PRICING STRATEGY in THE INDONESIAN CONSTRUCTION INDUSTRY
Issues related to pricing strategy in the Indonesian construction industry are covered, including problems of current pricing strategy in construction, exploration of pricing strategies with a market-based approach, and survey findings of the top Indonesian contractors regarding their current pricing practices and the applicability of market-based pricing strategies. Comparisons with similar survey findings of the top U.S. contractors are conducted whenever possible. In conclusion, the belief that current pricing strategy in construction is predominantly cost-based is confirmed by the survey findings; indeed, in setting the markup, most contractors rely on subjective assessment of the competition. Using simulated bidding scenarios, it is discovered that Indonesian contractors tend to be more market-based as they know more about their clients and competitors. Finally, "Owner's characteristics", "competitors' characteristics", and "market demand" are statistically significant external variables in making pricing strategy decisions. To maximize the benefits of market-based pricing strategies, a proposed of bidding procedure change should be explored by all parties involved in construction.