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Prissättning av tjänster i byggkonsultbranschen - Införandet av alterantiva prissättningsmodeller

Nilsson, Emma LU and Persson , Jenny (2010) FEKP02 20101
Department of Business Administration
Abstract
Title:
Pricing of Consultant Services within the Construction Industry – Introducing Alternative Pricing Models

Authors:
Emma Nilsson and Jenny Persson

Tutors:
Elisabeth Attebrant – Regional Director, East, Sweco Management
Göran Alsén – Department of Business Administration, Lund School of Economics and Management, Lund University
Bertil Nilsson – Department of Production Management, Faculty of Engineering, Lund University

Issue of Study: Within the construction business pricing is traditionally done at current account. In order to increase profitability the company, on whose behalf this report is carried out, has set a goal to increase the number of contracts where alternative pricing models are used. Why are prices and... (More)
Title:
Pricing of Consultant Services within the Construction Industry – Introducing Alternative Pricing Models

Authors:
Emma Nilsson and Jenny Persson

Tutors:
Elisabeth Attebrant – Regional Director, East, Sweco Management
Göran Alsén – Department of Business Administration, Lund School of Economics and Management, Lund University
Bertil Nilsson – Department of Production Management, Faculty of Engineering, Lund University

Issue of Study: Within the construction business pricing is traditionally done at current account. In order to increase profitability the company, on whose behalf this report is carried out, has set a goal to increase the number of contracts where alternative pricing models are used. Why are prices and thereby revenues low within the industry today? Why is it, and has it been hard to, implement the usage of other pricing models? How can such a change be made possible within the construction industry? And which model or models would be suitable to implement in case of a change?

Purpose: The purpose of this report is to investigate why pricing levels are low within the construction consultant industry in comparison to other consultant industries, as well as to examine what affects the choice of pricing models. In addition to this the report aims to analyze pricing models used today and to develop a process according to which employees at the host-company can work in order to successfully introduce alternative pricing models. Finally, the report aims to increase awareness of the possibility of using different types of pricing models and the importance of this subject.

Method: Existing theories concerning pricing, both general and industry specific, were mapped out, as was the industry of construction consulting services. The result of the report is, in addition to this, based on a number of qualitative interviews carried out with employees at the host-company as well as with other industry players. The result of the study has also been influenced by interviews with employees within other industries where prices and revenues tend to be higher than within the industry of construction consulting services.

Conclusion: This report is based on an analysis of the complex and challenging questions that arise when a change of pricing models is to be carried out within the “slow-moving” industry of construction consulting. The report concludes that the low price and revenue levels are caused by strong traditions, the way reward systems are set up, the current owner structure, the fact that the area of competence is valued low and focus within the industry is put on non-business related questions, as well as consultants being hesitant to charging high prices.

The interviews imply that a pricing model based on incentives is demanded by both the consultant and the customer, both of whom wish that the difference in price depending on experience be larger. The report also presents a number of more unusual alternative ways of pricing. One option is to charge an additional fee if the customer demands consultancy services to be performed by a specific employee. Another possibility is to use a type of subscription model, or possibly to sell a group of consultants rather than individual consultants. The report also suggests that modular pricing should be used both when a particular task is easily specified, and for changes and additional work that can be standardized.

The report shows that difficulties that have been encountered whilst trying to bring about the usage of alternative pricing models do not have to do with the models themselves. The difficulties come about as a result of lacking communication between the consultant and the customer, and the fact that pricing models that promote an open collaboration are missing. The report presents a process that is recommended to be used in order to succeed when introducing alternative pricing models. The process is divided into the following steps:

1. An internal change of the company
2. A change in how construction consultants gain insight into and perceive the customer’s situation
3. A change in the way that customers understand the consultants’ situation (Less)
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author
Nilsson, Emma LU and Persson , Jenny
supervisor
organization
course
FEKP02 20101
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Pricing at current account, Construction consultant industry, Pricing change, Construction consultant service, Incentive pricing set-ups, Fixed pricing, Pricing
ISSN
1651-0100
language
Swedish
id
1668712
date added to LUP
2010-09-20 09:37:53
date last changed
2010-09-20 09:37:53
@misc{1668712,
  abstract     = {Title: 
Pricing of Consultant Services within the Construction Industry – Introducing Alternative Pricing Models

Authors: 
Emma Nilsson and Jenny Persson

Tutors: 
Elisabeth Attebrant – Regional Director, East, Sweco Management
Göran Alsén – Department of Business Administration, Lund School of Economics and Management, Lund University
Bertil Nilsson – Department of Production Management, Faculty of Engineering, Lund University

Issue of Study: Within the construction business pricing is traditionally done at current account. In order to increase profitability the company, on whose behalf this report is carried out, has set a goal to increase the number of contracts where alternative pricing models are used. Why are prices and thereby revenues low within the industry today? Why is it, and has it been hard to, implement the usage of other pricing models? How can such a change be made possible within the construction industry? And which model or models would be suitable to implement in case of a change?

Purpose: The purpose of this report is to investigate why pricing levels are low within the construction consultant industry in comparison to other consultant industries, as well as to examine what affects the choice of pricing models. In addition to this the report aims to analyze pricing models used today and to develop a process according to which employees at the host-company can work in order to successfully introduce alternative pricing models. Finally, the report aims to increase awareness of the possibility of using different types of pricing models and the importance of this subject.

Method: Existing theories concerning pricing, both general and industry specific, were mapped out, as was the industry of construction consulting services. The result of the report is, in addition to this, based on a number of qualitative interviews carried out with employees at the host-company as well as with other industry players. The result of the study has also been influenced by interviews with employees within other industries where prices and revenues tend to be higher than within the industry of construction consulting services.

Conclusion: This report is based on an analysis of the complex and challenging questions that arise when a change of pricing models is to be carried out within the “slow-moving” industry of construction consulting. The report concludes that the low price and revenue levels are caused by strong traditions, the way reward systems are set up, the current owner structure, the fact that the area of competence is valued low and focus within the industry is put on non-business related questions, as well as consultants being hesitant to charging high prices.

The interviews imply that a pricing model based on incentives is demanded by both the consultant and the customer, both of whom wish that the difference in price depending on experience be larger. The report also presents a number of more unusual alternative ways of pricing. One option is to charge an additional fee if the customer demands consultancy services to be performed by a specific employee. Another possibility is to use a type of subscription model, or possibly to sell a group of consultants rather than individual consultants. The report also suggests that modular pricing should be used both when a particular task is easily specified, and for changes and additional work that can be standardized.

The report shows that difficulties that have been encountered whilst trying to bring about the usage of alternative pricing models do not have to do with the models themselves. The difficulties come about as a result of lacking communication between the consultant and the customer, and the fact that pricing models that promote an open collaboration are missing. The report presents a process that is recommended to be used in order to succeed when introducing alternative pricing models. The process is divided into the following steps:

1. An internal change of the company
2. A change in how construction consultants gain insight into and perceive the customer’s situation
3. A change in the way that customers understand the consultants’ situation},
  author       = {Nilsson, Emma and Persson , Jenny},
  issn         = {1651-0100},
  keyword      = {Pricing at current account,Construction consultant industry,Pricing change,Construction consultant service,Incentive pricing set-ups,Fixed pricing,Pricing},
  language     = {swe},
  note         = {Student Paper},
  title        = {Prissättning av tjänster i byggkonsultbranschen - Införandet av alterantiva prissättningsmodeller},
  year         = {2010},
}