SecProbe.io

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     FOLEY

     FOLEY & LARDNER LLP
ATTORNEYS AT LAW

     777 EAST WISCONSIN AVENUE

MILWAUKEE, WISCONSIN  53202-5306

414.271.2400  TEL

414.297.4900  FAX

www.foley.com

     November 2, 2005

     WRITER'S DIRECT LINE

414.297.5670

mplichta@foley.com  Email

     VIA EDGAR AND FACSIMILE

     CLIENT/MATTER NUMBER

044741-0103

Mr.           Jim B. Rosenberg
Ms.
Sasha S. Parikh
Ms. Mary Mast
U.S. Securities and Exchange Commission
Division of
Corporate Finance
Washington, D.C. 20549

 Re:
National
Research Corporation
Annual Report on Form 10-K for the year ended December 31, 2004
File
No. 000-29466

Ladies and Gentlemen:

        On
behalf of our client, National Research Corporation, a Wisconsin corporation (the
“Company”), set forth below is the Company’s supplemental response to
comment no. 2 of the Staff (the “Staff”) of the Securities and Exchange
Commission (the “Commission”) set forth in the Staff’s letter, dated
September 15, 2005, and our call with the Staff on October 20, 2005, with respect to
the above-referenced Annual Report on Form 10-K. Comment no. 2 of the Staff reflected
in the comment letter is set forth below in bold italics. Following such comment is the
Company’s supplemental response (in regular type).

          2.

          With regards to your Market Guide contracts, please tell us why it is
          appropriate to defer the direct costs of preparing the
          survey data for the Market Guide until delivery. It appears that costs
          should be expensed as incurred. Provide us the
          authoritative accounting literature you are using to defer the costs.

        Supplemental
Response:

        Background.
The Market Guide is a product of the Company that is published in September
          of each year. The Market Guide summarizes in a large database perceptions of
          health care providers across the United States and reflects the results of
          approximately 140,000 surveys of health care consumers each year. Customers
          purchase a standardized online database and the customer can than manipulate
the           data to address the customer’s particular questions.

        In
approximately October of a given year, the Company begins to market the following
year’s Market Guide. Most sales and marketing is directed at existing customers, as
the Market Guide historically has enjoyed annual renewal rates of approximately 75% to
80%. Customers begin to enter into contracts in the fourth quarter and customers continue
to execute contracts well into the following year. Each December, the Company enters into
an agreement with a third party for that third party to conduct approximately 140,000
surveys and gather the related data for the following year’s Market Guide. The fees
and expenses under the agreement typically range from approximately $600,000 to $700,000
for the entire project and are paid in installments once work begins on the project. The
third party provider commences its work in the first or second quarter of the year and
continues its work, and the Company continues to make installment payments, through
approximately July of each year. The Company also continues to contract with customers for
the Market Guide during that time.

BOSTON

BRUSSELS

CHICAGO

DETROIT

JACKSONVILLE

LOS ANGELES

MADISON

MILWAUKEE

NEW YORK

ORLANDO

SACRAMENTO

SAN DIEGO

SAN DIEGO/DEL MAR

SAN FRANCISCO

SILICON VALLEY

TALLAHASSEE

TAMPA

TOKYO

WASHINGTON, D.C.

WEST PALM BEACH

Mr. Jim B. Rosenberg
Ms. Sasha S.
Parikh
Ms. Mary Mast
November 2, 2005
Page 2

        Beginning
in 2005, the third party provider begins to accumulate the data through online surveys,
and the Company pays the first significant installment payment for those services, in
approximately April. Prior to 2005, the Company’s third party provider utilized U.S.
mail surveys that required additional lead time. As a result, the third party provider
historically began to accumulate the data in February and the Company would make its first
significant installment payment in April. Also, the Company has in the past incurred
approximately $70,000 to $100,000 of additional costs annually relating to approximately
20 temporary workers hired to input and code the results of hard copy surveys returned via
mail. The temporary workers were hired specifically for that project and, with a few
immaterial exceptions, were terminated at the end of the project. Because of the new
online data-gathering process, the cost of such temporary workers has decreased to less
than $10,000 in 2005 and is expected to remain at these levels going forward.

        Deferred
Expenses. During 2005, the Company deferred the cost of the fees paid to the third
party provider, and all other Market Guide costs (internal, selling, general and
administrative) were expensed as incurred. During years prior to 2005, the Company
deferred the costs of the temporary workers in addition to the third party costs. A
summary of amounts under Market Guide customer contracts compared to installment payments
to the third party provider for each of the last three years are summarized in the
attached Exhibit A. In September of each year, the Company ships the Market guide and
recognizes the related deferred revenues and deferred expenses at that time. Any
additional sales that follow after September are insignificant. The Company recognizes
revenue from such sales upon shipment and no deferred expenses are allocated to such
sales.

