A major challenge the landscape industry is facing incudes the varying costs of materials. Although this is mostly lumber, it is also true to other materials relative to the industry, such as PVC. When material prices are changing week to week, how do you avoid consuming the unplanned costs?
Leveraging your company’s relationship with vendors might help you. At the very least you may be able to request a discounted price. When it comes to projects that require material, we suggest pulling purchase orders and requesting costs from vendors within 30 days of the project starting. Currently, some vendors can’t promise pricing over a week. If you have a good relationship, you may be able to get that pricing extended a week or two longer. Although this is not a guarantee, paying on time and retaining relationships will provide you better ground to make requests such as these.
When performing projects or work orders, set as many as possible to time and materials, rather than estimating the costs of material. This allows you to charge the client according to the actual cost of materials, rather than you possibly being charged more than expected.
When you can’t utilize T&M Agreement templates, you can add language into your agreements to cover the varying costs. This may look like including a statement that prices estimated in the agreement are subject to change if material costs are X% more than the cost at time of proposal. The goal here is to provide clients an estimate but include wording that protects the company if prices spike at time of Ordering materials.
Material pricing issues are not the first challenge we have faced in the past year. There have been many areas you have had to adjust to, and this can be one of the easiest to overcome. Being open to change, brainstorming solutions, and thinking outside the box is the key to success. If you’d like to discuss other ways you can think outside the box and make changes to your processes, schedule a consultation here.
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