How to Lock Your Material Costs Before a Job Starts

How to Lock Your Material Costs Before a Job Starts

How to Lock Your Material Costs Before a Job Starts

Material price volatility is real, and if you're bidding jobs without locking your material costs, you're gambling. When you bid and win a job three weeks before you start work, coil prices might have moved 5-10%. Locking your material cost at bid time protects your margin. Here's how to do it.

Why Locking Costs Matters

You bid a job at $5,000 total. Your estimate includes:

  • Labor: $3,200
  • Material: $1,600
  • Overhead and margin: $200

Three weeks later, you win the bid. You're ready to order material — but coil prices have risen 8%. Your $1,600 material cost is now $1,728. That's $128 straight out of your margin.

Multiply that across 10 jobs per season and you've lost $1,280 of profit to price volatility.

Locking material costs at bid time prevents this.

What "Locking" Means

When you lock material costs, you get a firm quote from your supplier that's good for a specific time period (usually 30-45 days). That price is your cost, whether prices go up or down. You can bid the customer knowing your exact material cost and protect your margin.

Step 1: Get a Firm Supplier Quote Before You Bid the Customer

Don't estimate material costs based on "what I usually pay." Get an actual quote.

To get a firm quote, you need:

  • Exact coil specs: Gauge, width, finish, color, quantity
  • Your machine requirements: So the supplier knows what you need
  • Timeline: When will you start the job? (Affects lead time and expedite costs)
  • Custom requirements: Any non-standard specs?

When you request the quote, ask:

> "Can you give me a firm quote on this coil valid for 45 days? I'll know if the job is a go by day 30."

A professional supplier will quote you a firm price good for 45 days. That's your locked cost.

Step 2: Include Material Cost in Your Customer Bid

Build your customer bid using the locked material cost you received from your supplier.

Example bid breakdown:

This bid is based on material costs you've locked.

Step 3: Order Material Immediately After Winning the Bid

The clock on your 45-day price lock is ticking. If you win the bid on day 15, you want to place the order by day 30-35, well before the 45-day quote expires.

This is where contractors sometimes stumble — they win the bid, then spend two weeks scheduling, then decide to order. By then, the 45-day period is expiring.

Solve this: have your order ready to go. The moment you win the bid, you contact your supplier and place the order using the locked quote. Done.

What If Material Prices Drop?

Good news — you're covered. You locked the price, so you pay the locked amount. That extra margin becomes your profit. This is why locking costs is a hedge in both directions.

Of course, if prices spike, you're protected too.

What If Material Prices Spike After You Bid But Before You Win?

Your supplier's quote is good for 45 days. If the customer takes 60 days to decide, your quote expires.

In this case:

1. Ask your supplier if they'll extend the quote (sometimes they will for good customers)

2. Ask the customer to decide sooner (expedite the decision)

3. Get a new quote if the old one expires (might be higher)

This is why having timeline conversations with customers early is smart. If you know they'll decide slowly, either get a quote good for 60 days or build price adjustment language into your bid.

Including Price Adjustment Language in Your Bid

For jobs with longer timelines or uncertain decision periods, include language in your bid that accounts for material cost changes:

> "Material costs are locked for 30 days from this bid date. If this project proceeds beyond 30 days, material pricing will be re-quoted based on current market rates."

This protects you if the customer drags their feet.

For Longer-Timeline Jobs

For larger jobs or jobs with longer timelines (commercial projects, renovations with extended approval processes), you might need 60-90 day locks or price escalation clauses.

Include this in your bid:

> "Material costs locked for 60 days. Thereafter, if commodity prices move more than 5%, pricing will be adjusted accordingly."

This is standard in commercial bidding and customers expect it.

Bulk Orders and Volume Pricing

If you're ordering multiple jobs worth of material at once (intelligent planning), you can negotiate better pricing and longer locks.

A supplier might offer:

  • 10% discount on volume
  • 90-day price lock instead of 45-day
  • Agreed-upon price escalation clause (e.g., "prices locked for 90 days, then subject to 50% of commodity price swings")

This is why larger contractors with consistent volume get better pricing — they have leverage.

Working With Your Supplier on Locks

A good supplier relationship includes pricing locks that work for your business. When you request a quote, tell them your timeline:

"I'm bidding a job today. Decision is likely in 2 weeks, work starts in 6 weeks. Can you lock material pricing for 45 days?"

A factory-direct supplier working with contractors directly can offer better pricing locks than a distributor because they're not beholden to external price lists. They can negotiate and work with you.

Protecting Your Margin on Bigger Swings

If you're bidding during volatile market conditions (commodity prices swinging 10%+ week to week), build conservative estimates:

Estimate material 5% higher than current quotes. That cushion protects you if prices move up before you order.

For example: Current coil quote is $2.40/foot. Your bid estimates $2.52/foot material cost (5% cushion). If prices stay steady or drop, that's margin. If prices spike, you're covered.

The Math of Locked Costs

Let's run the numbers on 10 jobs per year:

Without locking (8% price swing average):

  • Assumed material cost per job: $1,500
  • Actual cost (average 4% increase): $1,560
  • Loss per job: $60
  • Annual loss: $600

With locking:

  • Bid material cost: $1,500 (locked)
  • Actual cost: $1,500 (honored)
  • No loss: $0
  • Annual gain vs no-lock scenario: $600

That's real money over a season.

Getting Started

For your next bid, follow this process:

1. Develop detailed specs for the job (gauge, width, finish, total footage)

2. Request a firm 45-day quote from your supplier

3. Build your customer bid using the locked material cost

4. When you win the bid, place the order immediately

5. Move forward knowing your margin is protected

Request a quote from a supplier and try it on your next job. You'll see the benefit immediately.