Commodities and Value-Based Pricing of Engineering Services

Abstract

This paper proposes that many civil engineering companies can be classified as either commodities or value-based providers of services. We examine the way civil engineers price and market services for these two types of products, explore when and how much should companies increase or decrease prices, and determine what are or may be the long-term ramifications on market share. Lastly, we propose a model for value-based pricing of civil engineering services. An understanding of the products they deliver, how to competitively price these products, and ideas for improving profitability should help civil engineering firms price and market their services to improve profitability and not lose market share.