Most contractors know Xactimate is the software that sets the standard for what things cost in a claim. Fewer know why the prices are what they are or why they change. Understanding the Xactimate pricing system is essential because when you don't know where a price comes from, it's hard to argue when it's wrong.
Here's how Xactimate pricing actually works, why it changes, and what that means for your supplements.
Xactimate Pricing Is Regional
Xactimate prices are not national. The cost of materials and labor varies dramatically by region, and Xactimate accounts for this. A bundle of shingles in a low-cost rural market can run significantly less than the same bundle in a major metro area. Labor rates follow the same pattern. A roofer's hourly rate in Atlanta is different from Los Angeles.
This is why the adjuster's estimate from Xactimate is specific to the zip code where the damage occurred. If you submit a supplement with a price that doesn't align with the regional cost in that specific zip, the adjuster will question it. It's not that your price is wrong for your market; it's that you're asking the carrier to pay outside the Xactimate price for that region.
How Xactimate Gathers Pricing Data
Xactimate doesn't make up prices. They collect real data from suppliers, contractors, and labor markets across the country. They track what materials actually cost at suppliers like Home Depot, Lowes, and specialty distributors. They track labor rates from payroll data and contractor surveys. They track regional variations in those costs.
This data gathering is continuous, and general pricing updates are published monthly. Vendor-specific pricing data updates even more frequently, on a nightly basis. This means prices can shift many times throughout the year depending on market conditions.
Worth Noting
The monthly updates don't always mean prices go up. Sometimes they go down if material costs drop. But adjusters using older versions of Xactimate may have lower prices than the current version, which is why date discrepancies matter in supplements.
Why Prices Change Over Time
Material costs fluctuate based on commodity prices, shipping costs, supply and demand, and market conditions. When the price of oil goes up, shipping costs increase, and material prices often follow. When there's a supply shortage, prices spike. When markets settle, they may come back down.
Labor rates also fluctuate seasonally. Summer typically commands higher rates than winter because work is more abundant. Regional economic conditions affect labor availability and therefore rates. A construction boom in a region can drive rates up; a slowdown can bring them down.
What Version of Xactimate Is the Adjuster Using?
This is a critical question that few contractors ask. The adjuster's estimate was created on a specific date using a specific version of Xactimate with a specific monthly price list built in. If you submit a supplement even a few months later using current market prices, you might be referencing a price list that's several updates ahead of what the adjuster used.
This creates a pricing mismatch. The adjuster sees your price and compares it to their Xactimate prices, which are out of date. Your price looks high. You look like you're trying to get extra money. In reality, you're using current market data and they're comparing you to old data.
How to Use Xactimate Pricing in Your Favor
Know the Xactimate version the adjuster used. Ask for the date of the estimate and cross-reference it with the monthly Xactimate price list that would have been in effect on that date. If there have been multiple monthly updates since the original estimate, you have leverage.
When you submit a supplement with pricing that differs from the adjuster's estimate, cite the updated price list. Say something like: "The original estimate was written off an earlier monthly Xactimate price list. Our supplement reflects the current price list, which accounts for updated material and labor costs since that estimate was written." This frames the price difference as market reality, not contractor inflation.
Regional Price Variations and Your Market
If you operate in a high-cost region, Xactimate prices might be lower than what you actually pay locally. This is common in cities and coastal areas. When this happens, include documentation in your supplement: supplier quotes, invoices from recent jobs, or regional labor data. This proves that Xactimate's regional pricing for your zip code doesn't reflect your actual market.
Adjusters are more receptive to price arguments when you show the discrepancy with supporting documentation. You're not arguing about Xactimate; you're showing that Xactimate doesn't accurately reflect your specific market.
The Bottom Line
Xactimate pricing is a system, not a black box. It's regional, it updates monthly, and it's based on real market data. When you understand how the system works, you can use it to support your supplements more effectively. You can explain pricing differences, cite monthly updates, and provide regional data when your market doesn't align with Xactimate's regional pricing.
Most contractors never dig into how Xactimate pricing works. That's an advantage for the ones who do. The next time a price is questioned, you'll know exactly where it came from and why it's right for your region and the current price list.