Regular market research is an essential part of nurturing your brand, meeting customer expectations, identifying opportunities, improving profit margins and staying competitive overall. Without data collected directly from customers and your market, it’s impossible to ensure the lineup of your construction or home improvement materials addresses current needs, preferences and industry trends.
Since many of your important go-to-market decisions will be made from annual market research, make sure the agency you partner with can deliver high-quality, reliable qualitative and quantitative data that is both relevant and timely.
What is the Cost of Custom Market Research?
Nailing down a precise price estimate for market research can be challenging, because there’s no one-price-fits-all model that accommodates every company or every project. The cost of market research varies based on numerous factors, including what you want to accomplish, who will be involved, the time it takes to collect data, and the type of methodology or technology you implement in the process. Some methodologies are simpler and less costly than others, but they might not provide as much value to you.
There are two main classifications of external data that will help your firm make better strategic decisions. Secondary research are off-the-shelf reports that are readily available, free or often a low price point, and available to everyone. Secondary research are often higher-level reports great for directional information and broader perspectives. Primary or Custom research is research designed specifically around your needs, exclusively for you and no one else that provides you with a deeper insight on your specific product, brand, customer and market.
In general, you should plan to spend about $20,000 to $50,000 for a qualitative or quantitative custom market research project. For market research projects completed by a specialist firm within your industry niche, expect to lean into the higher end of that range. That is primarily due to the cumulative value-add their team brings with the proper interpretation of the data, ability to save you time up front, and enhanced design based on prior industry experiences.
Custom research can certainly be done for less, but you will get what you pay for. Short, quantitative, online surveys may fall between $15,000 to $30,000 range, and tend to primarily validate a hypothesis versus uncovering new ways of approaching a situation from the perspective of the customer. DIY survey tools like Alchemer or SurveyMonkey are even cheaper, but lack analytical complexity, lack sophisticated question logic, and may result in poor respondent quality when using their database of respondents.
At the other end of the spectrum can be six-figure research projects if you're looking for an annual program, multiple methodologies, or a wide-range of audiences. It's all based on your objectives, the level of support you need, and your desire for high-quality results with actionable insights specific to you and your industry.
Factors that Influence Market Research Costs
In order to calculate research costs, consider these key variables impacting project costs:
- Methodology Used (Primary vs. Secondary and Qualitative vs. Quantitative)
- Sample Size
- Survey Length
In many cases, your sample size will influence cost when conducting surveys or hosting focus groups, especially as it’s common to offer a respondent incentive—on top of any fees paid to the market research company.
For example, incentives for in-depth qualitative interviews can be $100 to $300, depending on the participant. Contractor or professional interviews are on the high end with DIYers and homeowners on the low end.
To gain solid qualitative data, you want a minimum sample of about 5 to 10 participants for each group or demographic you want to evaluate, while quantitative data requires a much larger sample size—ranging from 100 contractors to 1,000 DIYers—subject to the incidence and overall size of the customer audience.
Incidence is the percentage of respondents that meet your research criteria. This is another critical factor that impacts market research costs. Higher incidence means lower sample costs, lower incidence means higher sample costs and smaller sample size.
The number of questions to be fielded and tabulated in your survey or questionnaire will also contribute to the overall cost of your market research project.
Setting Your Market Research Budget
The best way to develop a detailed budget for your upcoming project is consulting with the firm who will be leading your market research. They can give you a custom quote for how much your research project will cost, based on what services you require, your objectives, and a myriad of other variables.
Then, the cost of running your research project is broken down into the following stages:
- Project scope and design
- Questionnaire design
- Programming the questionnaire
- Respondent sampling and fielding
- Data cleaning
- Coding and tabulating the data
- Reporting and analysis to provide insights and recommendations
What is the Value of Market Research?
Quality custom market research is an investment, but when conducted properly, it is an asset that will pay dividends for your company. You will gain a wealth of customized data that gives insight into customer usage and attitude, brand health, product development, and market sizing so that you can properly guide your company’s trajectory in the market.
Primary market research enables you to make informed decisions during each stage of product development, or when testing a new marketing campaign, or as you explore different acquisition and distribution opportunities to improve your company’s profit margins.
These aren’t the types of business endeavors and expenditures that you can afford to approach casually or with gut instinct. Without first compiling a solid base of objective data, you risk pouring thousands or even millions of dollars into new strategies or products that don’t align with current consumer preferences, don’t accommodate path to purchase behaviors, or fail to account for key market influences.
Selecting a Firm for Your Market Research
To make the most of your investment into market research for your company, you need a couple of key components, including a well-defined objective and suitable methodologies. You also want to contract with a research company that has ample industry expertise and proven methods of data collection and analysis.
For those within the building products, home improvement, or lawn and garden segments, this should involve hiring a specialized team that understands the nuances of selling building products through the channel. That’s what our team at The Farnsworth Group has to offer. Our experts can help you design a customized research project that provides you with the highest quality of data and actionable insights to grow your business, backed by over 30 years of industry specific expertise.