For contractors, staying profitable in today’s volatile market is no small feat. Between tariffs, fluctuating material costs, and unpredictable labor availability, jobsite budgets are under constant pressure. But according to Greg Pyne, VP of pricing data services, and David Obert, chief product officer at Verisk’s Property Estimating Solutions, contractors can mitigate these challenges with smarter estimating strategies and up-to-date data.
Material Costs: Stable…for Now
While fears over tariffs and global trade tensions have made headlines, actual material cost increases have been modest in the past year. Pyne reports a 2.4% year-over-year national average increase in common construction materials.
“We haven’t seen a huge impact at the point of purchase yet,” Pyne says, though he cautions the situation is fluid. Factors like tariffs on Chinese imports—especially flooring—bear watching, but domestic alternatives and soft demand are helping stabilize prices for now.
Given the unpredictability, contractors are adding contingencies into their bids to cover potential cost increases. Some are specifying escalation clauses in contracts, while others build in flat-rate contingencies of 5-10%.
“You don’t want to get locked into a price you can’t honor if materials spike,” Pyne says. “Shortening bid validity periods—from 90 days down to 30—is another strategy contractors are using to protect themselves.”
The Cost of Outdated Pricing Data
One of the biggest risks contractors face is relying on outdated price lists. Obert warns that proprietary lists often fail to reflect current market conditions, leaving money on the table.
“Even if your area hasn’t been hit by global price swings, localized events—like a hailstorm wiping out shingle inventory—can cause sudden cost shifts,” Obert says. “That’s why monthly pricing updates and real-time data tools are critical.”
Leveraging Technology: Xactimate and Direct Supplier
Solutions like Xactimate and XactRemodel are updated monthly to reflect material and labor trends across hundreds of U.S. markets. These tools provide contractors with the insights needed to make informed decisions and manage risk confidently.
Integration of SKU-level data through Direct Supplier and similar tools, allows users to compare actual vendor pricing against estimate assumptions—critical when sourcing alternatives during cost spikes.
“The system links standard estimate items to real products from multiple suppliers,” says Pyne. “Contractors can quickly see if there’s a more cost-effective option without leaving the platform.”
Ultimately, smarter estimating practices-powered by current data and integrated technology-help contractors deliver on their commitments, maintain open communication with clients, and keep projects on track, even as market conditions evolve.
Labor Costs: The Bigger Factor
While material prices grab attention, labor often has a larger impact on overall project costs. “In painting, for example, materials might represent only 30% of the total cost, with labor accounting for 70%,” Pyne notes.
Verisk’s data reflects local labor trends, offering market-specific rates by trade—not just flat adjustments by region—giving contractors a more accurate view of true project costs.
Reporting, Not Predicting
While Verisk’s tools don’t forecast prices, they excel at rapidly reporting changes. Contractors receive monthly pricing reports based on current data, but in the event of sudden shifts, such as natural disasters, analysts provide updates to reflect fast-moving market conditions.
The Takeaway
In an environment of shifting costs, clear communication with clients and suppliers is essential. Contractors should:
- Define bid validity periods clearly.
- Disclose contingencies in contracts.
- Regularly review supplier agreements and explore alternative vendors.
“Don’t get complacent with the same supplier relationships,” Pyne advises. “Shop around periodically to ensure you’re still getting competitive pricing.”
