Discounting Hits MBA Admissions Consulting
Stratus Prep, an admissions consulting firm, has been offering would-be clients a 10% discount off its standard $6,500 three-school package that would include HBS. mbaMission, one of the larger players in the MBA admissions consulting, is dangling a $100 discount in front of applicants who enroll in its MBA application writing bootcamp. And Accepted.com, which has been counseling applicants since 1994, is also offering to shave 10% on all non-rush MBA admissions consulting and editing services booked by the end of July.
After several years of declining MBA applications, the discounting that has been rampant in the GMAT prep business is now starting to hit the highly competitive MBA admissions market. At least nine firms alone are advertising discounted services on GMATClub, an online community of GMAT exam takers. Among them, Aringo Consulting Group is promoting a rather massive 30% cut in its admissions consulting fees.
HAS THE BUSINESS PEAKED OR ARE TOO MANY COMPETITORS CHASING TOO LITTLE BUSINESS?
Is it a sign that the market for MBA consulting has peaked? Or is it just too many competitors chasing too little business? Two years ago, when Poets&Quants published an in-depth series on the business, there were as many as 300 firms with more than 500 MBA admission consultants around the world. Overall, P&Q estimated they were racking up annual revenues of at least $35 million.
Since then, however, even more competitors have cropped up and the business of some of the firms has exploded. Two years ago, for example, Chicago-based The MBA Exchange listed 40 active consultants on its website. Today, the firm has 67 consultants, including former admission officials from at least eight schools, including Harvard, Wharton, Kellogg, Chicago Booth, Columbia and Dartmouth Tuck. Virtually all of the consultants have MBAs and the majority of them worked with admissions when they were students.
“I think that discounting is an indication of how challenging it is for those who are battling it out using commodity channels like Google Adwords to get their names out,” says Jeremy Shinewald, founder and president of mbaMission. “The barriers to entry in this business are low, but the barriers to actually getting clients are now quite high.”
‘WE DO TURN CLIENTS AWAY DUE TO CAPACITY ISSUES EVERY YEAR’
Stacy Blackman, founder and president of Los Angeles-based Stacy Blackman Consulting, agrees. “I think that many of the firms out there are trying to find ways to differentiate and be competitive, but that is not how we operate,” says Blackman. “We have never sold our services based on low pricing. It’s hard to say whether business has peaked. All I know is our experience, and we do turn clients away due to capacity issues every year.”
Linda Abraham, founder and president of Accepted.com, says her 10% discount during the month of July is no big deal. “Actually, we’ve offered a July special for years,” she says. “The reason behind it: by getting applicants to start early we help them and we help ourselves.
This a very seasonal business. If they start in July we will serve more applicants total. If they all start in September, we and the clients go crazy, and we end up simply being available to fewer applicants. They also will produce better, more thoughtful applications if they start early and don’t do the last-minute slap-together that so many end up doing. We work with those too, but not at a discounted rate.”
Notwithstanding the discounting by some firms, the vast majority are holding already hefty consulting fees steady—if not increasing them (see table for going rates at some select firms). The going rate for a four-school package at most top firms is about $7,000, though they range from a high of $7,599 at Clear Admit to $5,400 at Inside MBA Admissions. Hourly consulting rates range from $375 an hour at EXPARTUS to $244 at Veritas.
“As with any professional service, there’s a wide range of pricing available in the admissions consulting marketplace,” says Dan Bauer, founder and managing director of The MBA Exchange. “Applicants who are ‘shopping’ firms should consider the value proposition behind the price. For example, verified admissions results, documented client satisfaction, and a long-term reputation for integrity are some important factors for any serious applicant.”