Why Picking an Analyst Firm Isn't like Choosing a Plumber...

My father told me that there were two things I needed to know about plumbing – what it smells like and which way it is supposed to flow (generally downhill). You know when you need a plumber. There’s water everywhere – that’s a problem. The same is true when it comes to research. You have a problem and you need to solve it. But that’s where the similarities end. 

It used to be that to find a plumber – if your dad, uncle, cousin or your neighbor wasn’t one – you opened the yellow pages, scanned the ads and started calling. If it wasn’t a situation where your basement was filling with water, you might call several and get rates to compare. You might even look to see who claims to be certified or approved by the better business bureau. You’d also see when they can arrive and do the job – especially if the water is going everywhere and you have no idea how to shut off the valve.

If you need to find a plumber because you’ve spent the entire 3-day weekend binge watching HGTV and now want to remodel your bathroom – you definitely do a bit more homework than in the above situation. You’ll do more research and solicit bids for the work, then dig into those bids to see if it’s a master plumber, an apprentice or just a contractor doing the actual work.  You might even go so far as asking for rates for each of those positions and how many hours each was expected to do on the job. This way you could see if you were getting a fair price. You’d even compare to see who was charging you more for PVC pipe – provided you haven’t gone absolutely crazy and insisted on copper (which I know is better, Dad). When you’ve done all your due diligence, you’ll pick one and hope you get the results you want.

Unfortunately – pricing research isn’t that easy. Nor is comparing it between firms. Sure, if you want to buy research on a topic there is likely more than one firm that produces it – and each is priced differently. While on a single report level I can use the basic divide the price by number of pages to get the cost per page to see if one is more expensive than the other – but I still have to look at the other factors. Who is more respected in the industry I’m buying research on? Who appears to have a better (or more in-depth) methodology? Who gives me more analysis and less charts/graphics? I could go on… but you get the idea. On a single report purchase there are ways of determining which will give you the most value.

But what do you do when you need to source an entire service from a research firm? How do you determine which will give you better value? You can’t use the price per page method – especially since a firm with 400 analysts will produce a lot more reports than a firm with 10 analysts. Does that mean the smaller firm is cheaper or better? No. Nor does it mean the larger firm is cheaper or better. It just means that while you may be looking at comparing fruit – we’re talking about apples and tomatoes.

While I can easily search the internet and learn that the average cost per hour for a plumber is anywhere from $50 to $200 an hour, with the cost of an average job being somewhere between $175 to $450 (not sure how if it’s $200 an hour) when all is said and done. I can’t do that for market research analysts. And while I can equate an apprentice plumber to a junior analyst and master plumber to a senior analyst – the comparison once again ends there. Each has its job requirements and skill sets that have to be met to be qualified at that position – but unlike plumbers which are (generally) licensed and therefore their skills regulated by regulatory bodies – market research skill requires vary between firms and what qualifies one person as a senior analyst at one firm, may not qualify them as one at another. Now this isn’t unusual. It’s true in a variety of jobs – Doctors, Nurses (RN, PRN)… Lawyer, Paralegal…. Police Chief, Detective, Beat Cop…. CEO, EVP, VP, Director, Manager… the list goes on. It doesn’t mean that because you have a specific title or job that you will make the same amount (or can charge the same amount) when you leave one employer to go to another.

