Isn’t some absorption normal to protect relationships?

Sometimes. The test shows exactly where it happened, so the absorptions that protected an account can be kept on purpose and the rest can stop.

What if our system overwrites old costs?

Supplier price files, purchase orders, and receipts usually preserve the history. The cost on each invoice line also records what the cost was on that day.

Price increase pass-through in building products distribution: how to find it in your records

The short answer

Building products distributors absorb more supplier increases than they realize, because job quotes, contractor price lists, and held prices delay or block the pass-through. For each supplier increase in the last two years, compare the cost change with the change in sell price on the same SKUs and accounts, and measure how many days it took to reach invoices. The margin lost in the lag, and on accounts that never received the increase, is usually concentrated and fixable.

Where it hides in building products distribution

Held job pricing

A job quoted months ago ships at the old price after the new cost has landed. The quote had no escalation clause, or nobody enforced it.

Contractor price lists

Lists sent to contractors for the year, updated late or not at all when costs move.

The lag

Every day between a cost increase and a price increase is margin given away on everything that ships in between.

Accounts that never moved

A handful of large contractors are often exempt in practice, whatever the policy says.

The records to pull

Twelve to twenty-four months of each. Nothing needs to be installed or connected; a spreadsheet export is enough.

Supplier cost history

SKU, supplier, cost, and effective date of every change.

Invoice lines

Date, account, job, SKU, sell price, cost, and any quote or price list it shipped under.

Quotes and price lists

Quoted jobs with dates and terms, and the contractor lists in force.

The ten-day test

Days 1–2

Have pricing write down the share of increases it believes reach customers, and how fast. Hold out the most recent increase.

Days 3–5

For each supplier increase, measure the change in cost against the change in sell price on the same SKUs, by account and channel.

Days 6–8

Measure days to pass through and margin lost in the lag, and list the accounts and jobs that never received the increase.

Days 9–10

Check the held-out increase behaves the same way, then size escalation clauses on quotes, list update timing, and account exceptions.

Specimen · illustrative figures

A $180M building products distributor tracked six supplier increases over two years. On average, 71 percent of the cost increase reached invoices, after a median lag of 47 days. Held job pricing accounted for 40 percent of the shortfall, and nine contractor accounts never received two of the increases. Closing half the gap was worth an estimated $900K to $1.4M a year.

Stop condition, written first

Stop if at least 95 percent of cost increases reach invoices within 30 days across accounts, in both the search period and the held-out increase.

What gets built if it holds

An increase tracker that flags every SKU, quote, and price list affected by a cost change, with escalation terms on new job quotes. It runs inside your operation, belongs to you, and is measured weekly against the dollar range the test produced.

Sources

14McKinsey & Company, “Pricing in distribution: A strategic growth engine,” July 2026.

Specimen figures are illustrative and do not describe a Modven client. Reviewed October 10, 2026.

Price increase pass-through in building products distribution

Where it hides in building products distribution

The records to pull

The ten-day test

What gets built if it holds

Asked often, answered plainly.

Where do you suspect the value is hiding? Tell us your hunch. Ten days later it comes back with numbers on it.