As we approach 2025, the building products industry stands at a transformative crossroads. The sector is witnessing unprecedented changes driven by technological advancement, environmental imperatives, and shifting market dynamics. Traditional approaches to manufacturing, distribution, and pricing are being reimagined as the industry adapts to meet evolving customer expectations and regulatory requirements. This comprehensive exploration delves into the key trends and predictions that will shape the building products landscape in 2025, with a particular focus on pricing strategies that will help manufacturers and distributors navigate this changing environment.

At Pricefx, we offer cloud-native pricing software solutions aimed at helping discrete manufacturers and distributors(both important for building materials organizations) drive their pricing strategies and overcome their ‘staying awake at night’ challenges with pricing technology that directly assists their unique pain points and use cases. What trends and predictions should they consider in 2025? And what lessons can be learned from last year?

This article looks at the major building products industry trends and predictions and forecasts for 2025. It also provides tips for building products companies to get ready with their pricing strategies and how to apply them to maximize their desired business outcomes—so let's dive in.

Building Products Industry Trends for 2025

1. Smart Building Materials Take Center Stage

The integration of technology into building materials represents perhaps the most significant shift in the industry since the introduction of engineered wood products. Smart materials that can adapt to environmental conditions, monitor their own performance, and communicate with building management systems are moving from experimental projects to mainstream applications.

The evolution of smart concrete exemplifies this trend. Traditional concrete, while reliable, has always been prone to unpredictable deterioration. Now, manufacturers are embedding sensors directly into the material during production, creating concrete that can self-monitor for stress, cracks, and chemical changes. This advancement is not just about monitoring - it is revolutionizing how we think about building maintenance and longevity.

Window manufacturers are similarly transforming their products. Dynamic glazing systems now respond to environmental conditions in real-time, automatically adjusting tint levels to optimize energy efficiency and occupant comfort. These systems integrate with building management platforms, creating a coordinated approach to climate control that was impossible just a few years ago.

2. Sustainability Becomes Non-Negotiable

Environmental considerations have evolved from a marketing advantage to a fundamental business requirement. The building products industry has reached a tipping point where sustainable practices are now driving innovation across the entire value chain.

Manufacturers are increasingly investing in carbon-negative materials development. For instance, advanced timber products are being engineered to sequester more carbon than is released during their production, while new cement formulations incorporate carbon capture technology during the curing process. These innovations are reshaping the industry's approach to sustainability.

The circular economy concept has moved beyond theory to become a practical framework for product development. Manufacturers are designing products with their entire lifecycle in mind, from raw material sourcing to end-of-life recycling. This shift is particularly evident in the insulation sector, where manufacturers are developing products that can be fully recycled into new insulation at the end of their useful life.

3. Digital Twin Technology in Product Development

Digital twin technology has emerged as a game-changer in how building products are designed, tested, and maintained. This technology creates virtual replicas of physical products, allowing manufacturers to simulate performance under various conditions before committing to production.

The impact of this technology extends far beyond the design phase. Manufacturers are now able to predict product performance over decades by simulating exposure to different weather conditions, usage patterns, and maintenance scenarios. This capability is particularly valuable for exterior building products, where long-term performance is critical but traditionally difficult to verify without years of real-world testing.

4. Advanced Manufacturing Processes

The production of building materials is undergoing a technological revolution. Artificial intelligence and automation are transforming traditional manufacturing processes, leading to improved efficiency, consistency, and quality control.

AI-driven quality control systems can now detect subtle variations in product specifications that might be invisible to the human eye. These systems analyze thousands of data points in real-time, adjusting production parameters to maintain optimal quality. This level of precision is particularly important in the manufacture of engineered wood products, where slight variations in moisture content or adhesive application can significantly impact product performance.

5. Supply Chain Resilience

Recent global disruptions have fundamentally changed how building product manufacturers approach their supply chains.

For instance, the post-COVID supply chain changes have led to the industry no longer relying on single suppliers or regions for sourcing. This shift also impacts efforts to return input costs to pre-COVID levels. Furthermore, geopolitical tensions might continue to cause disruptions  similar to those experienced during COVID. As a result, the industry is moving away from just-in-time inventory models and adopting more resilient strategies that prioritize stability over pure efficiency.

This shift involves more than just maintaining larger inventory buffers. Manufacturers are investing in sophisticated supply chain monitoring systems that provide real-time visibility into material availability, production capacity, and logistics networks. These systems help companies anticipate and respond to disruptions before they impact production or delivery schedules.

Building Products Industry Pricing Predictions for 2025

Let’s examine the top pricing trends and predictions for the building products and materials industry that appear set to play out in the year ahead.

