How to calculate material markup (without feeling greedy)
Markup is not profit by another name -- it covers picking, returning wrong items, van stock, breakages and price rises. If you pass materials through at trade net with no margin, you are subsidising the merchant's business with your time. This guide explains how to calculate it, how to apply it consistently, and how to handle it on customer quotes.
What markup actually pays for
Think about what happens before materials arrive on site: the phone call to check availability, the drive to the trade counter, the wait, the card fee, the fuel, the return trip for wrong-spec fixings, the breakages in transit, and the occasional price jump between quoting and ordering.
None of that is free. A 20% materials margin on a £500 material order is £100 -- roughly 1.5 hours of a £65/hr tradesman's time. That is a conservative estimate of what the materials operation actually costs.
- Picking and procurement time: 30-90 minutes per materials run depending on job type
- Van stock and consumables: blades, drill bits, silicone, fixings -- these disappear into jobs
- Card processing and merchant fees: typically 1.5-2% of transaction value
- Price exposure: you quoted in week 1, ordered in week 4 -- timber, copper and tiles all moved
- Returns: wrong spec or excess materials require time and sometimes restocking fees
How to calculate the right markup percentage
The simple formula: markup percentage = (sell price - cost price) / cost price x 100. A £100 item sold at £125 is 25% markup. The same item sold at £125 is a 20% margin (on the sell price).
UK trades commonly use 15-30% on materials depending on trade and job size. High-value items (boilers, consumer units, large tile orders) often use lower percentages -- 10-15% -- because the absolute amount is significant. Small fittings and fixings need higher percentages or flat minimums to cover the handling cost.
- Standard materials (tiles, timber, pipe, cable): 15-25%
- High-value equipment (boilers, boards, units): 10-15%
- Small fixings and consumables: minimum £5 handling or 30%+, whichever is higher
- Specialist or long-lead materials: add a price-risk premium if the quote is valid for more than 14 days
Percentage vs fixed minimum: which to use
A flat percentage breaks down on both ends. On a £2 box of screws, 20% is 40p -- not worth the paperwork. On a £2,000 tile order, 20% is £400 -- arguably too much.
The practical approach: apply a percentage to all materials, with a floor minimum per line (typically £5-10). On high-value single items, negotiate with yourself -- does your actual time on this item justify the full percentage?
Customer-supplied materials
When a customer supplies their own materials, the markup conversation disappears -- but the risk does not. Under-specification, wrong quantities, delivery timing and quality all become the customer's problem. Include this on the quote: 'Customer-supplied materials -- installation only. Any delays, shortfall or specification issues to be resolved by customer. Additional visits charged at agreed day rate.'
Show net vs gross: what to put on the customer PDF
You can keep customer PDFs clean while your working quote shows net, markup and sell. Most customers do not need to see your trade price -- they need to see the total they are paying and what it includes.
A line like 'Tiles, adhesive and grout -- 24m² -- £680 supply and fit' is clear without itemising your merchant account. If a customer specifically asks for breakdown, you can share the labour and supply totals separately without revealing net cost.
- Internal view: net cost + markup % = sell price per line
- Customer view: combined supply-and-fit line or separate labour / materials totals
- Keep your Price Book entries in sell prices -- reduces confusion when quoting quickly
- If VAT-registered: apply markup to net price, then add VAT on the customer sell price
Where to build markup into your workflow
The worst place to calculate markup is on the fly while writing a quote. Do it once in your Price Book: set up lines at the sell price (markup already included) so when you pull them into a quote, the number is already correct.
Review material lines quarterly -- supplier prices move and stale lines cost you margin silently. A tile line set in 2023 at net + 20% may now be under your actual current cost.
- Set Price Book entries at sell price, not net -- less mental maths at quote time
- Flag lines that include materials separately from pure-labour lines
- Review top 5 material lines against current trade prices each quarter
- For large orders, get a current price confirmation before sending the quote
Where Pro Quoter fits
Keep markup already baked into your Price Book lines -- fewer blank-screen moments after a long day. Pull standard lines into quotes without recalculating; adjust for job-specific specs.
Built by a tradesman: simple, fast, useful -- enquiry through to final payment. The Price Book builder lets you set sell prices once, reuse consistently, and review when supplier prices change.
FAQ
- What markup do UK trades use?
- 15-25% is a common range for standard materials. Higher percentages (25-35%) on small items and consumables; lower (10-15%) on high-value single items. Your actual time and risk on each category should set the number -- not industry averages.
- Should I tell customers I am marking up materials?
- You do not need to. Tradesmen marking up materials is standard practice and understood in the industry. A supply-and-fit price is a complete service price. If a customer objects, explain what is covered: procurement, delivery risk, breakages, returns.
- What if material prices rise between quote and order?
- Add a validity clause to your quote (14-28 days) for volatile materials like timber, copper and tiles. For long-lead items, note that prices are subject to supplier confirmation at order stage.