""We're doing more performance-based arrangements with our clients," Michael Birshan, managing partner of the UK, Ireland, and Israel at McKinsey, told reporters at a media event in London earlier in November."
"Now, rather than saying, "Here's a scope, what's the fee for that?" clients are coming to McKinsey and saying, "Here's the outcome we'd like to get to," and the fee will be mostly contingent on the performance McKinsey can deliver, Birshan said. Some fixed cost components remain."
"Outcomes-based pricing didn't start because of AI, but the type of work AI transformation demands suits it, Kate Smaje, global leader of technology and AI at McKinsey, told Business Insider in an interview."
"Clients who were undertaking " big career bets" appreciated the company saying, 'Hey, look, your scorecard with your board is our scorecard, and we're both successful when this transformation works, so let's share in the upside,' said Smaje."
AI is reshaping consulting offerings and pricing models. McKinsey reports that roughly a quarter of global fees now come from outcomes-based pricing that ties most payment to delivered performance while preserving some fixed-cost components. The shift has grown over several years as clients seek complex, multi-year, multidisciplinary transformations that AI enables. The firm expects the proportion of outcome-linked fees to increase. Clients making significant strategic bets favor arrangements aligning the consultancy's success with the client's scorecard and sharing upside when agreed transformation metrics are met.
Read at Business Insider
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