M Science CEO Michael Marrale knows there's never a good time to change how you price your product, though he admits the end of 2022 might have been "the most inopportune time."
A tough year in markets made many asset management clients hyperfocused on budgets. Still, the longtime alt data player, which is owned by the investment bank Jefferies, scrapped its legacy bundle package for all of its research and products and transitioned to a more à la carte menu.
The subsequent move increased the price, which ranges from tens of thousands to hundreds of thousands of dollars, for some of M Science's clients, including doubling the bill for some of the firm's biggest buyers.
The change is an example of the realities in both the data world and the hedge fund industry, where many of M Science's longtime clients come from. Data companies like M Science have to constantly invest in technology and new datasets to keep up with changing client demands, and the pricing change indicates how large the biggest hedge funds in the industry have become. A bundled price no longer works when the purchasing organizations have grown to thousands of people.
New data sources, improved infrastructure, and a partnership with Databricks led Marrale and his team to realize "we were giving our clients a whole lot more than what they were used to getting from us."
The firm covers roughly 230 tickers now, for example, expanding into fields like cloud computing, semiconductors, and software-as-a-service businesses. Next year, auto companies are set to be added, Marrale said, and the new data partnerships have pushed the source data beyond commonly used credit-card data.
On the whole, Marrale said retention has been strong. Large hedge funds still want access to the whole suite but the change also opened the door to smaller asset managers looking for a specific report.
One data executive at a large fund said they stayed on despite an increased cost because it's already integrated into many portfolio managers' processes. This executive noted that M Science had traditionally been cheaper than some of the other well-known alt data players that many in the industry use.
Naturally, there were some clients who did not sign on to the new pricing plan, Marrale said, but he estimates "more than half who left have come back in some form."
"That's a validation point when we see clients come back," he said. "We are seeing them cut other things before alternative data. We are seeing that we are critical to our clients' process."
