.png)
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
In the competitive landscape of construction software, your pricing strategy can make or break your business. While developing innovative features for project management and building management is crucial, even the most powerful contractor tools won't generate revenue if your pricing approach doesn't resonate with your target market.
According to a McKinsey study, effective pricing optimization can increase a SaaS company's revenue by 3-8% and margins by up to 50%. Yet many construction software providers continue to use pricing models that leave significant revenue on the table. Let's explore how to test and refine your construction SaaS pricing strategy to maximize growth and customer satisfaction.
Why Construction SaaS Pricing Deserves Special Attention
The construction industry has unique characteristics that affect how companies value and purchase software:
- Seasonal revenue fluctuations
- Project-based operations with varying team sizes
- Mix of office and field personnel
- High cost sensitivity due to tight project margins
- Varying technology adoption rates among potential users
These factors mean that standard SaaS pricing approaches often need adjustment for construction software. A pricing strategy that works brilliantly for marketing automation might fail completely when applied to contractor tools.
Common Pricing Models for Construction Software
Before testing variations, understand the baseline pricing models in the construction technology space:
- User-based subscription pricing: Charging per user per month/year
- Tiered feature-based pricing: Basic, Pro, and Enterprise packages with increasing capabilities
- Project-based pricing: Costs scale with the number or size of projects managed
- Usage-based pricing: Billing based on storage, processing power, or specific feature usage
- Hybrid models: Combinations of the above approaches
According to Construction Executive magazine, most successful construction software solutions have moved toward subscription pricing models that provide predictable costs for contractors while ensuring recurring revenue for providers.
Essential Elements to Test in Your Pricing Strategy
1. Price Point Testing
The most obvious element to test is the actual price point. Methods include:
- A/B testing: Show different pricing to different website visitors
- Cohort analysis: Introduce different pricing to different customer groups
- Customer interviews: Gather direct feedback on willingness to pay
Construction software pricing typically ranges from $15-$150 per user per month depending on capabilities, according to Software Advice's construction software market report.
2. Value Metric Testing
Your value metric is what you charge for—users, projects, storage, etc. Testing different value metrics helps determine what aligns best with your customers' perception of value.
For example, a construction project management platform might test:
- Per-user pricing vs. per-project pricing
- Unlimited users with storage limits vs. limited users with unlimited storage
- Per-active-user vs. flat team pricing
According to OpenView Partners' SaaS pricing research, companies that align their value metric with customer value perception see 25% higher growth rates.
3. Package Structure Testing
Experiment with different feature groupings and tier structures:
- Test 3-tier vs. 4-tier package structures
- Evaluate which features should be premium vs. standard
- Determine if specialized add-ons (like BIM integration or equipment tracking) should be separate
Research from Price Intelligently shows that construction companies typically need to see a clear 2-4x value increase to justify moving to a higher pricing tier.
4. Discount Strategy Testing
Testing different promotional approaches can reveal optimal acquisition strategies:
- Time-limited discounts vs. permanent price reductions
- Free trial period length (7, 14, or 30 days)
- Implementation fee waiving vs. reduced monthly pricing
- Annual payment discounts (10-20% is standard)
How to Conduct Effective Pricing Tests
1. Establish Clear Metrics
Before testing, define what success looks like:
- Conversion rate from trial to paid
- Average contract value
- Customer acquisition cost (CAC)
- Customer lifetime value (LTV)
- Churn rate
2. Use the Right Testing Methodology
Different pricing elements require different testing approaches:
- For new customer acquisition: A/B tests on landing pages
- For existing customers: Grandfathering some while introducing new pricing to others
- For major model changes: Cohort-based testing with new market segments
Construction software provider Procore reportedly tested five different pricing structures before settling on their current model, which helped them achieve unicorn status with a valuation over $1 billion.
3. Gather Qualitative Feedback
Numbers tell only part of the story. Supplement quantitative data with:
- Customer interviews about pricing perception
- Sales team feedback on pricing objections
- Competitor pricing analysis
- Lost deal analysis
4. Implement Changes Gradually
Pricing changes can destabilize existing customer relationships. Consider:
- Grandfathering existing customers
- Providing migration paths to new models
- Giving advance notice of pricing changes
- Offering incentives for early adoption of new pricing
Common Pitfalls in Construction SaaS Pricing Testing
Avoid these common mistakes:
- Testing too many variables simultaneously: Change one element at a time for clear insights
- Insufficient sample sizes: Ensure statistical significance before drawing conclusions
- Ignoring customer segments: What works for residential contractors might fail for commercial builders
- Focusing only on short-term metrics: Consider long-term impacts on customer lifetime value
- Neglecting competitive positioning: Your pricing exists within a market context
Case Study: How One Building Management Software Optimized Pricing
A mid-sized building management software provider (who preferred to remain anonymous) shared their pricing optimization journey with Construction Dive. They initially offered a simple per-user model but discovered through testing that their customers valued unlimited users more than advanced features.
Their transformation:
- Moved from per-user to per-project pricing with unlimited users
- Created tiers based on project complexity rather than feature access
- Introduced optional add-ons for specialized needs
- Implemented annual billing with a 15% discount
The results were impressive:
- 32% increase in annual recurring revenue
- 18% reduction in customer acquisition cost
- 22% decrease in churn rate
- 40% increase in average contract value
Conclusion: The Iterative Nature of Pricing Strategy
The most successful construction software companies view pricing strategy as an ongoing process, not a one-time decision. Regular testing and optimization should be built into your business rhythm, with comprehensive reviews at least quarterly.
Remember that the goal of pricing optimization isn't merely to extract maximum revenue—it's to align your pricing with the value you deliver to customers. When construction companies feel they're getting exceptional value from your software, they become not just loyal customers but advocates who drive organic growth through referrals.
By systematically testing various elements of your construction SaaS pricing strategy, you can discover the optimal approach that maximizes both customer satisfaction and business performance—creating a sustainable competitive advantage in the crowded construction technology marketplace.