Latest material prices – why it's crucial to keep on top of them

Rising material prices, for instance, bricks, timber, insulation, sand, and nails, are one of the biggest challenges for 2023 facing builders. Driven by the current global political situation, and soaring inflation, the pressure of fluctuating material prices means the construction industry must protect its bottom line and ensure locked-in profit margins.

According to the Building Cost Information Service (BCIS), the cost of raw materials is expected to have trebled this year. And that is following a fivefold increase during the Covid-19 pandemic, increasing from -0.9% in 2020 to 4.8% in 2021. However, the BCIS Material Cost Index is forecasted to reach 17.5% by the end of this year.

Estimating material prices accurately is key to running a profitable building firm

The role of accurate pricing in earning profit

As a builder, given the tighter margins, it's critical to be using accurate material prices in quoting to make sure you earn a profit. The alternative is to simply help fund the homeowner's dream home.

Getting pricing right makes a huge difference to your bottom line. Think about the last quote you gave and went on to win. Now think of what you had to pay the builders merchant. Did those costs change, or did they stay pretty much the same? Because if you aren't changing your prices to reflect market changes, then you'll be losing yourself money.

Some people overcharge the customer for materials to cover their backs, others have been charging the same cost for the last five years. What's clear is, given the market challenges ahead, getting your pricing right will be a huge factor in the success of your business.

Keeping on top of material prices

The ability to track the accuracy of material pricing is a massive competitive advantage. You want to be as accurate as possible when you quote customers, after all, with materials consuming most of the job cost, playing a guessing game can result in your profits being wiped and even a negative balance sheet on the job.

Obviously, with hundreds of products required for a project, the time it takes to research prices every time you quote a customer isn't really sustainable, or scalable. Therefore, it's important to have the right software in place to give you peace of mind and enable accurate pricing every time. Take EstimatorXpress, the UK's leading estimating solution for the residential builder. They do the research on your behalf so you can stay on top of the constantly evolving price points. Plus, you can factor in wastage and inflation. Solutions like EstimatorXpress have a huge catalogue of materials and work independently of any one supplier.

Using an estimating solution ensures you're not throwing money down the drain – although not all estimating packages update their material prices as regularly as EstimatorXpress – so do check. Without using estimating software, you might not even realise you're undercharging. You can be forgiven – projects take time, jobs overlap, and you might use materials across different projects. All of which makes it hard to monitor and keep on top of. That is, until you notice the profit shortfall…

The days of the 'rule of thumb' estimating are a thing of the past. Times are changing, and with that, your estimating needs to change too. Being on top of the most up-to-date material prices means the money goes into your business, not your customer’s project.