So trying to assume that by factoring the average hourly rate of senior analysts vs junior analysts vs research assistants and then determining the average amount of time each spends on an average length report (which, what is that anyway) is impossible. While I can stake a guess that seniors have a run rate of between $325 and $550/hour, juniors between $125 and $250/hour with research assistants (RAs) being between $30 to $75/hour. Just because it takes an RA 10 hours to pull together the data from a survey, create charts and format tables doesn’t mean that part of the report costs me $500. Nor does it mean that I add $1400 for the junior analyst’s 7 hours writing the basic analysis. I can’t just then say, well the senior analyst spent 3 hours on this so that’s another $1200. Which means the report is $2100. I need to account for editing/formatting, brand compliance and the amount of time it took to actually collect the data behind what the RA pulled together. Sure, if you factor that out – you can see why many firms charge only $4,500 to $7,995 per report. But those are also reports that are more graphs than substance and often the data is sources by scraping the web – I mean, doing secondary research. I can’t put a price on the cost of primary research – though, yes some of you may argue that if it costs an average of $25,000 to $40,000 to do a consumer study – then I should add that to the $4,200 (I was generous to editing, having been a copywriter and factoring that some portions had to be rewritten) the report has cost so far… this means that we’re up to about $35,000 for the report. Which is about the average of what it costs to buy a report from many large firms, since it’s usually more than one RA, junior analyst and maybe two seniors (or one senior analyst and a research director).

But then what about the firms where it’s only senior analysts because it’s a small firm… so if we factor 20 hours at $400 – then I’m at $8000 for the writing… factor another $2,000 for editing and rework… then add $25,000 for the research we’re at $35,000 – again. So, turning to my trusty friend, Google, I find that the average cost of a market research report is between $15,000 and $35,000.

This brings me back to my plumbers…. The cost to fix the sprung pipe in my basement is not the same as the cost to fix the leaky toilet in my guest room and it’s definitely not the same as the cost to fix the dripping faucet in my kitchen. Let’s face it – I could probably take the screen off and replace the rubber washer on the faucet in about 10 minutes and do it myself… but a plumber will charge for somewhere between a half-hour and an hour of work…. Which then makes me wonder why it’s so hard for people to understand that when you buy a research service – why you can’t just determine the cost per report (although you can divide the cost of service by the number of reports….) or take the average cost of a report and multiply it by the number of reports to get to the cost of the service. 

In my experience, services range between $10,000 and $50,000 each. They have somewhere between 5 and 100 reports per service. BUT that doesn’t mean a 5 report service only costs me $10,000. It could be that I pay for a quarterly deliverable (4 reports) for $40,000, or I pay $12,500 for a service with quarterly deliverables. It all depends on the type of research/data I’m getting, who’s selling it. I cannot simply say that the service I’m buying from research firm A at $10,000 is any less valuable than the service that covers the same broad topic from research firm B at $30,000. Both are on the Internet of Things (IoT)… Firm A happens to be a firm grounded in the utilities/energy sector while firm B is a telecommunications focused firm. AND it definitely doesn’t mean that I don’t need research from Firm C, who for $25,000 will provide me with IoT from their specialty – automotive.

I cannot benchmark one analyst, one service or one firm against the other. What I can do is benchmark how useful my teams find what we buy from each of the firms. If I find that one firm is used more than another, than I dig into why. If another firm isn’t used as much – why not? Maybe our focus has changed and we are no longer interested in the healthcare sector. Or maybe we are interested in the healthcare sector so those 13 reports from firm D that were included as part of another service is suddenly much more valuable. I can see if we truly use every service we buy – or maybe we only use one report in an entire service and adjust the contract accordingly. I can benchmark the cost of my total contract across time, and I can fight to control costs that way. I can push for value-adds from my firms and I can switch out services, so I might still only have 6 services, but only 4 are the same as last year. I can survey my users and get feedback on the usefulness of each firm based on reports, analyst accessibility and responses.

But I cannot, and I will not attempt to determine the cost per report per service based on the number of analysts listed as authors on the report. With the vast number of reports added to our system in a given year, it’s not worth it. Nor is the cost of my time (factor that I’m in the director range…..) to do it. End the end – it’s a waste of time and the whole thing reeks… just like plumbing.

So, I write all this to see if anyone else has any better ideas on how to benchmark one research firm against another… given that I have firms of all shapes, sizes, types, and industries… with a varying degree of depth and experience….

The opinions expressed in this article are solely those of the author and do not represent any professional affiliation.