1. Value-Based Pricing Models

The building products industry is witnessing a fundamental shift in how products are priced, moving from cost-plus models to sophisticated value-based approaches. This transformation requires pricing teams to develop a deeper understanding of how their products create value for different customer segments.

Consider a commercial roofing manufacturer that has developed a new highly reflective membrane product. Rather than pricing based on production costs plus margin, the pricing team analyzes the product's impact on building energy costs over its lifetime. They create a pricing model that considers:

• Reduced cooling costs over 20 years
• Extended roof life due to reduced thermal stress
• Lower maintenance requirements
• Potential LEED (LEED certification provides a framework for healthy, highly efficient, and cost-saving green buildings, which offer environmental, social and governance) certification points

Using this analysis, they develop a premium pricing strategy that still delivers clear ROI to customers. They support this with a custom calculator tool that helps salespeople demonstrate value to specific customers based on their building type, location, and energy costs.

2. Dynamic Pricing Systems

Dynamic pricing in the building products industry is becoming more sophisticated, moving beyond simple supply-demand adjustments to incorporate multiple close to real-time factors. This evolution requires pricing teams to develop new skills and systems for managing more complex pricing models.

For example, let's examine how a regional distributor of structural lumber implements dynamic pricing:

Their system monitors and adjusts prices based on:

• Real-time inventory levels across multiple locations
• Competitor pricing in each market
• Transportation costs from various suppliers
• Regional construction activity levels
• Weather forecasts that might impact construction activity
• Futures prices for raw materials
• The ability to transition existing slow-moving inventory into faster moving inventory with an increasing price via a low-cost re-work solution

The system automatically adjusts prices within pre-set parameters, flagging situations that require human review.

For instance, when a major weather event is forecast in a particular region, the system might suggest increasing prices gradually in the weeks leading up to the event, based on historical demand patterns.

3. Sustainability Premium Evolution

The pricing of sustainable building products is becoming more nuanced as the market matures. Assisted by a level of pricing technology that now supports their desired business outcomes, pricing teams are developing more sophisticated approaches to capturing the value of sustainability features while remaining competitive.

A manufacturer of insulation products provides an illustrative example. Their pricing strategy now incorporates:

A tiered sustainability premium based on:

• Percentage of recycled content in the current products
• Carbon footprint per unit
• Third-party environmental certifications
• End-of-life recyclability

They've developed a unique approach where customers can "lock in" lower prices by committing to return used material for recycling. This creates a win-win situation: customers get better pricing, while the manufacturer secures a reliable stream of recycled material for future production.

4. Digital Integration in Pricing

Technology is enabling pricing strategies that would have been impossible to implement just a few years ago. Modern pricing teams are leveraging digital tools to make better decisions and respond more quickly to market changes.

A major manufacturer of exterior cladding products demonstrates this approach with their new digital pricing platform. The system:

• Integrates real-time cost data from production facilities
• Analyzes regional market conditions and competitor pricing
• Considers customer-specific factors like purchase history and credit terms
• Accounts for product mix and volume discounts
• Generates customized quotes within minutes

The platform also includes a machine learning component that helps identify optimal pricing for new products based on comparisons with similar existing products and market response data.

5. Risk-Sharing Pricing Models

Innovative pricing structures that distribute risk between manufacturers, distributors, and customers are gaining traction. These models require pricing teams to develop new skills in risk assessment and contract structuring.

Consider a manufacturer of high-performance windows implementing a performance-based pricing model:

• Base price reflects standard product costs
• Premium tied to actual energy performance post-installation
• Rebates if products don't meet efficiency targets
• Bonus payments if savings exceed guarantees
• Weather-normalized calculations to ensure fair comparisons

This model requires sophisticated monitoring and verification systems, but it helps align the interests of manufacturers and customers while providing a competitive advantage in the market.

Is Your Business Equipped for Change?

The building products industry in 2025 is characterized by rapid technological advancement, increasing environmental awareness, and evolving customer expectations. Success in this landscape requires manufacturers and distributors to embrace new approaches to product development, manufacturing, and pricing.

The pricing function is becoming more strategic and sophisticated.

Pricing teams need to develop new skills and adopt new tools like automated pricing software like Pricefx to implement more complex pricing strategies.

Those who can effectively balance innovation, sustainability, and customer value while maintaining profitability will be best positioned for success in this dynamic market.

As we move through 2025 and beyond, the ability to adapt quickly to changing market conditions while maintaining strategic focus will be crucial. Companies that invest in developing their pricing capabilities and embrace innovative technologies and approaches will find themselves well-equipped to thrive in this evolving landscape.

But you will need to check if your company’s infrastructure is ready to move a pricing software solution. Check out my recent article to learn more:

Meanwhile, Happy Pricing!