Financial services industry operates more like healthcare and law than say consumer products with regard to pricing practices and competition (in the context of

Financial services industry operates more like healthcare and law than say consumer products with regard to pricing practices and competition (in the context of advisory, not lending). You wont find a lot of doctors or lawyers bragging about how low their rates are because price is a perceived indicator of quality. That being said, a convention began a long time ago that a fair price to pay to a top notch bank is 7% and everyone has stuck to it. If you were a client and were quoted 8%, you would demand to know what makes you different than the hundreds of other (perhaps weaker) companies that got a better deal. If you were quoted 5%, unless the circumstances were extraordinary, the dozens of companies in the pipeline are going to expect the same treatment. So the question to the investment bank comes back to this: why rattle a system that works and is accepted as is? To be frank, price competition exists in banking but most companies dont care about it. There are a lot of IPO's that take place and you'd be amazed how many of them "fail". You just dont hear about them because they are so small and underwritten by smaller banks. Big/successful companies dont care about the arbing the 100-150 basis points and risk jeopardizing the success of their IPO by picking someone other than Goldman.