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Economy Struggling, Barely Holding On! (You may quote any of the following in your newsletters, e-zines, etc. so long as you credit Brenner Information Group for finding this information.) For the last 20 months, service providers have had to deal with lower prices and lower revenues. Last year, billing rates dropped like a rock and revenues and profits evaporated. Then a bottom was reached, and prices began a gradual climb toward profits. Today, while the paradigm shift and down market that we described earlier continues, business conditions are getting slightly better in some industries, and this will expand. Slightly higher service prices are appearing. As shown in the "Historical Average Hourly Rates" table (bottom of firstpage.html), average billing rates for virtual services are up slightly since last year. While the U.S. economy is trying to recover, the worldwide economic slowdown is affecting every country in one way or another. Those who bought our Virtual Services Special Report and subscribed to our Real Prices Confidential online database are in a good position to profit as the economy improves. Now that the U.S. election is over, watch for slowly growing consumer confidence as buyers return and inventories are reduced. If government policies don't undermine natural business forces, this will stimulate production and job growth. A brighter economic sun line is slowly beginning to appear on the horizon. But it can't come soon enough. Offshore virtual services jobs are being pulled back to the U.S. as the economy forces more workplace shifts. Last year Delta Air Lines announced that it had stopped using virtual call centers in India. Chrysler LLC is moving its customer-service center work back from India. United Airlines is also moving phone work jobs back to America. And Sallie Mae (SLM Corp.) began returning outsourced jobs from India, Mexico, and the Philippines to the United States. The rapid growth of offshore outsourcing to India has ground to a halt as U.S. companies cut outsourced offshore business before eliminating payroll positions at home. While the cost of hiring offshore support is less than 20% of what they'd pay using U.S. workers, the growing number of complaints about poor communication is affecting U.S. company relationships with their own customer base. Dwindling call volume during this deep recession is also affecting these decisions. Today, as pay cuts and layoffs escalate, thousands of unemployed professionals are turning to freelance work for income. You may be one of them. Regardless, you need to know what others are charging for the services that you offer. This information is rapidly becoming available. We just released Hourly Rates North Carolina, Hourly Rates Pennsylvania and Hourly Rates South Carolina and more hourly rate books are coming. Each of these pricing books contain thousands of actual prices as advertised by the service providers themselves. Here is truly what the competition is charging. Check them out at Hourly Rates and see for yourself. We just completed research into businesses that have failed in the last 12 months. We wanted to find out where they are located, how many are in each state or country, and the nature of their freelance and virtual service business. California had the highest number of failures on a list of 34 places in the world followed by Colorado, Michigan and New York. More important is knowing where failures have not occurred. For a free copy of this article click off your request to brenner at brennerbooks dot com. Here's what we're finding: FROM THE WALL STREET JOURNAL: - "Recession Job Losses. Over 8 million jobs have been permanently lost since recession began. Many are not coming back." - Feb10 - "Clawing out of Recession. U.S. unemployment lowers to 9.7% even as 20,000 more lose jobs. The number of workers who have given up looking is growing." - Feb10 - "U.S. Unemployment for 2009. U.S. unemployment expected to end year at 10.1% after revisions." - Feb10 - "Jobless Recoveries the New Normal. Sales at U.S. companies begin to slowly rise, but without hiring new employees. The percentage of jobless workers on permanent layoff, with no hope of getting called back to work, is at a record 55.1%." - Dec09 - "Deeper Price Cuts Loom. Many retailers are likely to start offering broader discounts before the end of the current holiday shopping season in response to generally lackluster store sales." - Dec09 - "Service-Sector Gauge Falls Back in November. Activity contracted raising concern that the U.S. recovery could be losing steam." - Dec09 - "The jobless rate jumped to 10.2% in October, the first time above 10% since the early 1980s. A total of 15.7 million Americans are out of work." - Nov09 - "Consumer Sentiment Index Rises from 56 to 65" - Oct09 - "Americans without health insurance reached 46.3 million in 