IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i21p9397-d1509336.html
   My bibliography  Save this article

Exploring Alternative Revenue Models for Construction Consulting Firms in the Digital Era

Author

Listed:
  • Abbas Tafti

    (WSP, Smedjegatan 24, 972 31 Luleå, Sweden
    Department of Civil, Environmental and Natural Resources Engineering, Luleå University of Technology, 971 87 Luleå, Sweden)

  • Marcus Sandberg

    (Department of Civil, Environmental and Natural Resources Engineering, Luleå University of Technology, 971 87 Luleå, Sweden)

  • Matts Andersson

    (WSP Sverige AB, Arenavägen 7, 121 88 Stockholm, Sweden)

Abstract

The AEC industry, including construction consulting, is experiencing digitalization through technologies like Building Information Modeling (BIM), impacting firms’ business models. The traditional hourly-based model does not align with shortened project timelines driven by digitalization, design automation, and product-based approaches. This study uses a case study approach and explores and evaluates four selected alternative revenue models (freemium, subscription, out-come-based, and performance-based) for value creation using a digital tool developed by the consulting firm. The freemium model enhances market reach but requires a high conversion rate. The subscription model offers steady recurring revenue and supports client relationships. Out-come-based and performance-based models link payments to client outcomes and performance metrics, fostering efficiency and competitive advantages. The study identified multiple target markets for this tool and emphasized the importance of a portfolio revenue model to meet specific client needs in the digital era. Implementing alternative revenue models aids return on investments and avoids the digitalization paradox. Construction consulting firms must adeptly manage these models’ complexities to address diverse client needs and leverage digital transformation opportunities.

