Breaking Down Focus Group Costs

in Focus

There are several components that go into costing focus groups. To keep things simple, we can split these costs into two main components: fixed and variable costs. On the fixed side, we have the research facilities where the focus groups are conducted. For the most part, focus group facilities tend to price their services similarly. Recruiting charges and participant incentives tend to be the same with slight variations. If for example, a facility is suggesting a gratuity of $150 and the other $350 per respondent, then that should raise eyebrows. Likewise recruiting costs should be fairly on par and room rentals. While inflation affects everyone, increases in focus group facility costs will be similar across the board given the level of competition and self regulation.

Now let's take a look at the variable component of focus group research. This falls exclusively in the category of focus group moderators. While there are no exact numbers on how many focus group moderators there are, it is safe to assume that the number could be as high as in the tens of thousands. Unlike, focus group facilities which compete against one another within a well defined pricing structure, focus group moderators operate in a less defined, very loose pricing structure. Prices charged by focus group moderators are very inconsistent. There is no conformity to pricing or even quality. Many focus group moderators operate independently. This creates a huge disparity between what one moderator charges for similar services from another. It is not uncommon for great pricing disparities of two to three times. The price some moderators charge for a two hour focus group would make even the most highly paid lawyers green with envy. Fees attributed to moderation services can run as high as half the cost of conducting the focus groups and in some cases more.

Now, don't get me wrong. The differences in price could very well be justified. There could be a number of factors why a moderator may charge much more for comparable services. An experienced, well connected moderator may command a higher premium but is it justified? The question a researcher should be asking is: will I be getting the same information from another moderator charging much less for his/her time? The answer in many instances is a resounding yes!

Researchers have at some point or another experienced, much to their chagrin, focus groups gone badly due to poor moderating, a low quality report, or a combination of both. Worse yet, the price being charged didn't measure up to the service received. Yet there is another reason why some moderators can get away with charging more for their services. For the most part, researchers loathe taking a risk on a new moderator. In fact, some moderators have built successful careers off of one or two major clients. As in the case of the art world, the price one is willing to pay for "good art" is in the eye of the beholder.

What can companies do to help manage the cost of conducting focus group research? For starters, they can get competing bids from at least three focus group moderators. Secondly, if the research is being conducted across multiple markets (New York, Chicago, and Los Angeles), a researcher can request using a focus group facility with locations in all three cities. The facility will usually offer multi-city discounts in those locations usually in the form of a reduced price on the rental and in many cases recruiting and incentives. Lastly, a researcher should consider using a local moderator to conduct the focus group which should save on travel costs. These costs could range between 10%-20% of the total research costs. Another benefit of using a local moderator is that the price differential may be substantially less than bringing in moderator from a higher priced market such as New York or Los Angeles.

Without a clear understanding of the pricing structure of qualitative research costs, companies are flying in the dark. A big budget means that a company can afford to continue conducting research or push its weight around when it comes to pricing. Yet, many companies operating on a tighter budget choose to conduct ad hoc research or simply go without. And, the seemingly high sticker price discourages small and medium-sized companies who could benefit from qualitative research from dipping their toe in the water.

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Randolf Saint-Leger has 1 articles online

Randolf Saint-Leger
Founder & CEO of http://ModeratorNetwork.com

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Breaking Down Focus Group Costs

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This article was published on 2010/04/03