Ethical Psychology of Pricing Construction For Clients

See how to reset client price expectations using an ethical and established psychological dynamic known as “price anchoring”.

Price anchoring is a psychological dynamic identified by psychologists Gretchen Chapman and Brian Bornstein in a 1990’s consumer study.

Fundamentally, it dictates that when a consumer first hears a price for a product or service, they then compare all other prices to that reference point. A theory of ‘price relativity’, if you like.

Curiously, the study showed that even when test subjects knew the original reference point was random (or uninformed), it still ‘anchored’ their price expectations for future prices they considered for that product or service.

So How Can This Help You Manage Clients’ Pricing Expectations?

For architects and designers, this highlights two quite serious implications for you and your clients.

Firstly, we need to recognise that most clients will have an existing ‘anchor’ price for their project that could have come from anywhere. Whether from a conversation at a friend’s BBQ, a well meaning relative who has been thinking about a project or something they saw on TV.

The point is, Chapman & Bornstein’s study shows the original anchoring source doesn’t have to be expert or informed to influence your client’s price expectations.

So, as an industry professional, one of your first tasks is to check your client’s anchor price.

Sometimes a simple question about the client’s budget uncovers this figure. Other times it requires a little more detective work during your first client meeting.

Often, your clients’ anchor price falls short of adequately funding their brief. It’s at this point, you can provide your expert opinion to help them ‘re-anchor’ or adjust their price expectations.

You can showcase your expertise to your client’s benefit. Show them past projects and reveal their construction budgets. You can also use ProCalc to obtain an informed budget estimate that reflects builders current pricing.

This is crucial for progression because clients who don’t adjust their price expectations will struggle to justify a cost that exceeds their anchor price. That is, the project is less likely go ahead.

Secondly, if you are anchoring (or re-anchoring) your client’s price expectations, you really only have the chance to do it once or twice.

Understandably, a client who is continually asked to adjust their price expectations, for the same scope of work, will be become jaded and sceptical of the advice they’re receiving and the person providing it.

So, it follows that the first time you discuss likely construction costs you need to be quite measured and precise in your comments.

Providing reliable and accurate advice to clients in these early stages will build trust & collaboration – a way forward for the project. See how ProCalc supports this OR watch this demonstration video

Importantly, it will help clients understand what they’re in for over the coming months and reduce surprises for their hip pocket.

Author, Richard Armstrong, is a project manager & former registered builder who specialises residential construction pricing. With post-grad property qualifications and over 15 years’ design & construct experience, he is the Founder of ProCalc – Professional Construction Estimator. Free trial at

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