Why Benchmarks Matter
You cannot manage what you do not measure. And you cannot measure what you do not benchmark. The problem with most consulting firms is that they know their own numbers but have no idea whether those numbers are good, bad, or average for their sector and size.
After 29 years across 56 entities in 18 countries, I have observed clear patterns in consulting profitability.
The Key Benchmarks
Gross Margin. Healthy range: 50–65%. Stress threshold: below 42%.
Net Margin. Healthy range: 12–22%. Stress threshold: below 7%.
Revenue Per Employee. Healthy range: £150K–£220K. Stress threshold: below £100K.
Utilisation Rate. Healthy range: 70–80%. Stress threshold: below 60%.
Payroll % of Revenue. Healthy range: 30–45%. Stress threshold: above 50%.
Billing Realisation. Healthy range: 85–95%. Stress threshold: below 75%.
What To Do
Pull your numbers for the last 12 months. Calculate each of these benchmarks. Compare to the ranges above. Identify the two metrics where you are furthest from healthy. Focus improvement efforts there.
*Satyabrata Das provides CFO intelligence with commercial edge to agencies and consultancies. Book a free discovery call →*