If you are a construction company and you are confused by the matrix of different pricing models of software services, this article might raise your interest.

The construction industry is embracing new technologies, with SaaS (Software as a Service) products and solutions at the forefront of this transformation. These solutions empower companies in the AECOO industry to not only adopt new technologies that facilitate their building process and enhance efficiency, but also to benefit from budget and maintenance improvements by switching from Capex to Opex.

However, the transition to SaaS isn’t always smooth sailing. Two key concerns can arise: adoption and pricing.

We discuss adoption in another article, you can explore it in depth here. In this article, we’ll only tackle the complexities of pricing models of SaaS products.

As a construction company, even with a brilliant idea, you shouldn’t waste your precious time and energy deciphering SaaS pricing structures from providers. That’s a misuse of your resources! Your focus should be on your projects, not on tedious paperwork and hypothetical cost analyses. We’ll simplify this intricate landscape and guide you toward the most beneficial pricing method for your AECOO business.

What is the typical range of SaaS (Software as a Service) pricing models used in the AECOO industry?

The AECOO industry utilizes a variety of SaaS pricing models, each catering to different needs and project types. Here are the most common ones:

Tiered Pricing

Tiered pricing is the most popular model. Tiered pricing model offers a range of subscription plans with varying features and functionalities at different price points. This variety in price points allows AECOO firms to choose a plan that aligns perfectly with their project complexity, company size, and budget. For instance, a small firm might choose a basic plan with core functionalities like project management and document sharing, while a larger firm might opt for a higher pricing tier offering advanced features like BIM integration or cost estimation tools at a higher price point.

Freemium Model

Some vendors offer a limited free version of their software with basic features, also known as a Freemium package. This Freemium model can be a good option for companies to try out the software and assess its suitability for their needs before committing to a paid plan. Advanced features or increased usage will usually require upgrading to a paid tier. However, not all SaaS providers offer a Freemium option, so evaluating and comparing different pricing models is essential before making a decision.

Per-User Pricing

This model charges a set fee per user who accesses the software. This can be easier to manage from an administrative standpoint, but it might not be ideal for companies with a large number of users or those with varying levels of software usage within their teams. For example, an AECOO firm might have a team of architects who heavily utilize the software for design purposes, while other team members might only need occasional access for collaboration or document review. In this case, a per-user pricing model could be less cost-effective.

Additionally, this model can limit project flexibility. If additional team members need access at certain points, unforeseen costs may arise. It’s also challenging to predict the exact number of users needed upfront, potentially leading to hidden costs at project completion.

Usage-Based Pricing

This model is gaining traction, particularly for solutions where features are heavily influenced by project activity. Here, companies pay based on their actual usage of the software, such as the number of projects they manage, the number of users accessing the platform, or the amount of data storage they require. This can be a cost-effective option for firms with fluctuating workloads, volatile demand or those undertaking smaller projects.

Each model has its own merits and drawbacks, and companies typically select the one that best aligns with their business strategy and understanding of their customers’ perceived value.

Beyond the Tiers: Unmasking Complex SaaS Pricing Strategy in AECOO

The Problem: Unclear and Unstable SaaS Costs

Now you have an overview of all the common SaaS pricing plans used in the AECOO industry. However, SaaS companies often create pricing plans based on various models, which can make them not always straightforward for construction firms to understand at first glance.

Traditionally, figuring out SaaS pricing models can be a frustrating task. SaaS companies often hide their costs behind complex structures, making it difficult to understand and predict your bottom line. These costs can include:

• Cloud Hosting (Ex: Amazon Web Services) and Cloud Infrastructure
• Content Delivery Networks (Cloudflare)
• Domain Names
• Development Environment
• Analytics Tools
• External Library Licenses

As a construction business, managing all these SaaS products and their individual contracts becomes a time-consuming burden. Worse yet, cost changes often seem unclear, making it difficult to predict your overall expenses and fueling concerns about hidden fees and intentional obfuscation.

The Impact on Construction B2B Business Model: Broken Trust and Unfair Practices

Unpredictable SaaS costs can have a ripple effect on your construction business, opening the door for competitors.

