The article Pricing Experiments You Might Not Know, But Can Learn From has some great testing insights into selling and pricing. One of the fundamental truths in business: pricing is an art, not a science.

We think our customers make purchase decisions completely rationally, deciding on the option with the highest utility. But the above article shows that neither our customers nor ourselves tend to make pure rational purchase decisions.

So what do I take away from the article and my own experience for construction pricing?

1. Asking people what they want to pay (their budget) rarely works. They almost never have enough data to really know what’s reasonable.
2. Helping them know what’s reasonable is your job. It’s particularly valuable to let customers know what similar projects, built by others, have costed. Knowing construction cost databases, even showing the Means Cost Data pricing, is worthwhile.
3. When trying to get a decision, remember that choosing between three prices is generally easier than choosing from two. Think about the pricing psychology and present estimates accordingly.

As is the case with most areas of business, there’s more to pricing than just doing the work. Take some time to learn about pricing and run some tests to gain some insight.

Too many folks in this crazy construction business work for decades with almost nothing to show for it but callouses. Take some time to think and learn about pricing. There should be some reasonable rewards for all the risks you endure in construction contracting.