Tackling your board's next big question

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Behind the hyped stories about robots killing the Big Four, something more subtle – and more useful for CFOs – is happening. Professional service’s value is being rewired. And, some say, the gulf between the Big Four and mid-tier players is narrowing.

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The Big Four have never been short of an enemy or two, but AI hysteria is giving more fuel than ever to the idea that it's time for a new order.

The threat seems real enough: LLM-based tools remove grunt work, shortening engagements and cutting billable hours, which throws a cat among the pigeons on established Big 4 pricing models (and therefore margins). 

But don’t start dancing on their graves just yet. While it is true that margins are under pressure for professional services like audit, tax, and some of the other advisory services, new, alternative pricing structures are on the way (because, you know, those margins need protecting…).

For example, last year PwC said automation will lead a move away from hourly rates toward outcome-based pricing. Deloitte has hinted at the same (although they’ve been keeping mum on what that actually means).

To be fair, it’s not just the Big Four either. A recent Tolley survey of UK tax professionals found that AI is disrupting pricing models for tax firms too, with 40% now offering alternatives to hourly billing like fixed fee models. 

“The idea that everything's driven by hourly rates is outdated,” said Becky Shields, partner and head of digital transformation at auditor Moore Kingston Smith, “You can now do some tasks much faster and to a higher standard, while at the same time, expectations around coverage and insight are increasing.”

But new pricing models like outcome-based pricing, fixed or subscription fees are a quiet, gradual change, not a revolution—part of a long-term pivot, driven by automation and other factors. The rise of AI, along with the PE invasion of accounting firms, is just an accelerant. And, while it could shake up the big firms’ dominance, it could also play into their hands.

For CFOs, this is the moment to get ahead of the conversation before pricing models change on their terms instead of yours. 

For anyone paying attention, AI isn’t sucker punching the Big Four’s pricing. For accounting firms, fee recovery and utilization rates may still dominate discussions internally. But for years, they’ve been linking prices to more qualitative factors like delivered value, increased regulatory risk, and client complexity. 

And AI adoption isn’t the first thing to bust up the link between effort and value. Tech-enabled efficiencies over the last 10-20 years have allowed firms to do more in less time, but… at the expense of billable hours (and revenue). In other words, the time and materials pricing model is breaking down as work requires less time and fewer materials. That golden goose is laying fewer eggs. 

Firms have been managing the hourly model's weaknesses through cost levers for years: offshoring work, standardizing processes, automating the repeatable stuff. That buys margin, but it doesn't fix the underlying problem. 

And AI is forcing a more fundamental rethink: not just how to deliver services cheaper, but whether time is a defensible basis for charging at all.

To cope, Shields noted that firms are now moving toward:

Complicating the pricing picture for the Big Four is the equalizing effect of technology. Mid-tier firms see the AI transformation as an opportunity to bridge the Big Four’s moat. But equally, AI could hand an advantage to large firms as they use their huge resources to invest in the best tech.

Ying Miao, CFO of Converge Marketing, thinks firms outside the Big Four can gain a competitive advantage. They have less legacy infrastructure and fewer internal hurdles that can slow adoption of new models and structures in big firms. 

“The gap is narrowing,” she said.

PE investment is also shifting pricing models, adding to the pressure on the Big Four. Nearly 25  of the top 100 accounting firms, and half of the top 30 have private equity backing now. And when PE rolls up firms, it changes service models, pricing structures, and who's actually running the engagement. 

The changes are taking many forms. PE-backed firms are implementing standardized service tiers, along with higher base rates, and a push toward bundled engagements that pad revenue per client. 

The narrowing gap between Big Four and mid-tier makes new pricing models a negotiating tool for CFOs. PE-backed mid-tier firms are now credible alternatives to the Big Four in ways they weren't five years ago: same services, lower rates, and a hunger for marquee clients. That competitive pressure gives CFOs real leverage if they use it.  

Amy Wang, CFO of procurement platform Procurify, said: “I don’t think the Big Four are safe. Mid-size firms can adopt third-party tools more quickly, move with greater agility, and build a service model that's better aligned with where the industry is heading. The Big Four have always had the advantage of brand awareness and top talent. But now the playing field has leveled. Everyone has access to those technical resources.”

However, Todd McElhatton, COFO of Zuora, said the large firms are “probably in good shape. They have depth and have invested heavily in technology. Large enterprises are more complex and often need the larger audit firms’ reach.” Stakeholder trust and confidence in the Big Four remains important for public or quasi-public companies.

It’s a shift that CFOs are seeing. Wang of Procurify has been shopping around for professional services recently. She’s been reviewing the mid-tier market and said that she’s noticed more outcome-based conversations: “What are we trying to achieve versus what hours go in?”

Operationally, this creates a need to “be much more deliberate upfront about defining what outcomes we're driving toward and what we expect… not just scope, but measurable results,” she said.

If you can define what good looks like, for example, fewer errors, faster turnaround, senior eyes on the work, analysis you can actually act on, you can hold the firm to it. And if they can't meet the bar, you have grounds to renegotiate the fee.

That's the flip side of value-based pricing. When fees are tied to outcomes rather than hours, the client gets a say in what those outcomes are. Which means the next engagement conversation shouldn't start with rates but with scope, risk coverage, and the specific deliverables you actually care about. 

In the end, the armchair prophets got the story wrong. AI isn't killing the Big Four. But it is reshaping how they price and how much leverage CFOs have in the room. And it will boost some mid-tier competitors and kill others. 

But, here's the honest answer: nobody knows where this goes. The Big Four might use their resources to lock in the new models on their own terms. PE-backed mid-tiers might eat their lunch.

AI might make the whole conversation moot in ways nobody's modeled yet. The only thing that's certain is that the hourly rate's days are numbered, and the firms that replace it will write the rules if CFOs don't get there first.

Answering your board’s next big question.

Last week’s Playbook got into the different working capital cycle types and how to design yours to win.

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