Shifting these unpredictable costs from SaaS companies onto your construction firm forces a difficult decision. You may need to compensate by lowering your revenue and profit margin, or transfer the cost to your customers. In either case, it’s not only unfair but also risky, eroding trust in B2B relationships.

Here’s how unpredictable SaaS pricing can negatively impact your construction business:

• Unstable Cost Prediction: You can’t accurately predict your SaaS expenses, making it difficult to price your own services effectively.
• Unfair Price Adjustments: Fluctuating SaaS costs force you to make sudden price adjustments to your customers, potentially driving them away.

Therefore, a clear and fair pricing strategy from your SaaS provider is not just a matter of financial transparency. It’s a cornerstone of a sustainable and mutually beneficial B2B relationship between your construction company and customers.

The Solution: Usage-Based Pricing Plan for Predictability

The key to a healthy B2B relationship with your SaaS provider is predictable pricing. Usage-Based Pricing offers a viable solution to the problems arising from complex and unpredictable SaaS costs.

Unlike other pricing models, Usage-Based Pricing model aligns directly with a construction business’s actual usage, ensuring you only pay for what you use. This model greatly simplifies cost management, making it easier to predict and control your expenses. Choosing partners that offer a usage-based pricing model can bring your business several advantages:

• Project Fluctuations: Construction projects are inherently dynamic. Their size, scope, and duration can vary significantly. Tiered pricing models might lock you into a plan with features or costs that are either excessive for smaller projects or insufficient for larger ones. Usage-based pricing eliminates this issue. You only pay for what your customers actually use, ensuring a perfect fit for each project’s needs.
• Team Size Variations: Unlike some industries, construction teams can fluctuate depending on the project phase. During the design phase, you might need more user licenses for architects and engineers. Usage-based pricing eliminates the need to pay for unused licenses during slower periods or scramble for additional ones during peak activity.
• Unforeseen Needs: Construction projects are prone to unforeseen challenges. These challenges might require additional software functionalities that weren’t initially anticipated. Usage-based pricing allows you to scale up your needs temporarily without significant upfront costs or being locked into a higher tier permanently. You only pay for the additional features used to address the specific challenge.
• Focus on Project Delivery: Construction companies thrive on efficiency and delivering projects on time and within budget. Usage-based pricing removes the administrative burden of managing complex pricing structures. This frees up your team to focus on core project tasks like planning, communication, and execution.
• Improved Customer Relationships: Predictable costs from your SaaS provider translate to more accurate pricing for your customers. This transparency fosters trust and strengthens B2B relationships. Happy customers are more likely to become repeat clients.
• Reduced Risk of Cost Overruns: Unforeseen cost increases are a major threat to project profitability in construction. Usage-based pricing offers greater cost control as you only pay for the actual software usage, minimizing the risk of budget overruns due to fluctuating software costs.
• Scalability for Growth: As your construction business expands, your software needs will naturally increase. Usage-based pricing seamlessly scales with your growth, ensuring you only pay for the additional resources you utilize. There’s no need to worry about being locked into a plan that doesn’t reflect your current needs.
• Flexibility and Adaptability: The construction industry is constantly evolving, embracing new technologies and workflows. Usage-based pricing provides the flexibility to adapt your software needs as these advancements emerge. You only pay for the features and functionalities that are truly valuable to your evolving projects.

With usage-based pricing, your construction business can focus on what matters most: delivering successful projects for your customers.

Catenda’s Innovative Software: How Catenda Empowers You to Price Intelligently, Work Efficiently and Build Smarter

At Catenda, we understand the unique needs of the construction industry. That’s why we’ve chosen a usage-based pricing option for our solutions. We believe this approach aligns perfectly with your business goals, offering:

• Transparency: You have complete visibility into your SaaS costs, allowing for accurate budgeting and project planning.
• Scalability: As your business grows, so too does your usage of our solution. Our pricing model adapts automatically, ensuring you only pay for the resources you need.
• Focus on Value: Forget about managing complex SaaS pricing tiers. With Catenda, you can concentrate on maximizing the value you deliver to your customers.

By embracing a usage-based pricing model, Catenda empowers your construction business the best way to achieve sustainable growth while delivering exceptional projects for your customers. Contact us today to learn more about how our solutions can help you build a successful future.