Factors influencing tender pricing strategies of construction SMEs in Ghana

Pricing strategy is a critical aspect of how a firm generates its revenue or profit and as such, it remains an issue of prime importance to the construction industry. This article examines the relationship between factors that influence tender pricing and pricing strategies of SMEs construction firms in relation to competition-based, value-based and cost based pricing. In this article, Partial Least Square Structural Equation Modelling (PLS-SEM) is used to establish the relationship between factors that influence tender pricing and pricing strategies (constructs) derived from an analytical review of literature, coupled with a pilot study. The view of pricing experts working with SMEs construction firms was solicited using a structured questionnaire. Results showed that all nine constructs that were considered and that influence tender pricing had a high influence on the three pricing strategies identified (Cost–Based, Value–Based and Competition–Based). The findings of this study may be useful to SMEs construction firms in pricing as it will serve as a measure for achieving maximum profit. The study demonstrates how tender pricing factors can influence the choice of pricing strategies using PLS-SEM analysis based on the perspective of the SMEs.