Navigating From Contract to Dig

By Ken McKenna, Tampa Bay Pools / ken@tampabaypools.com

What a difference a year makes. Last year, just before COVID, business was good and prices were relatively stable except for your normal increases once a year. Then COVID hits and business blows up. Now as a builder you have to figure out how much business you should take on. How many leads should you take? People say too much business is a good problem, but it is a problem. We spent six or more months navigating through sales and then figuring out the timeline from contract to dig. Then prices start to fluctuate. Now we are seeing pipe triple in cost in just a few months and wood prices souring. The question is how do we sell a pool today that won’t be built for six months and price it accordingly? It is a dilemma I’m sure every builder is wrestling with right now.

I have heard talk of a price escalation clause which, I guess if written properly, works. I worry about the customer’s trust in waiting six months then being told they have to pay more. You could also adjust prices regularly (perhaps monthly) and add a percentage to your typical pricing calculation to cover increases that may arise before construction. You may also want to use a clause in contracts so that if materials aren’t available, substitutes may be used or choices may have to change.

In speaking with many manufacturers, they suggest ordering 12-16 weeks out for anything you need. Now is the time to work closely with all your trade partners to maximize your purchase before the next increase. Also, this may be the time to limit choices on pools to those products that are made domestically and have shorter ordering times. It’s definitely a time for staying on top of costs, saying no to jobs, and trying to maximize your margins instead of increasing volume. Sharing ideas amongst peers is also helpful. There is plenty of work to go around so helping each other may be in all of our best interests.