Suggested Citation

  • Abbas Tafti & Marcus Sandberg & Matts Andersson, 2024. "Exploring Alternative Revenue Models for Construction Consulting Firms in the Digital Era," Sustainability, MDPI, vol. 16(21), pages 1-29, October.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:21:p:9397-:d:1509336
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/21/9397/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/21/9397/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Täuscher, Karl & Laudien, Sven M., 2018. "Understanding platform business models: A mixed methods study of marketplaces," European Management Journal, Elsevier, vol. 36(3), pages 319-329.
    2. Visnjic, Ivanka & Neely, Andy & Jovanovic, Marin, 2018. "The path to outcome delivery: Interplay of service market strategy and open business models," Technovation, Elsevier, vol. 72, pages 46-59.
    3. Jingchen Hou & Andy Neely, 2018. "Investigating risks of outcome-based service contracts from a provider’s perspective," International Journal of Production Research, Taylor & Francis Journals, vol. 56(6), pages 2103-2115, March.
    4. Ng, Irene C.L. & Maull, Roger & Yip, Nick, 2009. "Outcome-based contracts as a driver for systems thinking and service-dominant logic in service science: Evidence from the defence industry," European Management Journal, Elsevier, vol. 27(6), pages 377-387, December.
    5. Stephen Gruneberg & Will Hughes & Debbie Ancell, 2007. "Risk under performance-based contracting in the UK construction sector," Construction Management and Economics, Taylor & Francis Journals, vol. 25(7), pages 691-699.
    6. Priyadarshini Das & Amer A. Hijazi & Duncan W. Maxwell & Robert C. Moehler, 2023. "Can Business Models Facilitate Strategic Transformation in Construction Firms? A Systematic Review and Research Agenda," Sustainability, MDPI, vol. 15(17), pages 1-20, August.
    7. Grubic, Tonci & Jennions, Ian, 2018. "Do outcome-based contracts exist? The investigation of power-by-the-hour and similar result-oriented cases," International Journal of Production Economics, Elsevier, vol. 206(C), pages 209-219.
    8. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    9. Boumediene Ramdani & Ahmed Binsaif & Elias Boukrami, 2019. "Business model innovation: a review and research agenda," New England Journal of Entrepreneurship, Emerald Group Publishing Limited, vol. 22(2), pages 89-108, October.
    10. Bailey Bestul & Vincent Gruis, 2024. "Six Business Model Types for Circular Building Component Reuse Actors," Sustainability, MDPI, vol. 16(13), pages 1-21, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maximilian Bock & Martin Wiener & Carol Saunders, 2023. "Non-ownership business models in the manufacturing industry: Uncertainty-exploiting versus uncertainty-mitigating designs and the role of context factors," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-18, December.
    2. Kohtamäki, Marko & Parida, Vinit & Oghazi, Pejvak & Gebauer, Heiko & Baines, Tim, 2019. "Digital servitization business models in ecosystems: A theory of the firm," Journal of Business Research, Elsevier, vol. 104(C), pages 380-392.
    3. Korkeamäki, Lauri & Kohtamäki, Marko & Parida, Vinit, 2021. "Worth the risk? The profit impact of outcome-based service offerings for manufacturing firms," Journal of Business Research, Elsevier, vol. 131(C), pages 92-102.
    4. Grubic, Tonci & Jennions, Ian, 2018. "Do outcome-based contracts exist? The investigation of power-by-the-hour and similar result-oriented cases," International Journal of Production Economics, Elsevier, vol. 206(C), pages 209-219.
    5. Mar’atus Sholihah & Tatsuru Maezono & Yuya Mitake & Yoshiki Shimomura, 2019. "PSS Strategic Alignment: Linking Service Transition Strategy with PSS Business Model," Sustainability, MDPI, vol. 11(22), pages 1-30, November.
    6. Yanwei Chen & Xiaojun Liu & Kaiqing Huang & Huajun Tang, 2022. "Pricing and Service Effort Decisions of Book Dual-Channel Supply Chains with Showrooming Effect Based on Cost-Sharing Contracts," Sustainability, MDPI, vol. 14(18), pages 1-23, September.
    7. Moon, Ilkyeong & Feng, Xuehao, 2017. "Supply chain coordination with a single supplier and multiple retailers considering customer arrival times and route selection," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 78-97.
    8. Yang, Jian & Qi, Xiangtong, 2009. "On the design of coordinating contracts," International Journal of Production Economics, Elsevier, vol. 122(2), pages 581-594, December.
    9. Yan, Xiaoming & Zhang, Minghui & Liu, Ke, 2010. "A note on coordination in decentralized assembly systems with uncertain component yields," European Journal of Operational Research, Elsevier, vol. 205(2), pages 469-478, September.
    10. Ventura, José A. & Bunn, Kevin A. & Venegas, Bárbara B. & Duan, Lisha, 2021. "A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates," International Journal of Production Economics, Elsevier, vol. 233(C).
    11. Ventura Charlin & Arturo Cifuentes, 2024. "Revenue-sharing agreements in the live entertainment industry: a practical risk analysis framework," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(5), pages 384-395, October.
    12. Li, Bo & Hou, Peng-Wen & Chen, Ping & Li, Qing-Hua, 2016. "Pricing strategy and coordination in a dual channel supply chain with a risk-averse retailer," International Journal of Production Economics, Elsevier, vol. 178(C), pages 154-168.
    13. Yang, Honglin & Zhuo, Wenyan & Shao, Lusheng & Talluri, Srinivas, 2021. "Mean-variance analysis of wholesale price contracts with a capital-constrained retailer: Trade credit financing vs. bank credit financing," European Journal of Operational Research, Elsevier, vol. 294(2), pages 525-542.
    14. van der Rhee, Bo & Schmidt, Glen & A. van der Veen, Jack A. & Venugopal, V., 2014. "Revenue-sharing contracts across an extended supply chain," Business Horizons, Elsevier, vol. 57(4), pages 473-482.
    15. Cruijssen, F. & Borm, P.E.M. & Fleuren, H.A. & Hamers, H.J.M., 2005. "Insinking : A Methodology to Exploit Synergy in Transportation," Other publications TiSEM 958be918-e7b4-4e46-9cbe-d, Tilburg University, School of Economics and Management.
    16. Tim Gruchmann & Nadine Pratt & Jan Eiten & Ani Melkonyan, 2020. "4PL Digital Business Models in Sea Freight Logistics: The Case of FreightHub," Logistics, MDPI, vol. 4(2), pages 1-14, May.
    17. Mutlu, Fatih & Çetinkaya, Sıla, 2020. "Supplier–carrier–buyer channels: Contractual pricing for a carrier serving a supplier–buyer partnership," International Journal of Production Economics, Elsevier, vol. 230(C).
    18. Xia Zhao & Ning Li & Liang Song, 2019. "Coordination of a Socially Responsible Two-Stage Supply Chain Under Random Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(05), pages 1-27, October.
    19. Cao, Zong-Hong & Zhou, Yong-Wu & Zhao, Ju & Li, Chang-Wen, 2015. "Entry mode selection and its impact on an incumbent supply chain coordination," Journal of Retailing and Consumer Services, Elsevier, vol. 26(C), pages 1-13.
    20. Donghui Yang & Yan Wang & Shue Mei, 2021. "How to balance online healthcare platforms and offline systems? A supply chain management perspective," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 502-515, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:21:p:9397-:d:1509336. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.