- Tags : HR & Staffing | Reference & Background Checking Services | Price trend | Price forecast | Procurement research | Category market forecast
Recent Price Trend - Reference & Background Checking Services
In the three years to 2017, the average price of reference and background checking services has been increasing at an estimated average annual rate of 1.4%. Demand growth has been pushing prices upward during the period, although competition has limited the rate of price growth.
As the broader economy has grown, hiring has picked up, driving demand for services. In addition, rental vacancy rates have decreased as lingering economic uncertainty has led many potential property buyers to instead rent. Landlords represent a large buying segment for suppliers of background checking services because they conduct checks on potential tenants. As demand for housing rentals has increased, the decline in rental vacancies has driven demand for background checking services. The overall increase in demand has been the primary driver of price growth.
Fortunately for buyers, price growth has been slow due in large part to the high level of competition in the market. These services used to be conducted manually by phone and fax and, thus, required a higher level of labor. In the early 2000s, providers began offering reference and background checking services online, reducing their labor costs and boosting profit margins. As a result of high profit margins, in conjunction with low barriers to entry, many new operators have entered the market, creating stronger competition. Although prices have increased, competition has prevented prices from rising at a more rapid rate.
Prices for reference and background checking services have also exhibited a low level of volatility. Suppliers' costs are mostly related to overhead and wages, which tend to change slowly. Therefore, buyers are not subject to wide price fluctuations as a result of supply chain issues. Competition has also played a role in limiting price volatility because implementing sharp price spikes could result in a supplier losing customers to competitors. Low volatility enables buyers to accurately budget for purchases. Overall, these factors provide buyers with positive purchasing conditions.
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