What is Consulting Business Model? – How Does It Work? (Explained)

There are various business models that cater to all types of businesses. However, some business models cater to the needs of product-based businesses as compared to the service industry.

However, there are also a few models that only work for service-based businesses. Among those, one model is the consulting business model.

What is the Consulting business model?

The consulting business model is a strategy commonly used by consultancy firms in generating revenues. These firms represent businesses that comprise one or more consultant services. The primary business of consultancy firms is to render skilled advisory services in an efficient manner.

The services these firms provide are to support and advise their clients to achieve their objectives. By accomplishing those objectives, their clients can maximize their performance capabilities.

Firms using the consulting business model provide a variety of services. These may include helping clients with devising a strategy or plan or assisting in solving their problems.

However, these firms may also take up more than just consultancy services. Some consultancy-based businesses also offer management or software solutions.

The consulting business model isn’t a new or unique strategy. This business model has existed for centuries now. Consultancy-based firms are one of the most common businesses in various industries.

However, these firms also provide a specialized product for every client or customer, making their services heterogeneous.

How does the Consulting business model work?

A consulting business model, as mentioned, is for consultancy firms. These firms consist of consultants, who are experts in a specific industry. These consultants offer their professional advice, guidance, and solutions to clients experiencing issues.

Their clients comprise businesses that don’t have the expertise to deal with specific problems in-house. Therefore, they contact a consulting firm to take care of the problem.

Every industry may have its own specific consultancy firms. The management of a company or business reaches out to these firms for their issues.

The consulting firms then observe and analyze the company’s operations to identify the problems faced by them. Then, the consultants offer guidance or actionable solutions to the issues for which their clients hire them.

The consulting business model can work for several types of businesses. For example, some consultancies give their consulting business a proper structure by making it a firm.

However, some individuals, often self-employed, can also provide consultancy services and use this business model. Usually, the higher a consultant’s experience is in a specific field, the more they will earn.

Some common consulting firm types include IT, management, online marketing, human resources, etc. These firms come with expertise in each of their respective fields, providing competent services to clients.

What are the advantages and disadvantages of the Consulting business model?

There are various advantages and disadvantages of the consulting business model. Some of these include the following.


The consulting business model allows experts from any field to start their own business and offer their expertise to earn money. As mentioned, there are various types of consulting firms, which gives them a substantial variety of options from which they can choose.

The consulting business model also allows firms to attract clients and businesses from various industries. While consulting firms offer specialized services, their services apply to a large number of companies.

Therefore, gaining a new client and growing a consulting business is straightforward, given that the quality of their services is excellent.

The consulting business model also allows firms to earn more due to the specialized nature of the work. Since every client will have a specific problem, the firm’s service will differ with each job. Therefore, consultants can earn much more as compared to when offering homogenous services.


The primary disadvantage of the consulting business model is that firms may face more competition. While consultancy firms need experts to get started, there are many experts available in the market. It makes it easier to start a consulting firm resulting in higher competition.

While the business model comes with higher earning potential, firms also have to work harder to generate revenues.

Since every order or issue is client-specific, it is difficult for consultancy firms to use the same service twice. Therefore, they need to work on every order in a unique manner, resulting in more time and cost requirements.


McKinsey Company is a world-renowned management consulting firm that uses this business model. Similarly, audit firms such as Deloitte, KPMG, PwC, and EY use the consulting business model.

Some other names that use the business model include The Boston Consulting Group, Booze Allen Hamilton, Accenture, etc.


The consulting business model is prevalent among consultancy firms. These provide specialized services to clients from various industries. There are several types of consultancy firms that use the consulting business model.