Contractors always face the predicament of correctly pricing a job. Too high and lose the work; too low and make no money. A good price is one that works for both the contractor and the customer.
What's a contractor to do?
Many contractors include a price adjustment clause in their contracts. If costs increase between the time the contract is signed and the time the materials are ordered, then that increase will be passed on. Some make their supply houses or subcontractors guarantee quoted prices for up to a year, passing down the risk of any increases.
What are price adjustment clauses?
Price adjustment clauses provide for both upward and downward movement, and those usually include a ceiling of some sort (generally in percentage form) to protect against a runaway adjustment.
Additional resources provided by the author
Not pricing a job correctly could easily transform a profitable project into a money-losing proposition. One would, therefore, do well to consider including some sort of price adjustment formula in each agreement.
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