The price of fare collection systems has increased due to rising demand for public transportation
Los Angeles, CA (PRWEB) November 14, 2014
Fare collection systems have a buyer power score of 3.2 out of 5. This score represents moderate buying power that is strengthened by low market share concentration but limited by a lack of practical substitutes.
The market for fare collection systems contains roughly 250 suppliers, including big names like Xerox Corp., Advanced Card Systems Ltd., Samson and Vix Technology. Still, the market is composed of primarily privately held companies and those without a significant share of the market, which creates challenges for buyers when assessing the financial stability of a supplier. "Market share concentration is considered to be low," says IBISWorld research analyst Ian Buchanan, "which indicates that prices are driven largely by demand." Low market share concentration leads to high levels of competition, increasing the pressure on suppliers to offer flexible pricing and incentives, such as extended warranties or maintenance packages, to avoid losing business to competitors. Consequently, low market share concentration boosts buying power by strengthening negotiation leverage. Additionally, the average risk of bankruptcy among suppliers in this market is considered low. This knowledge is beneficial to buyers because it indicates a low risk of disruptions in the ability to procure fare collection systems due to financial instability on the supplier side.
Unfortunately for buyers, there are few alternative options to fare collection systems outside of hiring additional staff to manually collect fares. "This method of fare collection remains common on passenger trains," Buchanan says. "However, it is largely being phased out by more modern collection systems across the market." Although fare collection systems have a high initial cost, they are generally less expensive in the long run due to the reduction in labor costs. Knowing that buyers have few other options, suppliers gain pricing leverage, and buying power is restricted. For more information, visit IBISWorld’s Fare Collection Systems procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of fare collection machines. Transit companies use fare collections to verify payments from passengers. These machines collect fare in the form of paper tickets with bar codes, tokens and electronic cards that can be scanned. This report does not cover ticket vending machines, media fare or any other related products that are often purchased in conjunction with fare collection systems.
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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