I hear what you're saying - why would any company ever work with KPMG for auditing services if they could just go to an independent accountant - presumably for the same amount of money they will get more work and billable hours out of the independent accountant. But individuals don't go to KPMG for accounting services - larger firms do (and there are a number of business reasons for doing so but this isn't the place for a case study. By definition individual people, not larger groups or organizations use MBA admissions consulting services. Does the scale of the organization justify the amount of each package that is allocated to the firm owner/firm's operating expenses?
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I work for a professional services firm myself, and while it is true that what the firm pays me is somewhere between 10% to 50% of what the client pays the firm, that does not mean that the client only gets 10% to 50% of the value they paid for.
From the point of view of the client who pays $4000 to three firms the logic was:
- Firm A: $4000 paid, consultant earns 10%, consultant delivers on 100% of his earnings (but 10% of firm's earnings)which = $400
- Firm B: $4000 paid, consultant earns $50%, consultant delivers on 100% of his earnings (but 50% of firm's earnings) which = $2000
- Independent Consultant: $4000 paid, independent consultant earns 100%, independent consultant delivers on 100% of his earnings which = $4000
I've either worked for or received an offer of employment from 3 well known, US-based, MBA admissions firms. One offered me 10%, one 15% and one 45% of the fee. When I worked for those firms I certainly delivered on 100% of what I was paid - let's say I was getting 10% of a $4k package....I was then delivering on $400 worth of services...let's say I was getting 45% instead....then I was still delivering on 100% of that $1800 I earned. But if both clients needed full school packages it would be unreasonable to assume that I was able to dedicate the same time to the $400 client as I could to the $1800 client. Because if I'm earning $400 per client then I need to take on 4 times as many clients as I do if I'm earning $1800 to end up with approximately the same salary.
The video presents the facts and hopefully gives candidates insight that allows them to independently evaluate their choices. I think that all consultants deliver on what they are paid, it's just that some earn a lot less than others. There are some great firms out there that pay their consultants 50% - when a candidate is comparing two firms that look equally good to him - if he knows that one pays the consultant $2000 and another pays its consultant $400 for the same package that the client will pay $4000 for....well it is a pretty sure bet that the consultant that earns more is the one to go with IMHO.
The joy in working with clients is having the time to get to know them as people and really coach them and see them grow and succeed - all the joy would be sucked out of the work for me if I had to work with clients in an assembly line way because I had to take on a high volume of clients.
My point in the video is that MBA admissions clients are individuals, not corporations. There are some reasons that working with a larger firm benefits them - there can be reasons why it is to their disadvantage as well.
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Thank you for your detailed reply. Having now watched the entire video, I agree that there is a lot of informative content about the admissions consulting industry. I did not mean to belittle the time and effort that you put into the creation of this video, and I'm sorry if it came across as such. My feedback was only about the 2 minute section which seeks to "help people understand how to get the best value for their money from a consultant given prices being what they are." I disagree with your analysis, and moreover I think that is a disingenuous oversimplification to make blanket statements about firms such as "when you buy a $4k package, the most you’ll receive is $2k in services" (implying that when you buy a $4k package from an independent consultant, you'll get $4k in services). I work for a professional services firm myself, and while it is true that what the firm pays me is somewhere between 10% to 50% of what the client pays the firm, that does not mean that the client only gets 10% to 50% of the value they paid for. If this were the case, then why would anybody ever employ a professional services firm in industries such as law, accounting, consulting, etc.? Or is there something so unique about the admissions consulting industry that sets it apart from other industries in such a way that firms are useless in this industry?
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23 May 2015, 09:56