2008." - Sep09 Increase from 45.7% in 2007 caused by less employer-provided insurance. Over 47 million were uninsured in 2006 - "U.S. poverty rate increased to 13.2% in 2008, up from 12.5% in 2007." - Sep09 - "U.S. Unemployment Rate Now at 9.7%" - Sep09 - "Unemployment worst rate since June 1983" - Sep09 Economy lost 7.4 million jobs since recession started in December 2007. - "Billable Hour Pricing Under Attack" - Aug09 Some companies begin to demand flat rate prices instead of hourly rate billing. - "Sony Drops PlayStation 3 Price 25%" - Aug09 Sony trying to juice demand in countering lower-priced competitors with an industry-wide sales slump. - "Homeowners Skip Pricey Projects" - Aug09 Home Depot and Lowes facing sagging sales as homeowners make do with cheaper home improvement options. - "For the Self-Employed, It's an Endless Workweek" - Aug09 Guru.com membership grows 15% Elance.com membership grows 40% - "Grocers in Price Fight, And It's Drawing Customers" - Aug09 - "Latest Starbucks Buzzword: 'Lean' Japanese Techniques" - Aug09 Company begins to behave like its streamlined competitors. - "Price War Dividing Grocers Into Winners, Losers" - Jul09 Shoppers chasing bargains. Now 1 in 3 shoppers buy only items on sale. Retailers with low price reputations post strong gains. Others are playing catch up. - "Heavy Discounting Crimps Coach Profit" - Jul09 Luxury handbag retailer bets on greater sales of lower-cost handbags to lift profits. Profit in last quarter dropped 32% on heavy discounting. CEO says that this change reflects his belief that consumer spending won't return to pre-recession levels. Feels that market will settle at lower price levels. - "BP Profit Drops 53% on Fall in Oil Prices" - Jul09 British Petroleum reported drop in profit due to lower oil prices and weak margins. - "Iron Ore Prices Down 33%" - Jul09 Chinese steelmakers seek 50% discount on iron ore purchases. - "Once-Hot Coal Piles Up as Demand Cools" - Jul09 Current spot prices of $45-$50 a ton for Appalachian coal lower than $70-$80 a ton coal producers need to keep business viable. Last year this coal fetched $175 a ton. - "Natural Gas Puts Pressure on Coal Prices" - Jul09 - "The Great Recession: A Downturn Sized Up" - Jul09 Unemployment lines have been long before, but no prior slump since WWII has hurt so much on so many fronts. - "GDP Won't Tell Whole Recession Story" - Jul09 A 1.5% decline looks better than the last quarter, but this still marks the first time that GDP has contracted for four quarters in a row since 1947 when GDP measuring began. Current GDP worst since end of WWII. - "Bank of America Chief Says Bernanke, Paulson Barred Disclosure of Merrill Woes Because of Fears for Financial System" - Apr09 - "IMP Says Global Recession Is Deepest Since Great Depression" - Apr09 - "Europe's Grim Outlook Challenges World Recovery" - Apr09 - "Homeowners Refinance in Droves Unseen Since '03" - Apr09 - "Jobless Rate Climbs in 46 States, With California at 11.2%" - Apr09 - "12 States See Double-Digit Jobless Rates" - Apr09 - "Consumer Confidence Rebounding in April" - Apr09 - "Delta Air Ends Use of India Call Centers" - Apr09 FROM OUR REAL PRICES CONFIDENTIAL DATABASE: - Changes in U.S. Billing Rates (Feb10): Up = 30.9% Down = 14.4% No Change = 54.7% (More price reductions noted.) - Average graphic design billing rates have changed significantly. Seven Years of Graphic Design Pricing (Dec08) NOTEWORTHY: - Of 131 VA businesses in Alabama and advertising at Guru.com, just 59 listed their price. Only 3 reported earnings. Good news is that billing rates seem to be stabilizing. None of these advertisers lowered their rates. (Source: Guru.com, November 2009) - 90% of U.S. economy is based on the Service Sector (which is badly damaged right now). - "Federal personal income tax receipts down 22%" - Aug09 - "Federal corporate tax receipts down 57%" - Aug09 - Found that billing rates differed for the same company listed on Elance and iLance - Rate is $50/hr on Elance, but is $30/hr on iLance. HERE'S HOW COMPANIES ARE COPING WITH THE DOWN ECONOMY: LAYOFFS - Yahoo Sets New Round of Cuts (WSJ Apr09): PAY CUTS - Pay Cuts in Best Buy's Reshuffling Strategy; 20% Common in U.S. (WSJ Apr09): PRODUCING BARE-BONES PRODUCTS - At Sony, Culture Shift Yields a Low-Cost Video Camera (WSJ Apr09): REDESIGNING PRODUCTS & SERVICES - Money Magazine Bets on a Redesign (WSJ Apr09): OUTSOURCE - Wall Street Still Finds Ways to Hire Foreigners (WSJ Apr09): DROPPING PROJECTS - Shell Drops China Projects to Develop Alternative Fuels (WSJ Apr09): UNLOADING LOW PROFIT DIVISIONS - EBay Moves to Unload Skype (WSJ Apr09): CHANGE LEADERSHIP - Pang Steps Aside (WSJ Apr09): RELOCATING - California companies relocate to states with lower taxes: SHUTTERING PLANTS - Chrysler Closes Plant (WSJ Nov08): BANKRUPTCY - AbitibiBowater files Chapter 11 (WSJ Apr09): |
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