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What are the most common pricing models for B2B data providers in financial services?
Hi there, and thanks for asking Wonder! I understand you'd like to know the most common pricing models for B2B financial data providers. In short, the pricing models vary by vendor, from a single subscription offer to a menu of various products and services, with or without database add-ons. Below you'll find a deep dive of my research findings.
METHODOLOGY
I began my researching with the four top data vendor websites to see if they provided pricing information for their services/products, including Bloomberg, Thompson Reuters, FactSet, Dow Jones, and S&P Global (Platts). Some companies - like FactSet - only offer the option to apply for a demo. Other companies, such as Bloomberg, offer no information at all specific to products on their public websites, including Dow Jones. Still others only offer an overview of their products. I then checked a couple of smaller vendors offering similar services, such as CheckIQ; their setup was similar in regard to lack of pricing information or subscription tiers. After thorough search of the top four competitors and two smaller competitors in this field, I determined that product pricing information is not publicly available by the providers. This determination is supported by my research findings from third-party sources.
I then switched my search path to third-party information on product pricing and pricing models for each of the top 5 vendors. This research generated information about the state of the data vendor market, and an incomplete set of data for the product pricing and tiers for four of the top individual players, which I have provided below.
PRICING AND PRICING STRUCTURE
All my research indicates that product pricing and structure is closely-held information in this industry. However, I was able to learn that Bloomberg, which is the most expensive provider, offers only one tier of subscription service. Its only pricing differentiation is a 17% discount to multiple-terminal users. Detailed information on the subscription model of the remaining providers was not incomplete and largely anecdotal. However, the fact that the Bloomberg model was consistently singled out throughout my research suggests that it is unusual, which leads to the reasonable assumption that differentiated subscription tiers are the standard in the industry.
1. Bloomberg charges an annual fee of $24K, which is discounted to $20K for users with multiple terminals. It only offers one subscription, which allows the user complete data access.
2. Anecdotal information indicates that Thompson Reuter offers a "fully loaded Reuters Eikon terminal costs $1,800 per month," or approximately $21K per year. The company offers a vast array of products and services, the pricing models for which can be both negotiable and complex. Anecdotal evidence also indicates that "customers must calculate how many instruments are being deployed in each Business Application type and pay a subscription fee based on this calculation." In addition, one 2010 research source verifies that TR offers a variety of mid-level and low-level subscriptions; that the choice to employ human assistance or purely automated data information impacts the price of subscription; and there is a "sliding scale discount based on the number of instruments used." This source further reports that the subscription price is negotiable for larger enterprises. This data is relatively old, but it was the most recent source available with this level of detailed information.
3. FactSet services are available "around $12K per year." In addition to its baseline subscription service, the company also charges for "3rd party non real time database add-ons" as well as add-ons for real-time data. If all database add-ons were included, the cost could run $750K (in 2010).
4. S&P CAPITAL IQ annual subscription fee is approximately $7500. Additional information this vendor's subscription setup was not available in public resources.
LACK OF TRANSPARENCY IN USAGE CHARGES
Multiple research reports as well as media articles indicate that the industry prices are considered high to astronomical, and one report opines that a regulatory structure in the industry is needed "to achieve reasonable pricing of financial market data in practice." In addition to high subscription costs, "data suppliers are getting more creative with how they license and account for data usage." Calls for industry regulation include not only a fair-market industry price for subscriptions, but also increased transparency for usage charges.
CONCLUSION
To wrap it up: there does not seem to be an industry standard for pricing models as represented by the leading competitors in the field. Bloomberg has only one subscription service; Thompson Reuter has a 'variety' of unspecified services and products with complex and potentially negotiable pricing models; and FactSet has a baseline subscription to which various database add-ons can be included. Thanks so much for using Wonder, and please let us know if we can research anything else for you!