Despite rising demand, high levels of competition among suppliers will keep price growth slow over the next three years
Los Angeles, CA (PRWEB) March 27, 2014
Reference and background checking services have a buyer power score of 4.1 out of 5. This score reflects a high level of buyer negotiation power. Although prices have been increasing in the three years to 2013, the pace of growth has been slow. “While rising demand for services has helped boost prices, the high level of competition in this market has limited price growth,” says IBISWorld procurement analyst Erich Abellera. High levels of competition are reflected in the low market share concentration among suppliers. Low barriers to entry allow new operators to enter the market. As a result, price-based competition has moderated price growth in recent years.
A significant portion of reference and background checking services are conducted online. Because services are conducted online, wage costs have gradually decreased as a share of revenue. Therefore, suppliers of reference and background checking services have high profit margins on average. Although high profit margins can indicate a market monopoly or a highly specialized product, competition in this market is high, and strong profit performance gives buyers room to negotiate prices down. “Large buyers have especially strong purchasing power and can achieve volume discounts via lower per-report costs,” says Abellera.
Over the next three years, prices are forecast to continue rising at a slow rate. Fortunately for buyers, competition will remain high as more firms enter the reference and background checking services market, helping to moderate price growth. While a lack of substitutes slightly decreases purchasing power, buyers experience low switching costs. Therefore, buyers can easily switch to a different supplier to attain lower prices or better service. In addition, prices for reference and background checking services experience a low level of volatility. This market does not depend on critical supply chain inputs that can cause fluctuations in prices. This combination of slow price growth and low volatility results in strong buyer power.
For more information, visit IBISWorld’s Reference & Background Checking Services procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of reference and background check services. Reference and background check services are used to evaluate employees before job placement. Reference and background checks look into the history of past employment, possible criminal records, drug use and other relevant issues.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.