How Professional Contractors Are Dealing with Price Increases

If you oper­ate in the build­ing indus­try (and even if you don’t), you’re like­ly well aware of the steady increase in prod­uct prices over the past year. Chances are, you’ve heard about them from a customer’s point of view: They can’t afford to fin­ish a project they start­ed last year, or their con­trac­tor is fresh out of a cer­tain mate­r­i­al that’s cru­cial for the job. 

On the oth­er side of the coin, the Home Improve­ment Research Insti­tute was inter­est­ed in the per­spec­tive of con­trac­tors and oth­er pro­fes­sion­als deal­ing with these same price increas­es. How bad is it on their end? How are they deal­ing with the addi­tion­al costs? When do they expect things to go back to normal?

This Feb­ru­ary, HIRI admin­is­tered an online sur­vey to 560 respon­dents across var­i­ous con­struc­tion and remod­el­ing trades to achieve just that. What we learned was not a com­plete shock, but rather a con­fir­ma­tion of the dif­fi­cul­ties many in the home improve­ment indus­try have recent­ly faced. 

Expenses Across the Board

An over­whelm­ing 93% of pro­fes­sion­al con­trac­tors report­ed that their mate­r­i­al costs have increased in the last six months. For those who saw increas­es, the aver­age hike was 19%. Unsur­pris­ing­ly to those in the field, lum­ber and ply­wood have been the most com­mon mate­ri­als to increase in price, but oth­er build­ing mate­ri­als fol­low close­ly behind.

A Shared Burden

HIRI also asked pros how they or their com­pa­nies have han­dled price increas­es. While some pass along this bur­den to their cus­tomers, the major­i­ty are absorb­ing at least some of the costs, cut­ting into prof­it mar­gins. Mean­while, many of those pass­ing the increas­es along to their cus­tomers report­ed a detri­men­tal impact on their busi­ness. More than half (57%) respond­ed that they lost bids due to price increases.

Taking It Day by Day

On the bright side, with the cur­rent demand for con­trac­tors so high, most pros do not find them­selves in imme­di­ate risk of los­ing jobs due to price increas­es. How­ev­er, when asked about future prices, the major­i­ty of pros answered that they expect prices to be even high­er in six months.

This data was pulled from HIRI’s quar­ter­ly Con­trac­tor Sur­vey, which polls pro­fes­sion­al con­trac­tors on the trend­ing top­ics of the day from effects of COVID to labor short­ages to dig­i­tal busi­ness trends. To read the entire report and for instant access to updates as they are released, join HIRI today.