📨 Contractor’s Digest – Daily Rundown
📅 Wednesday, March 19, 2025
🛠 Helping Residential Contractors & Subs Build Smarter, Work Safer, and Grow Faster
🚧 Today’s Rundown
🔹 Lumber Prices Surge Again – What It Means for Your Bottom Line
🔹 How to Adjust Your Bids & Contracts When Material Costs Fluctuate
🔹 Tool Spotlight: Best Framing Nailers for 2025
🏗️ Feature Story: Lumber Prices Surge Again – What It Means for Your Bottom Line
📉 What’s Happening?
The Random Lengths framing lumber composite price increased 0.4% last week, reaching $485 per 1,000 board feet—the highest price since June 2023. https://www.nahb.org/news-and-economics/housing-economics/national-statistics/framing-lumber-prices
Lumber prices are now 14.9% higher than one year ago, fueled by:
✔️ Tariff uncertainty – Potential increases in U.S. duties on Canadian lumber.
✔️ Sawmill curtailments & closures – Reduced supply from key producers in Canada.
✔️ Stronger housing & remodeling demand – Contractors competing for limited materials.
📌 Why It Matters for Contractors:
Higher costs = lower margins. If you aren’t adjusting your pricing, your profits shrink.
Delays in pricing relief. Builders won’t see cost reductions immediately, even if lumber prices drop in the future.
Potential material shortages. With tariffs expected to double, Canadian lumber supply could tighten further.
📌 How to Stay Ahead:
✅ Review your contracts – Use price escalation clauses to account for rising material costs.
✅ Plan bulk purchases – Lock in pricing before future tariffs take effect.
✅ Educate clients – Be upfront about why prices are increasing and how it affects their projects.
🚀 Pro Tip: Many suppliers pass price increases to contractors immediately but delay reductions. Track pricing weekly and negotiate bulk buys to protect your margins.
📌 Business Tip: How to Adjust Your Bids & Contracts When Material Costs Fluctuate
Material prices—especially for lumber, steel, concrete, and roofing materials—have been extremely volatile over the past few years. With tariffs, supply chain issues, and demand surges, the cost of materials can swing up or down by 10% or more in just a few weeks.
📉 The Problem:
If you sign fixed-price contracts without accounting for cost fluctuations, you could end up paying out of pocket when material prices rise.
Clients lock in pricing early, but you absorb the increases, leading to shrinking profit margins or even losses.
If prices drop, you might get stuck overpaying for materials while competitors offer lower bids.
💡 The Solution? Smart contract & bidding strategies that protect your profits.
✅ 3 Key Ways to Protect Your Profits in a Volatile Market
1️⃣ Use Price Escalation Clauses for Projects Longer than 30 Days
🔹 A price escalation clause ensures that if material costs rise beyond a certain percentage (e.g., 5-10%), the client agrees to cover the difference.
🔹 This protects your bottom line and prevents you from absorbing price hikes.
💡 How to Implement It:
📌 Add a clause stating: "If material costs increase by more than 5% from the contract date, the client agrees to adjust the contract price accordingly based on supplier invoices."
🚀 Pro Tip: Clients may resist escalation clauses at first—frame it as a way to ensure they get the best price if costs drop.
2️⃣ Add Contingency Line Items for Unpredictable Cost Swings
🔹 A contingency buffers your bid against sudden cost increases by setting aside an extra 5-10% in the budget for materials.
🔹 If prices stay stable, you can credit unused contingency back to the client, making you look like a cost-conscious contractor.
💡 How to Implement It:
📌 Include a line item in your estimates labeled “Material Cost Contingency” and explain that it’s only used if necessary.
🚀 Pro Tip: Position this as protection for both you and the client—if material costs don’t rise, they don’t pay extra.
3️⃣ Get Supplier Pricing Commitments to Lock in Costs Before Quoting
🔹 Before submitting bids, negotiate bulk pricing or lock in supplier costs for a set period.
🔹 Some vendors allow you to pre-purchase materials at today’s rate and store them for future projects.
💡 How to Implement It:
📌 Ask suppliers: "Can you guarantee pricing for 30-60 days?" If they can, you can bid more confidently.
📌 Consider ordering and storing materials in advance for high-value projects.
🚀 Pro Tip: Partner with multiple suppliers—if one’s pricing spikes, you have backup options.
🚀 Take Action This Week
✔️ Review your contracts—do they protect you from cost fluctuations?
✔️ Talk to suppliers about locking in bulk pricing for upcoming jobs.
✔️ Start using price escalation clauses in all projects over 30 days.
✔️ Recalculate material costs weekly—a profitable bid last month might not work today.
By proactively adjusting your bids & contracts, you can stay ahead of market swings, protect your profit margins, and build trust with clients.
Would you like a template for a price escalation clause to include in your contracts? 📑💰
⚡ Tool Spotlight: Best Framing Nailers for 2025
🔹 Paslode 905600 Cordless XP Framing Nailer – Powerful, lightweight, and no air hoses needed—perfect for fast framing jobs.
😂 Contractor Humor: "Why did the contractor carry a ladder everywhere? Because he always wanted to take things to the next level!"
📣 Call to Action
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👷♂️ Stay safe, keep building smarter!
— Benjamin Patton