Cost

Now to tackle this most important criterion in deciding from which agency to buy the research. How useful is cost as an indicator of good value? As will be seen from the foregoing points it is important to check any differences in the cost-associated variables, such as sample definition, size of sample, number of interviewing points, length of interview, composition of questionnaire, number of open-ended questions included, data processing techniques to be applied, and provision of a written or verbal report. Differences in these variables will naturally lead to differences in cost. What then has to be decided is the extent to which differences in the variables are justified by the quality of research required. That depends on the importance of the problem and can only be judged by the individual commissioning the research.

There are two circumstances in which it may make good sense to go for the cheapest research proposal. The first is when the research brief is tight, i.e. when the research agency has no discretion over the cost-associated variables. All agencies are quoting to exactly the same specification and hence the only variation will be in cost. The second case is when the research agencies are in a competitive business situation. There are times of the year, and some years, when research work is comparatively scarce. Since the major area of cost for research agencies is their personnel, if these are relatively underemployed they represent a very high level of fixed cost. This can best be defrayed by offering research 'bargains' when the agency is short of work. If a comparison of cost-associated variables indicates no real reason for variations in cost, and yet variations exist, then suspect that one agency is pricing high. It probably already has sufficient work and additional work will impose an extra burden of cost. The agency therefore feels that the client adding to their costs should pay for them. A research agency pricing low is signalling that it wants the job, and providing all the other criteria are satisfied, then it makes sense to respond to that signal.

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