Quoting With Variable Materials Costs (Without Destroying Your Margins)

If you quote trades work in Australia, you already know the problem. You put together a quote on Monday using supplier prices you checked last week, the customer takes three weeks to accept, the job starts a month after that, and by the time you order materials, the price has moved. Copper is up 8%. The steel supplier has added a surcharge. The timber you quoted is backordered and the alternative costs 15% more.

Your quote is locked in. The customer expects to pay what you quoted. And the difference comes straight out of your margin.

Material price volatility isn’t new, but it’s become more pronounced. Supply chain disruptions, currency fluctuations, global demand shifts, and energy costs have made pricing less predictable across almost every material category. For businesses that quote weeks or months ahead of procurement, this creates a structural problem: every quote is a bet on future prices, and the longer the gap between quoting and ordering, the riskier that bet becomes.

Which Materials Move Most

Not all materials carry the same pricing risk. Understanding where volatility lives helps you focus your attention.

Copper. Used in electrical cable, plumbing pipe, and HVAC refrigerant lines. Copper is traded on global commodity markets, and prices can swing 10-20% within a quarter. An electrician quoting a commercial fit-out with $15,000 in cable is genuinely exposed to price risk.

Steel. Structural steel, roofing, framing, and fittings. Australian steel pricing is influenced by both global markets and local manufacturing capacity. Prices have been particularly volatile since 2021, with periodic surcharges from major suppliers.

Timber. Framing timber, structural beams, and sheet products. Supply constraints, plantation cycles, and import availability all affect pricing. Treated pine and hardwood can move significantly between quotes, especially for larger quantities.

PVC and plastics. Pipe, conduit, fittings, and insulation. These are petroleum-derived, so they follow oil price trends with a lag. Less volatile than metals, but still capable of meaningful shifts over a quoting cycle.

Equipment and units. Split systems, hot water units, switchboards, and other manufactured products. These tend to be more stable than raw materials, but they’re not immune — especially imported equipment affected by exchange rate movements.

Strategies for Managing Price Risk

There’s no single solution. The right approach depends on your trade, your typical job size, and the gap between quoting and procurement.

1. Shorten Your Quote Validity Period

The simplest protection. Instead of “quote valid for 30 days,” use 14 days — or even 7 days for jobs with significant material content. A shorter validity period reduces the window in which prices can move against you.

The trade-off is that customers may feel pressured. Mitigate this by explaining the reason: “Due to current material price volatility, this quote is valid for 14 days. We’re happy to requote if your timeline is longer.” Most customers understand. They’re seeing the same volatility in their own businesses.

2. Include an Escalation Clause

An escalation clause allows you to adjust the quoted price if material costs change by more than a defined threshold between quote acceptance and procurement.

A practical version: “Material prices are based on supplier pricing as of [date]. If material costs increase by more than 5% between quote acceptance and procurement, the difference will be passed through with prior notice to the customer.”

This protects you from significant swings while absorbing minor fluctuations. The 5% threshold is common — it’s enough to filter out noise while catching genuine shifts.

3. Lock In Supplier Pricing

For larger jobs, ask your supplier to hold pricing for a defined period. Many suppliers will lock prices for 14-30 days on a confirmed order or even on a firm quote, especially for account customers with volume.

The process: when you’re quoting a large job, get a written price from your supplier with a validity date. Reference that pricing in your quote. If the customer accepts within the supplier’s validity window, you order immediately at the locked price.

This works well for jobs over $10,000 in materials where specific products are identifiable at quote stage. It doesn’t work for small jobs or jobs where the exact materials won’t be confirmed until site work begins.

4. Build a Volatility Buffer

Add a percentage buffer to materials that have historically volatile pricing. Not a blanket markup — a targeted buffer on specific items based on their actual price movement.

If copper cable has fluctuated 8-12% over the past year, a 5-7% buffer on cable is reasonable. If PVC fittings have been stable within 2%, you don’t need a buffer there. The goal is to be competitive on stable items while protecting margin on volatile ones.

5. Maintain a Live Pricing Sheet

Instead of checking supplier prices at quote time, maintain a pricing sheet that’s updated regularly — weekly for volatile items, monthly for stable ones. Your estimators quote from this sheet, knowing the prices are current.

The manual version is a spreadsheet with a “last updated” column. Designate someone to call suppliers or check online portals weekly and update the sheet. It takes 30-60 minutes per week and prevents every estimator from independently checking (and potentially using outdated) prices.

The automated version pulls pricing from supplier portals or integrations directly into your quoting system. Not every supplier offers this, but the major electrical and plumbing wholesalers in Australia increasingly provide digital pricing for account holders.

Handling Long-Lead Projects

Some jobs — particularly construction, commercial fit-outs, and large residential projects — have months between the quote and material procurement. These need special treatment.

Quote in stages. Provide a preliminary estimate for budgeting purposes, with the understanding that final pricing will be confirmed closer to procurement. “Preliminary estimate based on current pricing. Final material costs to be confirmed 30 days prior to the relevant stage.” This is standard practice on larger projects and most commercial customers expect it.

Use provisional sums. For materials where pricing is genuinely uncertain, include a provisional sum — a best estimate that’s explicitly subject to adjustment. “Provisional sum for structural steel: $28,000. Final cost to be confirmed on order based on current market pricing.” This gives the customer a budget figure without locking you into a price you can’t hold.

Stage your procurement. If the project allows it, order materials in stages aligned with the construction programme rather than all at once. This limits your exposure window — you’re only betting on prices for the next stage, not the entire project.

Start Protecting Your Margins This Week

You don’t need a custom system to start managing material price risk. Here’s a practical starting point:

Today: Add a quote validity period and a one-sentence escalation clause to your quote template. These two changes alone protect you from the worst margin erosion.

This week: Create a simple pricing sheet for your top 20 materials. Include current price, supplier, and date verified. Share it with your estimators and commit to weekly updates.

This month: Review your last 20 completed jobs and calculate the actual material cost vs quoted material cost. Identify which materials and job types have the biggest variance. Apply targeted buffers to those specific areas.

When you outgrow that: If your material costs are complex, your pricing sheet has hundreds of items, or you need multiple estimators working from the same live data — that’s when a system that connects supplier pricing to your quoting process starts paying for itself. Not because spreadsheets are bad, but because at a certain volume, manual updates can’t keep pace with the market.

Material price volatility isn’t going away. The businesses that protect their margins aren’t the ones hoping prices stay stable — they’re the ones with systems and processes that account for the fact that they won’t.