How do you keep up with cost increases?

[Glenn]

Every time you purchase something, there seems to be a price increase. How do you keep current on pricing?

At one point not so very long ago, the steel yard would only quote prices good for 24 hours. We put a clause in our contract that our bid was to be adjusted to match any cost increase from the time of the bid to the time the order was placed. We got caught a time or two by not ordering ALL the inventory we needed for a certain job at the time the customer placed his order to us.

Shippers were adding a *fuel adjustment* to the shipping bills. This was understandable as it was the easy way to keep up with the increase in fuel prices. Problem was when the cost of fuel went down their *fuel adjustments* did not go down, but increased.

The cost of the companies existing warehouse shelf stock was increased to match their cost of new stock. The 5,000 gallons of gas left in the storage tank at the gas station would increase in price just as fast as the price sign changed out front. The steel with an inch of dust (and rust) on it is now the same price as the steel just quoted (but not yet ordered or delivered) from their supplier.

How do you keep up with each out of pocket cost (and cost increase) that you must pay?
How do you pass this cost on to the customer without eating into your profit margin?

[Timothy Miller]

Raise your prices if you can. Buy all of your steel up front if it is a large job. Buy in bulk to get better prices and shop around. Structure your contracts to follow fluctuating prices.

[Iron Clad]

I was caught up in this same problem myself on a railing project. Steel prices were going up so fast that I lost my rear on the job, added to the fact that I underestimated how much gas and coal for the job. It would have been cheaper to give my customer some money to find somebody else to build the railing! :(

[HWHII]

I have always bid my as follows, material + markup + labor + markup = profit I am always calling suppliers for prices and they keep me well informed if they are expecting a price increase so I can buy at a lower price. I am lucky that I have four local suppliers to shop from. I do wish I could just use one and get the best price from them but it does not always work out that way. On large jobs I do tell my clients the price is subject to change because of material costs if they wait to long to decide on a project.