What do I do when material prices move mid-job?
Short answer
Put a price escalation clause in every contract before you need it, and if you didn't, absorb small moves and talk through big ones honestly and early.
Prevent it with the contract, not the conversation
The best fix happens before the job starts: a clause that lets you pass through material price increases above a set threshold (say, 5% on a specific material line item) that occur between bid and purchase. This isn't unusual anymore, most homeowners accept it if you explain it plainly at signing.
Lock in prices where you can. If a job has a long lead time before a big material purchase (windows, cabinets, lumber for framing), order or quote-lock early rather than waiting and hoping the number holds.
If you're already mid-job with no clause
Absorb small moves, they're a cost of doing business and not worth a conversation that damages trust for a few hundred dollars. For a genuinely large jump, bring the customer the actual invoice or supplier quote showing the increase, don't just state a number, show your work.
Split the difference when it's a gray area. Offering to eat half of an unexpected material spike, when you have no contractual right to pass it through, often preserves the relationship better than either eating all of it or demanding all of it.
Example: lumber jump mid-framing
| Original lumber estimate | $14,000 |
|---|---|
| Actual cost at purchase | $16,100 (+15%) |
| Escalation clause threshold | 5% |
| Passed through to customer | $2,100 (the amount above the 5% cushion) |
The math: Only the increase beyond your built-in cushion gets passed through, not the whole jump, that keeps the clause fair and easier to defend.
Price escalation clause for future contracts
Material Price Escalation Pricing for this contract is based on material costs as of the date of this agreement. If the documented cost of a major material line item (lumber, steel, cabinetry, windows, or similar) increases by more than 5% between the date of this contract and the date of purchase, the Contractor will notify the Owner in writing with documentation of the increase, and the difference will be added to the contract price via a signed change order before the affected material is purchased.
Where owners get this wrong
- Bidding long-lead materials without any escalation language and hoping prices hold.
- Absorbing large price jumps silently instead of documenting and discussing them.
- Passing through every cent of a price increase with no cushion, which reads as opportunistic even when it's honest.
Ask your version of this question
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