Simon-Kucher & Partners reports record revenue growth
2018 was a banner year for Simon-Kucher. The consulting firm, known for its expertise in pricing strategy and marketing, posted revenues of $360 million – an increase of 23% over 2017. The Bonn, Germany–based firm saw explosive growth in the US, where revenue jumped by 35%.
The results for 2018 were the strongest growth figures that Simon-Kucher has seen in over a decade. Founded in Germany and breaking into the US market in 1996, the firm has seen robust and consistent growth since it shattered the €100 million ($119 million) fee income barrier in 2010.
Demand for effective digitalization services was key to the firm’s stellar global revenue results in 2018. Simon-Kucher CEO Georg Tacke notes that though firms have spent massive sums on digitalization, many have seen disappointing results. “The solution is therefore smaller, clearly defined, and highly-profitable digitalization projects, rather than just digitalization for digitalization’s sake,” explained Tacke. “This is exactly where companies turn to us for our support and expertise.”
Simon-Kucher’s revenue growth rate was boosted by excellent performance in the US, where fee income grew by 35% – driven by consulting work for the booming software, internet, and media industry.
“We continue to be closely linked with the Unicorn ($1 billion+ valuated startup) community in the North America, having now worked with over 25 of them,” commented Brad Soper, partner and Atlanta office head. “Most notably, this year we created a loyalty program for one of the ride sharing companies.”
Simon-Kucher has also seen significant demand for top-line growth services from private equity–owned firms looking for a boost in portfolio valuation from effective pricing. In total, the consulting firm serves over 20 industries, including banking and financial, consumer and retail, healthcare and life sciences.
Last year, the firm's business-to-business (B2B) practice supported a top packaged ice manufacturer with a revamped channel pricing strategy, developed a pricing program for a large foam manufacturer, and helped numerous distribution firms plan for tariff impacts.
Uncertain economic times can help drive demand for pricing advisory, as firms look to maximize their top line in less than perfect circumstances – battered by tariffs and risks surrounding international trade, a forecasted global downturn, and fluctuating commodity prices.
The above-mentioned factor will be an even stronger influence on the firm’s 2019 business. “The overwhelming theme this year will be pricing in uncertain economic environments,” remarked Soper. “Whether we have rising costs due to tariffs or raw material cost fluctuations – companies need to be proactive in their pricing strategy. In addition, we see many companies continuing to innovate – which calls for a departure from a historical cost-based pricing approach to value-based.”
Meanwhile, Simon-Kucher also posted excellent growth numbers in China, where revenue jumped by over 40%. Tacke noted: “China is becoming increasingly important for the international consulting market. At the moment the share is still low – but if the positive trend seen in recent years continues, China will soon become a permanent fixture for the industry.”
In its home market of Germany, Simon-Kucher’s revenue grew by 25%, outstripping the 8.4% consulting industry average in the country by a wide margin.
The firm is forecasting another strong year in 2019, with a revenue target of $400 million. Simon-Kucher will also look to expand its 1,300-person global workforce with an additional 400 associates this year.
In the US, the company is planning to open its seventh office in Houston this year, presumably to enable greater opportunities in Texas' booming energy sector. The office will be led by partner Philip Daus.
Last year, the consultancy opened a new location in Chicago. Based out of Boston in the US, Simon-Kucher has further offices in Atlanta, Mountain View (CA), NYC, and San Francisco.
