CRO Pricing: Benchmarks That Don’t Matter

Full-service CROs may offer services across 10 or more categories. Wouldn’t it be nice to know what the benchmarks are for what percentages of a full-service budget those categories should each represent, at least for a few key buckets like project management, clinical operations, and data management?

No. I rarely found these valuable when I was in-house, and find them less valuable over the past 3 years of consulting across a wide range of CROs of all sizes. In fact, they can be quite dangerous.

Project Management is the most common one I’m asked for. “We use 15%, what do others use?” My response is some form of “it doesn’t matter”.

Proportions like these completely depend on the mix of service categories involved, the specs and assumptions of each project, project complexity, each company’s staffing mix, among many other factors. Most outsourced clinical research projects are indeed complex- that’s why CROs exist!- and relying on high-level percentage benchmarks makes it too easy to take your focus away from getting every part of the budget right, scoped to the exact requirements of the project, resourced in a way to maximize a successful delivery.

Maybe 15% worked on the last project, but if the next project has fewer service categories, or is 100% in Europe, or has extremely complex biostatistics requirements, or involves numerous expensive technology offerings, or is in an ultra-rare indication, or any number of other factors, then that 15% doesn’t matter.

It doesn’t matter if 15% was your average over the past 12 months, or whether 3 of your main competitors like to use 12% or 20%- what matters is whether you priced the full scope of services properly for the new project. Relying on these high-level percentages for decision-making is dangerous, as it simply distracts from pricing the new project as accurately as possible.

So do any CRO pricing benchmarks matter? Of course!

If you’ve priced a key role at $250/hour while most competitors are at $180-$200 or $350-$400, that variance will affect your competitive positioning (especially if you’re significantly higher) and/or have you leaving significant margin on the table (if you’re significantly underpriced). Same situation if you’ve assumed a common key task takes 20 hours per unit to complete while competitors are 20%-30% lower or 50% higher.

These benchmarks matter and are useful because they help you price specific roles and services as competitively and profitably as possible, so that the sum of the parts- when built into a full budget- put you in a competitive and profitable position and help you anticipate how customers will evaluate different areas of your budget.

I specialize in pricing strategies for service and technology providers, with a focus on CROs. Contact me to discuss solutions for your organization.