McKinsey is shifting to outcome-based fees for AI consulting, tying payments to actual savings. They might charge a $1M base fee plus 15% of the first $50M in identified savings and 10% after that. On $80M of savings, the total bill hits $8.5M.
McKinsey is doing an outcome-based contract in supply chain and procurement, and so they can scale fees to save dollars, right? So if they deploy Quantum Black, which is their AI agent tool, to analyze historical supplier spending, renegotiate terms, and optimize purchasing, the metric is total hard dollar cost reduction achieved for over a 12 to 24 month period. So let's say, Neil, the reduced base fee is $1 million, a performance bonus of 15% of the first $50 million in identified savings, and then performance bonus of 10% on any savings generated So if the engagement yields $80 million, McKinsey's total billing would be $8.5 million. So base fee plus $7.5 million success fee, which I think is good for both sides. So they make more money. They do make more money. Yeah, I— what I do like is they make more money, but it is tied a little more to, hey, you have to perform.
