Worked scenario
Subcontracted at last year's rate, billed at last year's price
A consultancy delivering through associates has two prices to manage, and margin erodes whenever only one of them moves.
3 min read
Work is won at a client rate and delivered at an associate rate. The difference is the business.
Reviewed separately, if at all
Associate rates rise when an associate asks. Client rates rise when someone proposes it. Neither event references the other, so margin drifts without a decision.
Per engagement, not in aggregate
An average margin conceals engagements running at nearly nothing. Those are usually long-standing relationships where both rates have moved several times in the wrong order.
What changes
- Associate cost and client rate held together per engagement
- Margin per associate and per engagement visible
- Rate reviews scheduled for both sides
- Engagements below a margin threshold flagged
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