Rising Material Prices: How to Stay Agile

Price volatility is no longer a seasonal nuisance—it’s a permanent fixture in building materials distribution. From OSB and rebar to PVC fittings and drywall, material costs have seen unprecedented swings since 2020, and 2025 isn’t shaping up to be any more stable.

For distributors, that volatility affects more than gross margin. It disrupts quotes, undercuts contractor trust, delays procurement, and squeezes working capital. The winners aren’t those who try to “guess” the market—they’re the ones who stay agile in how they buy, price, and communicate.

Here’s how to stay agile in an era of rising—and relentlessly shifting—material prices.

1. Rethink How You Forecast Demand

Agility starts upstream. The old model—forecasting based on last year’s average usage—no longer works. Distributors need demand planning that accounts for:

Regional permitting and construction starts

Weather shifts (e.g., mild winters pushing framing season earlier)

Historical contractor buying patterns

Lead time volatility from mill or supplier

Use ERP demand forecasting modules that dynamically adjust based on real-time sales velocity. This ensures you’re not overbuying at a peak—or missing inventory ahead of a spike.

2. Build Vendor Diversity Without Losing Terms

Single-source dependency will burn you during price surges. But shifting to multiple suppliers doesn’t mean losing margin.

Instead:

Build secondary and tertiary supplier relationships for key categories (especially lumber, steel, and insulation)

Use RFQ platforms to pressure-test current pricing quarterly

Work with vendors that offer allocation stability, not just lowest price

Track freight-inclusive landed costs, not just SKU unit cost

A flexible supplier matrix gives you leverage when pricing tightens—and options when supply chokes.

3. Price More Frequently—But With Transparency

Contractors understand that prices move. What they won’t tolerate is feeling blindsided. You need to update pricing faster, but explain clearly:

Tie changes to specific inputs (“steel up 12% since May, affecting strapping and tie-down kits”)

Pre-communicate monthly adjustments for volatile categories

Offer temporary holds on quotes—e.g., “valid 5 days” instead of 30

Use matrix pricing in your ERP that aligns price tiers with volume, customer class, and delivery urgency

Price updates aren’t just a finance job—they’re a customer retention strategy.

4. Teach Your Sales Team How to Talk Price

Rising prices turn sales calls into pressure cookers. Equip your team to:

Explain why prices are changing (tariffs, plant shutdowns, commodity swings)

Offer alternatives when cost-sensitive items surge (e.g., switching from cedar to pre-primed trim)

Reinforce total value (service reliability, jobsite accuracy, delivery timing) instead of unit price

Use consistent language across reps—avoiding mixed messaging that erodes trust

Train with real scenarios. Role-play difficult calls. And back reps with bulletproof data from procurement and ops.

5. Monitor Margins in Real Time

Don’t wait until month-end to find out your margin eroded 4 points. Instead:

Use your ERP to alert when quotes fall below floor margin

Set up dashboards to track margin by product group, rep, and yard

Review negative margin transactions weekly—not quarterly

Use landed cost adjustments in your ERP to keep margin visibility clear (especially for freight-heavy items)

Agility means knowing where you’re bleeding margin—and stopping it fast.

6. Adjust Inventory Strategy Based on Price Forecasts

Some materials (like treated lumber) may justify a forward-buy if prices are trending up and space allows. Others (like fasteners or adhesives) are better left on just-in-time unless you’ve got high turnover.

Ask these questions by category:

Can we move this quickly if pricing drops?

What’s our carrying cost per pallet or bundle?

What do historical spikes and corrections look like?

Are we protected with price caps or vendor buybacks?

Agility isn’t just about reacting—it’s about staging the right risk.

7. Communicate Proactively with Your Customers

Build a rhythm of communication so contractors know what’s happening and what’s coming.

Use:

Monthly price trend summaries in email

Invoicing inserts for volatile items (“Steel pricing up 7% in Q2”)

Sales team prompts in CRM: “Flag next meeting to discuss framing lumber forecast”

Website updates or customer portal banners for major shifts

When you communicate first, you stay in control. When customers hear about pricing from someone else, you lose positioning—and trust.

In Summary

Price volatility is the new normal. But agility—real agility—isn’t just about reacting quickly. It’s about building systems, habits, and communication loops that make your operation flexible and resilient.

In a market where pricing changes daily and margins move fast, the most agile distributors won’t just survive. They’ll grow—while competitors scramble to catch up.