Markup on materials: pricing supplies on your quotes

Selling materials to your client at the price you paid means working for free part of the time. Comparing suppliers, ordering, collecting, storing, returning a faulty part: all of it costs you time and money. Adding a markup to materials on your quotes is normal and expected, as long as you do it with a method. Here is how to set it and present it without awkwardness.

What the markup has to cover

The markup is not a bonus. It pays for real work and for risks you carry instead of the client:

• sourcing time: comparing, ordering, going to the merchant or receiving deliveries;
• transport in your own vehicle;
• offcuts and waste, often underestimated on tiles, boards or flooring;
• breakages and faulty parts to return;
• price changes between the quote date and the purchase date;
• your guarantee on what you install.

Markup and margin are not the same

Two ways of talking about the same money, which give different results if you mix them up.

Markup is calculated on the cost price. With a 1.3 multiplier (a 30% markup), an item that costs 100 sells for 130.

Margin is usually calculated on the selling price: on that 130, the 30 of profit is about 23% of the selling price. If you want a 30% margin on the selling price, divide by 0.7 instead: 100 ÷ 0.7 is about 142.86.

I recommend thinking in multipliers. The calculation is direct and easy to check, on a quote or at the merchant's counter.

How to choose your multiplier

There is no official figure: it depends on your trade, your suppliers and the type of product. A few principles:

1. 1Small consumables (fixings, adhesives, sealants) justify a higher multiplier: they take as long to buy as expensive items, for a small amount.
2. 2Expensive, standard products (a boiler, a radiator, a bathroom suite) usually take a lower multiplier: clients can easily compare the retail price.
3. 3Made-to-order or fragile items justify a higher multiplier to cover breakage and ordering errors.

Test your multiplier on your last few jobs: recalculate the real margin including offcuts and extra trips. If it was eaten up by surprises, the multiplier was too low.

Put waste in the quantities, not the markup

The markup should not hide badly calculated quantities. Price quantities including waste: for example, tiles laid on the diagonal produce more offcuts than a straight layout. Quote the quantity actually needed, waste included, then apply the multiplier.

Presenting materials on the quote

Two options:

• Separate materials lines from labour: the client sees the detail and can change the range easily. This is what I recommend for renovations.
• "Supply and fit" unit prices: simpler to read, well suited to repeated work such as a socket or a square metre of painting.

Either way, you do not have to show your cost price or your multiplier. If a client supplies their own materials, say on the quote that you do not guarantee items supplied by the client and that any waiting time will be charged. The full structure of a quote is in how to write a quote clients accept, and your labour rate in how to set your hourly rate.

Worked example

These multipliers are examples for the calculation, not market references: use your own.

Summary