What is a benchmarking study?

In general terms, benchmarking is a way of discovering what is the best performance that is achieved – whether in a particular company, by a competitor or by the entire industry. This information can then be used to identify gaps in an organization’s processes in order to achieve a competitive advantage.

In transfer pricing, benchmarking refers to (i) the search for companies that perform similar activities as the company for which an arm’s-length remuneration needs to be determined, usually referred to as the “tested party” and (ii)  establishing the arm's length profits of the “tested party” by reference to the profitability of the companies that perform similar activities in terms of functions performed, assets employed, and risks taken.

Benchmarking is of paramount importance to any transfer pricing analysis as economic references are critical to justify the income allocation within a group or for a specific intercompany transaction.

A benchmarking study done at an appropriate level of quality can serve not only in a transfer pricing project but also as a tool for analyzing competition and industry performance.

How we can help?

Our specialists have extensive experience in preparation of benchmarking studies for commercial, financial, and intangibles transactions of all kinds.

Thus, we are proud of our ability to carry out customized benchmarking studies for all types of transactions that a company can carry out at a quality level that can not only help minimize transfer pricing risks but can also offer you an idea of the competition and the situation of your industry.

Moreover, if you need a standard benchmarking study that doesn’t need any other customization, you can buy it from our ready-made benchmarking studies library.

How do we do it?

We will first request you to fill in a form with information regarding the types of activities that you need to benchmark and will set a phone call to discuss about the details of these activities.

Using our subscriptions to various transfer pricing specialized databases, we will extract the raw data from these databases.

After extraction of the data, we will do a manual and tailored manual review of every potential comparable in order to identify a set of companies that are performing similar activities to the ones you need to test.

After finalizing this manual search, we will send an anonymized version of the benchmarking study to be reviewed by one of our partners in your country.

We will adjust the benchmarking study, if we will receive recommendations from our partners to adjust any aspect.

In the end, we will send you a first draft of the benchmarking study to review and we will schedule a phone call to discuss the results.

Moreover, if you need a standard benchmarking study that doesn’t need any other customization, you can buy it from our ready-made benchmarking studies library.

In the final step, we will adjust the benchmarking study with any of your comments, if there will be any, and we will send you the final draft.

This whole process will last approximately five to twelve working days from the date of receipt of the information regarding the types of activities.

Key benefits

Expert made tailored benchmarking studies

Our benchmarking studies will be prepared by experts with more than 10,000 hours of experience in preparation of such benchmarking studies.

This stands as a guarantee that our benchmarking studies will take into account the smallest details regarding your business and the final benchmarking study will achieve the best balance between the transfer pricing side and the commercial side of the benchmarking.

Review your profitability from transfer pricing regulations perspective

Our benchmarking studies are prepared 100% compliant with your country regulations and reviewed by an expert from your own country.

Therefore, you will be able to adequately measure your profitability against market profitabilities and determine whether your profitability is compliant with transfer pricing regulations in your country.

Review your profitability as compared with the competition

Not only our benchmarking studies can serve for your transfer pricing purpose, but they will also serve you in figuring out where you stand as compared to your independent competitors.

This will further allow you identify potential issues in your business and enhance your way of doing business.