efficient, competitive, lean. Maybe another firm offered something similar for 15 percent more. This one came through, and the rest is just execution, right?

Inside the consulting firm, there is a moment of celebration. We won. Big logo, big team, strategic account. Leadership signs off, delivery ramps up, and someone quietly updates the staffing plan to make the numbers work.

Then reality settles in.

What happens next

It is not always immediate. Sometimes it takes a few weeks. But it shows up. Scope clarity starts slipping. The senior lead is swapped for a more "scalable" setup. Delivery starts catching up with commercial decisions that were made in a different room.

The team gets overloaded. Escalations rise. Margins are reviewed. Adjustments are proposed. The same cycle begins again. Fixes are tried. More effort is poured in. The pressure increases. Quality drops. And often, everyone is frustrated, but no one is surprised.

Two kinds of low-margin deals

There are exceptions. A deal can be intentionally low-margin if it's a strategic move,

agreed and supported across the firm. You set it up that way, align leadership, define delivery constraints clearly, and protect the quality. That can work.

But most of the time, it is not that. It is the "must win" deal, the late-stage commercial dance, the auction-style pricing that nobody really believed in but signed anyway. The one where everyone nods at the kickoff and silently hopes it will somehow be fine.

Reminder to myself: write a separate post on those deals. They deserve their own story.

Fixed price is not the problem

One important exception: a fixed-price deal can actually work. If the scope is clear, the expectations are realistic, and both sides align on what’s being delivered. In that case, there is no incentive to under-staff, because that just leads to bigger issues. In these setups, the pressure shifts from the people to the outcome. The delivery model is not the risk. Clarity is.

When it does work

Not every lean deal is a bad one. Some are just structured smart. There is a ratecard. The pricing is competitive but balanced. You have roles that stretch and others that cover. You have room to adapt. It is not perfect, but it is fair.

You also accept that you never know who will become the client’s favorite, who will really perform, or where the real value will come from. But you give the team enough space to find that balance. That mix is what makes it sustainable.

And that starts with honesty.

On the inside

As someone who’s been responsible for accounts, I have often felt like the client’s agent inside the consulting machine. Maybe not the best word these days, but that is what it was. Navigating staffing decisions, protecting delivery quality, pushing back when the price was fine on paper but made no sense in reality.

That role only works if both sides are honest. About cost. About margin. About the kind of team a certain price can actually support. Because when that does not happen, you are not managing an account anymore. You are firefighting a broken deal.

A few takeaways

For consultancies: be honest with yourself. You can sell low, but only if the delivery setup matches the commercial setup. Pricing and costing are different things. If one changes and the other does not, the pressure will always find its way into the team.

For clients: be realistic. If the price is significantly lower than others, it is not a better version of the same thing. It is a different thing. Unless you know someone is strategically investing in you, a cut-rate deal means compromises. Often the ones that only show up later.

A few things this is not

This is not a plea for better pricing or higher rates. Everyone needs to figure that out for themselves. But it is a call to avoid the kind of setups that start clean and end in dis- appointment.

And just to be clear, I have worked in this industry for over 25 years. I have never seen a team that wanted to take advantage of a client. I have never seen anyone trying to cheat. Most of us want to do good work, earn follow-up projects, and build long-term partnerships. But we also need to run a business. We cannot work for free. The intent is honest. The pressure is real.

Also, let us not blame procurement. They have a job to do. And let us be honest. Many of the pricing tools and evaluation models we now suffer from were invented by consultants. Auctions included.

One last thing

Even when the team is too junior, too stretched, too exposed, they still try to deliver. And in 99 percent of cases, it is not their mistake. They just feel the consequences first.

Price is visible from the start. Value takes a little longer, but it is what people remember.

The Price Is right? Consulting Deals, Margins, and the Myth of the good Bargain

This week’s post might feel familiar. Because most of us have lived it. On one side of the table or the other.

The setup looks great. The deal is done. The kickoff slides are polished. The contract is signed, the budget locked in. The price is... impressive. Lower than expected, maybe even too good to be true. That’s where the story begins.

And where the trouble usually starts.

The temptation to believe

For clients, a low price can feel like a win. It’s efficient, competitive, lean. Maybe another firm offered something similar for 15 percent more. This one came through, and the rest is just execution, right?

Inside the consulting firm, there is a moment of celebration. We won. Big logo, big team, strategic account. Leadership signs off, delivery ramps up, and someone quietly updates the staffing plan to make the numbers work.

Then reality settles in.

What happens next

It is not always immediate. Sometimes it takes a few weeks. But it shows up. Scope clarity starts slipping. The senior lead is swapped for a more "scalable" setup. Delivery starts catching up with commercial decisions that were made in a different room.

The team gets overloaded. Escalations rise. Margins are reviewed. Adjustments are proposed. The same cycle begins again. Fixes are tried. More effort is poured in. The pressure increases. Quality drops. And often, everyone is frustrated, but no one is surprised.

Two kinds of low-margin deals

There are exceptions. A deal can be intentionally low-margin if it's a strategic move,

agreed and supported across the firm. You set it up that way, align leadership, define delivery constraints clearly, and protect the quality. That can work.

But most of the time, it is not that. It is the "must win" deal, the late-stage commercial dance, the auction-style pricing that nobody really believed in but signed anyway. The one where everyone nods at the kickoff and silently hopes it will somehow be fine.

Reminder to myself: write a separate post on those deals. They deserve their own story.

Fixed price is not the problem

When it does work

Not every lean deal is a bad one. Some are just structured smart. There is a ratecard. The pricing is competitive but balanced. You have roles that stretch and others that cover. You have room to adapt. It is not perfect, but it is fair.

You also accept that you never know who will become the client’s favorite, who will really perform, or where the real value will come from. But you give the team enough space to find that balance. That mix is what makes it sustainable.

And that starts with honesty.

On the inside

That role only works if both sides are honest. About cost. About margin. About the kind of team a certain price can actually support. Because when that does not happen, you are not managing an account anymore. You are firefighting a broken deal.

A few takeaways

For consultancies: be honest with yourself. You can sell low, but only if the delivery setup matches the commercial setup. Pricing and costing are different things. If one changes and the other does not, the pressure will always find its way into the team.

For clients: be realistic. If the price is significantly lower than others, it is not a better version of the same thing. It is a different thing. Unless you know someone is strategically investing in you, a cut-rate deal means compromises. Often the ones that only show up later.

A few things this is not

This is not a plea for better pricing or higher rates. Everyone needs to figure that out for themselves. But it is a call to avoid the kind of setups that start clean and end in dis- appointment.

Also, let us not blame procurement. They have a job to do. And let us be honest. Many of the pricing tools and evaluation models we now suffer from were invented by consultants. Auctions included.

One last thing

Even when the team is too junior, too stretched, too exposed, they still try to deliver. And in 99 percent of cases, it is not their mistake. They just feel the consequences first.

Price is visible from the start. Value takes a little longer, but it is what people remember.

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