Price Forecast: Accounting Services

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Recent Price Trend - Accounting Services

The price of accounting services has been growing at an estimated annualized rate of 1.6% in the three years to 2017. An increase in office space rental, which has gone up in line with higher demand for office space and surging real estate values, has prompted suppliers to raise rates for services in order to protect their profit margins.

However, rising demand for services has been the primary driver of price growth in the past three years. The number of businesses determines the size of the pool of companies in need of accounting services and has risen as companies have gained cheaper access to capital. This has, in turn, compelled suppliers to commence operations in increasing numbers. Additionally, aggregate private investment has increased in concert with growth in both consumer and business confidence. Greater private investment has allowed businesses and individuals to accumulate wealth, fueling demand for accounting services in order to comply with various government regulations. Overall, rising demand for accounting services has supported growth in rates for services because suppliers have been able to raise prices without risking significant losses in business, hurting buyer power.

Nonetheless, a strong degree of competition among vendors has worked in buyer favor by tempering the magnitude of growth in the price of accounting services. A large number of suppliers operate in the market due to the low barriers to entry. Thus, these suppliers undercut one another on the basis of price and breadth of services in order to capture a greater share of market revenue.

Price volatility has been low during the past three years, which has strengthened buyer power. Rates for services have not fluctuated substantially year over year, which has allowed buyers to budget accurately for accounting services. However, buyers should not wait too long to make these purchases because prices are expected to continue growing during the next three years.


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