        Basis
for Deferral of Expenses. The Company analogizes to the following authoritative
accounting guidance for its basis of deferring the direct costs of preparing the survey
data for the Market Guide until delivery: Statement of Financial Accounting Standards
(SFAS) No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating
or Acquiring Loans and Initial Direct Costs of Leases (SFAS 91), and Financial
Accounting Standards Board Technical Bulletin 90-1, Accounting for Separately Priced
Extended Warranty and Product Maintenance Contracts (FTB 90-1). SFAS 91 paragraphs 5
and 6 allow for direct loan origination costs to be deferred and expensed with the related
revenue. Direct loan origination costs are defined as “incremental direct costs of
loan origination incurred in transactions with independent third parties for that
loan.” In addition, paragraph 41 expands the discussion to state “Incremental
direct costs of loan origination incurred… must include only those costs that result
directly from and are essential to the lending transaction and would not have been
incurred by the lender had the lending transaction not occurred.” Further, FTB 90-1
paragraphs 4 and 5 state, “Costs that are directly related to the acquisition of a
contract and that would have not been incurred but for the acquisition of that contract
(incremental direct acquisition costs) should be deferred and charged to expense in
proportion to the revenue recognized….”

Mr. Jim B. Rosenberg
Ms. Sasha S.
Parikh
Ms. Mary Mast
November 2, 2005
Page 3

        As
described above, the deferred Market Guide costs are “incremental direct costs”
that are solely related to the Market Guide contracts entered into by the Company. These
costs are required to obtain the necessary data to fulfill the contractual obligation.
Therefore, based on the guidance of SFAS 91 and FTB 90-1, the Company expenses these costs
at the time the revenue is recognized.

        Recoverability
of Deferred Costs. The Company monitors the recoverability of the deferred costs on a
quarterly basis by considering historical and current renewal rates, as well as the total
contract revenue in comparison to deferred costs. If the Company determines certain
deferred costs would not be recovered, these costs would be expensed in the respective
quarter. As discussed above and as shown in Exhibit A, the Company has experienced high
levels of renewals from Market Guide customers, and at any given time deferred revenues
relating to Market Guide contracts exceed the related deferred direct and incremental
expenses.

        Disclosure.          The
Company will expand the “MD&A – Critical Accounting Policies           and
Estimates – Revenue Recognition” and “Note 1 to Consolidated
          Financial Statements – Summary of Significant Accounting Policies –          Revenue
Recognition” disclosures to include the following:

The
Company recognizes revenue on Market Guide contracts upon delivery of the Market Guide to
the principal customers. The Company defers costs of preparing the survey data for the
Market Guide. These costs are incremental direct costs solely related fulfilling the
Company’s obligations under the Market Guide contracts. The Company expenses these
deferred costs at the time revenue is recognized. The Company monitors and assesses the
recoverability of the deferred direct costs based on contracted revenues and whenever
changes in circumstances warrant such assessment. The Company generates additional
revenues from incidental customers subsequent to the completion of each edition. Revenue
and costs for these subsequent services are recognized as the services are performed and
completed.

* * * *

Mr. Jim B. Rosenberg
Ms. Sasha S.
Parikh
Ms. Mary Mast
November 2, 2005
Page 4

        If
the Staff has any questions with respect to any of the foregoing, please contact the
undersigned at (414) 297-5670 or Russell E. Ryba at (414) 297-5668.

Very
truly yours,

/s/ Mark T.
Plichta

Mark T. Plichta

Enclosure

 cc:
Michael
D. Hays
Patrick E. Beans
   National Research Corporation
Benjamin F. Garmer, III
Russell E.
Ryba
   Foley & Lardner LLP
Alexi A. Wellman
   KPMG LLP

EXHIBIT A

National Research
Corporation
Response to SEC letter dated 9/15/2005

     Healthcare Market Guide
     2003
     2004
     2005

     Q1
     Q2
     Q1
     Q2
     Q1
     Q2

     Contracts in place (deferred revenue) at quarter end

     $    152,500

     $  1,474,858

     $    212,528

     $  1,543,404

     $    130,310

     $  1,329,636

Deferred direct costs at quarter end

            Paid to outside vendors
     $      4,175

     $    628,521

     $      3,000

     $    184,929

     $       --

     $    323,587

            Paid to part-time hourly labor of NRC
       --

       98,138

       --

       76,364

       --

       --

                  Total deferred direct costs at quarter end
     $      4,175

     $    726,659

     $      3,000

     $    261,293

     $       --

     $    323,587