Material Cost Volatility: Protecting Your Bottom Line

If you’ve quoted a job and then watched your margin disappear before the first delivery hits the site, you’re not alone. Material cost volatility has become a defining challenge for builders across Michigan and the U.S.

From framing packages to HVAC equipment, pricing is increasingly unstable — and the old ways of locking bids just don’t hold up. Fortunately, builders who act strategically can protect profits, keep clients happy, and ensure long-term stability.

Why Material Prices Are So Unpredictable Right Now

A few key drivers behind current volatility:

• Global supply chain shocks and geopolitical disruptions

• High interest rates slowing demand in one sector while inflating costs in another

• Fuel prices and freight costs pushing delivery expenses up

• Seasonal surges — local demand spikes after winter slowdowns

That means quoting a price in April might be obsolete by the time June hits.

Build Strategic Supplier Relationships — Not Just Price-Based Orders

If you're price-shopping every single material load, you're missing the long game. Strong supplier relationships unlock better visibility, advance notice of price shifts, and sometimes even price protection.

What to ask your supplier:

• “Can you hold this quoted price for 30–60 days?”

• “What’s your forecast for this SKU over the next quarter?”

• “Are there alternate brands or specs that are more stable right now?”

By working with your supplier rather than against them, you gain information — not just invoices.

Use Escalation Clauses — Without Scaring Clients

Contract clauses that allow for material price adjustments aren’t just smart — they’re necessary. But you need to present them well.

Best practices:

• Use clear, fair language (“If material costs increase more than 5% between estimate and purchase…”)

• Reference trusted sources (e.g., Producer Price Index or local supplier quotes)

• Set thresholds, not open-ended terms

When communicated properly, escalation clauses protect your margin and keep projects moving — without giving clients sticker shock.

Offer Material Price Lock Options — With Expiration Dates

One technique smart builders are using:

• Provide a price locked for 15–30 days

• After that, quote is subject to change

This encourages client decision-making and gives you a tighter timeline to secure materials. It also protects you from holding a price you can’t guarantee later.

Diversify Your Material Options

Have plan B and C for common categories:

• Framing: dimensional lumber vs. engineered alternatives

• Siding: fiber cement, vinyl, engineered wood

• HVAC/Plumbing: preapproved alternate brands

If a preferred product skyrockets or is backordered, you can pivot without stalling the schedule or eating cost increases.

Improve Your Inventory Strategy to Avoid Overbuying

Buying in bulk to “beat the price hike” can backfire if materials sit too long, get damaged, or never get used.

Instead:

• Work with suppliers who offer just-in-time delivery

• Use takeoff tools to dial in order accuracy

• Track jobsite usage to prevent overstock waste

Bonus: Leaner inventory reduces carrying costs and frees up cash flow.

Final Thought

You can’t control the market — but you can control how you respond. Builders who treat material volatility as a solvable problem — not just a cost of doing business — will consistently outperform those who don’t.

At CMS, we help builders lock in pricing, forecast material trends, and pivot when needed — all while keeping jobs on time and on budget.

Want a building supply partner who helps you navigate pricing volatility with confidence?
📞 Contact Construction Material Specialists in Grand Rapids — your margin-friendly material source.