Which of the following pricing strategies ties payments to the effectiveness of the consultancy's services?

The effectiveness of consultancy services can significantly influence the choice of pricing strategy. Outcome-based pricing directly aligns payments with the results or effectiveness of the consultancy's work. Under this model, clients agree to pay a fee that correlates with the achievement of specific outcomes or goals that are pre-established. This approach incentivizes consultants to deliver high-quality results because their compensation hinges on successfully meeting or exceeding those outcomes.

In contrast, hourly rates do not necessarily reflect the effectiveness of the services provided; they are based on the time spent on tasks without a direct connection to the results achieved. Similarly, fee for service may indicate payment is for a specific service rendered but lacks the connection to performance outcomes. Pass-through costs primarily involve expenses incurred during the consultancy process, passed on to the client, and do not relate to the effectiveness of the consultancy’s contributions. Thus, outcome-based pricing stands out as the strategy that ties payments directly to the effectiveness of the consultancy's services.