Increased demand for consulting services will cause prices to grow.
Los Angeles, CA (PRWEB) April 30, 2014
The market for management consulting services exhibits a buyer power score of 3.5, representing an above average level of buyer power. The buyer power score represents a buyer's ability and leverage to gain an advantageous deal, with 1 representing a market with low buyer power and 5 representing a market with high buyer power. According to IBISWorld procurement analyst Dale Schmidt, “The main facets underpinning the high level of buyer power are the fragmented yet secure nature of the market.” Buyers can choose from over 600,000 suppliers that operate in the market, which helps limit price increases by giving the average buyer many options to choose from. In addition, consultancies in general are low risk endeavors. Their costs are mainly the salaries of their employees, and do not risk supply shocks or service interruptions.
However, certain aspects of the management consulting services market do diminish buyer power, namely the rising price and the highly specialized nature of the service. The price of management consulting is in the middle of a long period of slow and steady growth. This diminishes buyer power because it pressures buyers into making a purchasing decision. “Prices will continue rising if they put the purchasing decision off,” says Schmidt. In addition, each management consulting solution is highly specialized in nature because the supplier customizes their service to the buyer's needs. This makes comparisons between vendors difficult, as different vendors will offer up significantly different solution options with benefits that can be hard to measure.
The size and scope of the project and buyer are the main determinant of the price. A small business looking for a short-term consultation will pay toward the lower end, while a multinational corporation looking to overhaul their business processes can expect to pay much more. Similarly, the expected duration of the project and type of contract determine final price. Shorter contracts are more commonly paid on a per hour basis, while long-term or open ended contracts tend to use a retainer or project-based fee structure. Hourly contracts usually have a lower total cost for the buyer, though different pricing models are ideal for different buyers. The reputation and experience of the vendor also play a major role in the prices they charge. A new self-employed consultant will be forced to charge a much lower rate than an established, global professional services firm. As a result, budget-constrained buyers should look for more up-and-coming consultancies, though this is riskier as they will not have a long track record to prove that their changes will be cost-effective. The top four vendors in the market are Accenture PLC, International Business Machines Corporation, McKinsey & Company, and Deloitte Touche Tohmatsu.
For more information, visit IBISWorld’s Management Consulting Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of management consulting services. Management consultants advise businesses, nonprofits and public-sector agencies in the following areas: organizational design, human resources, corporate strategy, information technology strategy, marketing and sales, finances and logistics. This report is not intended for buyers looking to procure consulting services in any one of these areas individually, but rather for buyers looking to procure consulting services encompassing most or all of these areas.
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
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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.