Price Forecast: Management Consulting Services

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Recent Price Trend - Management Consulting Services

The average price for management consulting services has been rising at an estimated annualized 1.2% in the three years to 2017, harming buyer power. Suppliers are less likely to negotiate based on price due to rising prices market-wide. However, very little volatility has been occurring in the price of management consulting services during the period, helping buyers accurately forecast prices and time purchases.

 Pricing in the market has moved closely with the economic cycle. Declining corporate profit has been diminishing demand for some of the services associated with management consulting. However, demand for management consulting as a whole has still been growing in the three years to 2017. This is because businesses typically hire vendors to help with downsizing, mergers and general streamlining activity to cut costs and boost profitability when corporate profit is lower. Moreover, declining corporate profit has primarily impacted select sectors in the economy, while many others remain highly profitable.

Increases in government investment and a rising number of businesses has also been spurring demand growth. The rising number of businesses has been expanding the customer base for services, while growing government expenditure has been allowing public sector buyers the financial flexibility to purchase more services to improve their operations. In addition to rising demand, overhead costs have been growing during the three years to 2017. As suppliers encounter higher costs, they are more inclined to pass them on to buyers in the form of higher service prices.

 Still, low market share concentration and a sizeable number of suppliers have been helping to moderate price growth during the period. In addition, average wages have remained fairly steady, benefiting buyers by mitigating the rate of price growth. Competition among suppliers brought on by low market share concentration has also kept price growth modest, contributing to low price volatility. However, because prices are forecast to rise further, buyers should consider contracting services now to avoid paying more in the future.

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