If you’ve been in construction for more than five minutes, you know material prices are anything but predictable. One month you’re pricing out a job based on what seems like solid numbers, and the next month you’re watching the cost of lumber or PVC pipe jump 25%—with no warning. It’s enough to make a contractor pull their hair out.
So what’s the deal in 2025? Are prices finally settling down, or is this rollercoaster still rolling?
Are Things Finally Stabilizing?
The short answer is… sort of.
Compared to the chaos of 2021–2022, when COVID, supply chain breakdowns, and demand spikes sent prices into the stratosphere, things have calmed down a little. But don’t be fooled—volatility hasn’t disappeared. Many contractors are still seeing sudden swings in materials like steel, copper, asphalt, and even concrete products due to global demand, transportation hiccups, and regional shortages.
So while prices aren’t skyrocketing like they were, they’re not exactly predictable either. As of now, cautious optimism is the name of the game—but with a side of “watch your back.”
How to Protect Your Margins
You can’t control the market, but you can control how you respond to it. Here are a few ways to keep your margins from getting eaten alive by rising material costs:
1. Include Escalation Clauses in Your Contracts
This one’s big. An escalation clause lets you adjust the price of a job if material costs go up significantly during the project. Without it, you’re stuck holding the bag—and that bag is probably full of overpriced rebar.
Make sure the language is specific. Tie it to a published index or set a defined percentage increase that triggers renegotiation.
2. Keep Your Bids Tight and Timely
Don’t leave bids sitting out there forever. Add expiration dates—15 or 30 days is common—so you’re not held to pricing that might not hold up.
Also, be smart with your bid assumptions. If a supplier gives you a quote that expires in 10 days, build that into your proposal.
3. Buy Smart, Buy Early
If you know you’re awarded a job and can store materials securely, buy what you can up front. Locking in prices early can save you big-time if costs rise later. Just make sure you’ve got the cash flow and space to handle it.
4. Build Strong Supplier Relationships
Your suppliers can be your best allies in this game. The more loyal and communicative you are, the more likely they are to give you a heads-up on upcoming price changes—or even hold pricing a little longer than usual for you.
5. Use a Job Costing System That Keeps You Informed
If you’re still guessing where your profit is going, it’s time to level up. Use job costing software (like ProfitDig, hint hint) to track material costs in real time. You need to know if your profit is slipping before it’s too late to do anything about it.
Handling Price Changes in Contracts
When it comes to contracts, clarity is king. Whether you’re working with a GC or directly with a homeowner, spell out how material price changes will be handled. If you need to make a change mid-project due to rising costs, make sure you have a documented change order process in place.
It’s also wise to educate your clients or GC partners on why price clauses exist. It’s not about padding your profits—it’s about staying afloat in a market that can shift overnight.
Bottom Line
Material prices might not be as crazy as they were a couple years ago, but they’re still unpredictable. As a contractor, your best defense is smart planning, clear communication, and the right tools to stay on top of costs.