What term refers to costs that are billed to clients without any markup from the consulting firm?

The term that refers to costs billed to clients without any markup from the consulting firm is "pass-through costs." This means that the costs incurred by the consulting firm are directly transferred to the client without any additional fees added on top of them. These costs could include expenses related to travel, materials, or services provided by third parties, which the consulting firm pays upfront and then seeks reimbursement from the client without any profit margin included.

Understanding pass-through costs is critical in professional services where transparency and fairness in billing are emphasized. Clients can see exactly what they are paying for, ensuring clarity in the financial aspects of the consultancy relationship. This helps maintain trust and can foster a more collaborative environment since clients are aware that they are only paying for actual incurred expenses rather than inflated fees that might arise from traditional pricing structures.

Other pricing mechanisms, such as fee for service, outcome-based pricing, and flat fee pricing, involve different approaches where the consulting firm may charge a markup or a predetermined fee rather than passing through costs directly. These methods do not represent the straightforward billing of expenses without markup, which is why they do not align with the definition of pass-through costs.