How To Hedge Against The Rising Cost Of Landscaping Materials

From wood chips to gravel, the cost of all landscaping materials can be extremely erratic. If you've found that you bid on a job one day only to find that you're outpriced the next, then you need to manage your expenses. There are a few ways that a landscaping company can hedge against the rising cost of landscaping materials.

Pass Direct Costs to the Customer

While this may seem the most direct solution, this is the least preferable case for your business. The cost of landscaping materials is constantly changing, and you need to quickly react to them in order to maintain a competitive advantage. It's also difficult to assess how much of an increase in price it takes before your bids get underbid again. In other words, this may mean you just don't get the job.

Stock Up in Bulk on Products You Know You'll Need

When you know that certain types of materials are going to be in demand, then buy them in bulk. For example, if you're bidding on a big project for gravel, then buy 10 times what you need. This way when the demand comes up, you'll catch it before anyone else does thus creating an opportunity to make even more money off of it.  

Insert Some Wiggle Room on the Materials Used

Will it be black mulch or red mulch? Green gravel or brown? Let your customers know in advance that you may replace some items with very similar like-kind items. When supply chains are volatile and expenses are high, you'll frequently discover that one item that's very similar to another may be vastly less expensive.

Start Just-in-Time Purchasing Procedures

If you have a supply chain for your landscaping materials, then you need to create a system of receiving and reordering. As it becomes apparent that materials are becoming less plentiful or more expensive, start a just-in-time ordering process on the things you don't frequently need. It's possible that by the time you need these items, they won't be expensive anymore.

Many landscaping companies are locked into bidding on jobs by the landscape material costs alone. If materials are rising, your bids should reflect this. However, being locked into a price you gave the customer is not wise if the cost of materials is rising. And it isn't always an option to just increase the prices of your work indefinitely. To better manage risk and keep yourself profitable, use one or more of the above tips.