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Why Construction Companies Hate Fixed Costs

The construction industry operates fundamentally different from most other sectors. Projects have fixed deadlines, fixed work results, and fixed budgets. The larger these parameters get, the higher the risk becomes. That’s why construction companies have spent decades, if not centuries, perfecting the art of risk delegation. They prefer working with subcontractors, suppliers, and temporary workers who take on the execution risk rather than building everything in-house. This creates an interesting dynamic: Construction firms want to buy outcomes, not tools. They want to pay per brick laid, not own a bricklaying robot. They want to pay per structural calculation, not own engineering software. This behavior opens up a massive opportunity for startups who understand how to position their offering correctly.### The Magic of Selling Variable Costs While Building Fixed Cost Products

Traditional SaaS companies sell their products through subscriptions - a fixed monthly or annual fee. While this creates beautiful recurring revenue, it doesn’t scale with the customer’s project volume. A construction company doing 10 projects or 100 projects might still pay the same subscription fee. But what if you could create a product with mostly fixed costs (like developing software or building robots) but sell it as variable costs (per brick laid, per calculation made, per invoice processed)? This creates a powerful leverage effect: Once your fixed costs are covered, your margins expand dramatically as customers do more volume with you. Plus, you’re matching the way construction companies want to buy - they only pay for what they use, when they use it.

Real World Examples Show The Pattern Works

I’ve seen this pattern play out successfully across different construction tech verticals. Take robotics companies like Monumental: Instead of trying to sell expensive robots to construction companies (who don’t want to own or maintain them), they offer “bricklaying as a service” - charging per brick laid, just like human subcontractors do. Or look at FinTech players like Factus: Rather than selling invoice management software for a fixed fee, they take a small percentage of each invoice they process and pre-finance. Even in building materials, InfraMarket has built a multi-billion dollar business by aggregating demand from construction companies (who pay variable costs based on what they order) while securing fixed cost commitments from manufacturers (guaranteeing them minimum purchase volumes).### The Future of Construction Tech Business Models

This pattern isn’t limited to construction - we’re seeing similar models emerge in logistics, agriculture, and cloud infrastructure. The key is understanding your customer’s buying behavior and risk appetite. In project-based industries, customers often prefer paying for outcomes rather than tools. This creates an opportunity for startups to build high-margin businesses by productizing traditionally variable costs while maintaining the variable cost nature of the service from the customer’s perspective. For founders building in construction tech, this insight could be the difference between building a nice tool and building a category-defining company.If you’re a founder working on construction technology, this should make you think: Are you trying to force a traditional SaaS model onto an industry that doesn’t want to buy that way? Or are you building your business model around how your customers actually want to pay?

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Companies Mentioned

Monumental: https://monumental.io/

Factus: https://factus.com/

InfraMarket: https://inframarket.com/

Dexory: https://dexory.com/

Anduril: https://www.anduril.com/‍

Palantir: https://www.palantir.com/

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Patric Hellermann: https://www.linkedin.com/in/aecvc/

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