Stop Waiting for Costs to Drop: How to Grow Your Business Right Now

While you were fighting to break even, the contractor down the street grew his business fivefold.

Same market. Same inflation nightmare. Same labor shortages that kept you running short-handed on every job. But completely different bank account.

Squeezed by high interest rates, inflation, and tariffs, median household renovation spending dropped from $24,000 in 2023 to $20,000 in 2024, yet some contractors still grew double digits. How? They made specific changes to how they tracked costs, priced jobs, closed deals, and managed cash. They stopped waiting for conditions to improve and started working the strategies that separate winners from survivors.

The cost squeeze hitting contractor profitability

Construction costs remain about 40% higher than pre-pandemic levels—and they’re still climbing, with tariff threats pushing another 2.2% increase forecast for 2026. Contractors who thought prices would normalize are still waiting.

The labor crunch intensified. The industry needs 499,000 new workers in 2026 just to meet demand, while average hourly earnings jumped 4.4% over the past year. You’re paying more for workers who are harder to find.

Customers might understand the realities of inflation, but that doesn’t mean they aren’t price-sensitive. Homeowners expect quotes fast, push back on increases, and get sticker shock even when projects are legitimately more expensive. Many contractors now include “price subject to change after 15 days” clauses because material costs swing too fast to honor 90-day quotes.

Your margins got squeezed from every direction. The contractors who raised prices aggressively and stuck to them? They protected profitability. The ones who tried to stay competitive by eating cost increases watched their net margins collapse.

Tim Alagushov, co-founder of IRBIS, which offers HVAC, plumbing, and electrical services in San Jose, CA, grew the business fivefold since 2020 by gaining exposure through smart marketing, activating existing customers, and jumping early on opportunities like the Inflation Reduction Act. He adjusted fast and stayed aggressive on pricing, cost tracking, and new revenue streams.

Here’s what’s working right now:

1. Track every dollar—guessing kills profit

Alagushov tracks every fitting, every wire, every piece of equipment. No exceptions.

“A lack of stringent material tracking can lead to significant profit loss,” he says. 

The three financial metrics Tim watches:

1. Cost of goods sold per project
2. Recall costs as a percentage of revenue
3. Marketing expenses. 

These numbers tell him immediately if a job is bleeding money. Check your costs daily or weekly—not at the end when it’s too late to fix anything.

Your baseline targets:

• Gross margin: Around 20% minimum (builders average 20.7%)
• Net margin: Target 8.7% for builders or around 5% for remodelers
• Overhead ratio: Industry benchmarks put OpEx around 12% of revenue

If a project’s gross margin dips below 20%, stop and figure out why. Don’t wait until you’re $5,000 in the hole.

Set up a weekly 15-minute review of every active job. Check actual costs against the estimate. If you’re trending over, figure out why before you’re too deep to fix it.

2. Use financing to close deals you’re losing now

“Financing and flexible payment options are valuable tools for closing deals,” Alagushov says. Research from the National Association of Realtors found that 64% of homeowners financed their renovations through home equity or a loan. 54% of homeowners say they would consider financing a renovation if offered.

When you hand a customer a $25,000 quote and they hesitate, try this script instead: “We offer financing options that let you start your project now and spread payments over time. Would you like to see what your monthly payment would look like?”

Acorn Finance’s contractor financing lets you offer customers flexible payment plans without taking on credit risk yourself. The lender handles approvals and payments; you get paid upfront.

3. Price for today, not yesterday

Alagushov’s pricing strategy is simple: incorporate potential cost increases into the upfront pricing. Buffer room in each quote beats waiting to see what happens with the market—that’s how you lose money.

Shorter bid validity periods are excellent strategies for inflationary time. Why does your proposal stay valid for 90 days when costs swing weekly? Cut it to 30 days.

While you’re tweaking your estimates and contracts, add escalation clauses. If material costs spike 10% or more between bid and installation, you’re covered, without the need to eat the excess or raise prices for a disgruntled homeowner. 

Do the math on your business: Would you rather do 20 jobs at 6% margin or 17 jobs at 11% margin? Raise prices accordingly.

4. Build supplier relationships

“Strong supplier relationships are critical for securing materials and competitive pricing,” says Alagushov. When materials got scarce, his company enjoyed priority access because they’d fostered those relationships before the crisis hit.

Call your top three suppliers this week, and ask what volume commitments get you better pricing or priority allocation when things get tight. Perhaps you can commit to a $100,000 annual spend with your lumber supplier, saving 8% on every order—that’s $8,000 straight to the bottom line and guaranteed materials when competitors are scrambling.

5. Create recurring revenue so you’re not feast-or-famine

Alagushov launched maintenance memberships for existing customers. These memberships include annual HVAC tune-ups, quarterly inspections, and priority service. “This creates predictable cash flow and generates upsell opportunities,” he says.

Consider mimicking this strategy with a “home care membership” that includes annual maintenance visits, priority scheduling, and a 10% discount on repairs. If you sign up 40 customers at $300/year, that’s $12,000 in predictable revenue plus the upsell work that comes from being in customers’ homes regularly.

One additional financial benefit: Maintenance visits often highlight necessary repairs, which could add a $2,000-plus job to your queue. Members are inclined to buy because you’re already there, you have a preexisting relationship, and they trust your recommendation.

6. Use technology that actually pays back

Are you using technology to your advantage? Alagushov recommends utilizing a CRM, or client relationship management tool, and job cost tracker to streamline operations. Here’s what you need in your tech toolkit: 

• A job-cost app for real-time tracking, which can catch overruns early
• A digital takeoff tool to cut estimate time and streamline estimates
• A CRM to track leads and potential clients, giving you insight into your marketing channels and letting you build relationship with homeowners—even when they don’t bite at your first estimate
• Mobile time-tracking software, which tracks job-site costs and ensures you don’t bleed hours you don’t see

For instance, a job-cost app might help you identify employees that are consistently running over estimate on labor hours. That communication gap costs you money, but can be easily fixed with a simple conversation. 

Where to start

Pick the moves that plug your biggest leaks first.

In the next 30 days

• Audit your job costs. Pull last quarter’s jobs and calculate the actual gross margin on each. Then, calculate margin by project type. Which jobs made money? Which lost money?
• Call your top three suppliers about volume commitments and better pricing.
• Set your baseline metrics. Know your current gross margin, overhead percentage, closing rate, average project value. Check these numbers monthly.
• Research financing options like Acorn Finance if you don’t offer them yet.

Days 30-60:

• Fix your inventory tracking. Make sure every piece of material is assigned to a job or written off as waste.
• Update proposals and contracts. Shorten bid validity to 30 days maximum. And add escalation clauses.

Days 60-90:

• Double down on your most profitable projects. Market what actually makes money.
• Build a cash cushion equal to 2-3 months of expenses.
• Launch a subscription maintenance program for recurring revenue.

The bottom line

Costs may be rising, but that doesn’t mean your income has to decline. Successful contractors aren’t doing anything you can’t do: 

• They track costs religiously. 
• They price based on current reality. 
• They offer financing so customers can actually afford the work. 
• They build supplier relationships that get them priority access. 
• They use technology that pays back in time and eliminates errors. 
• They create recurring revenue so they’re not feast-or-famine.

Don’t need to wait for prices to stabilize to grow your business. Start tracking tighter, pricing smarter, and offering financing—the same playbook that’s already working for contractors who refused to just survive.

Your next record year doesn’t require perfect market conditions. It requires working the strategies that separate contractors who grow from contractors who struggle, regardless of how the economy changes.