The four models
Day rate
Simple and transparent: you pay for time. It suits work where the scope genuinely cannot be defined up front: an investigation, a recovery, interim cover. The risk is yours: if it takes longer, you pay more. Always agree an estimated number of days and a review point, not an open-ended arrangement.
Fixed fee for defined scope
Best for well-bounded pieces of work: a spend analysis, a contract register, a single category sourcing exercise, a tender. You know the cost before you start and the supplier carries the delivery risk. This requires the scope to be written down properly, which is a useful discipline in itself.
Monthly retainer
Used for fractional and ongoing support: an agreed number of days each month at a rate that reflects the commitment. It suits businesses that need senior judgement continuously rather than a one-off intervention, and it is normally the cheapest way to buy experience you cannot justify employing.
Share of savings (gainshare)
A percentage of the benefit delivered, usually over a fixed measurement period. Attractive because it appears risk-free, but it lives or dies on the baseline: what counts as a saving, how it is measured, over how long, and what happens if volumes change. Where the definition is loose, disputes follow. Where it is tight, gainshare can be a genuinely fair way to share risk.
How to compare offers properly
- Ask who actually does the work. The person in the meeting is not always the person on the job. Ask for names and days.
- Ask what you are left with. A saving plus a documented process and a trained team is worth considerably more than a saving plus a slide deck.
- Check the savings definition. Against last year's price, against the renewal offer, or against budget? These produce very different numbers from the same piece of work.
- Look at the exit. Can you stop after a defined phase without penalty? Good advisers are comfortable with short first commitments.
- Beware precision offered too early. Anyone promising a specific percentage before seeing your data is selling, not advising.
What drives the number
Seniority of the people involved, the number of days genuinely required, whether the work is analysis or delivery, how much of your own team's time is available, and how much market work is needed. A category sourcing exercise where the specification is clear and the market is competitive is a fundamentally different job from one where nobody knows what is currently being bought.
A sensible way to start
Buy a small, defined first piece of work (usually analysis) with a fixed fee and a clear output. It costs little, it tells you whether the value is there, and it tells you whether you want to work with these people. Decisions about larger engagements are much easier once both of those things are known.