No survey of materials markup by trade exists. Published guidance runs from about 10% to 20% on competitive bids (electricians on the Mike Holt forum) to 20% to 50% or more on smaller service jobs (HomeGuide, Housecall Pro). In the calculator, Material Markup is optional and starts at 0. If you'd rather price with margin alone, convert your usual markup with margin = markup ÷ (1 + markup) and leave the markup field at 0. If you do enter a markup, it adds profit on top of your margin, and the calculator shows your effective margin. A 25% markup is a 20% margin.
Profit on materials is reasonable and necessary. It pays for sourcing, handling, storage, and risk, not a padded invoice. The service-work sources run higher than the 15% to 30% often quoted. The rest of this article covers what markup pays for and how to handle customers who push back.
What Material Markup Actually Covers
When a customer asks why you're charging more than the hardware store price, the answer is: because there's more than the hardware store involved. Your markup compensates you for:
- Sourcing time: researching the right product, comparing suppliers, finding what's actually in stock
- Purchase and procurement: the time and fuel to pick up materials, or the time managing an order and coordinating delivery
- Storage and handling: keeping materials on your truck, in your shop, or at a staging location without damage or theft
- Capital float: you pay for the material before the customer pays you; that gap is a real cost of doing business
- Returns and defects: when something arrives damaged, the wrong size, or fails on the job, you manage the return. That's your time.
- Warranty coordination: if a product fails after installation, you're typically the first call. You didn't manufacture it, but you'll manage the process.
- Expert selection: you know which products last and which ones fail. Your material selection is part of the service.
None of this is free. If materials go out with no profit on them, you're providing all of these services for nothing.
What Published Sources Say About Markup by Trade
There is no survey of materials markup by trade. Real contractor price pages rarely publish a percentage; most say "cost plus markup" and stop there. Here is what we could find, and what kind of source each one is:
We found no published markup figure for roofing, flooring, or landscaping. Custom orders, long-lead items, and materials with real damage risk in transport or installation are the ones sources say deserve more.
Markup vs. Margin: Know the Difference
These two terms are often used interchangeably, but they mean different things and produce different numbers:
- Markup is a percentage of your cost. A 25% markup on a $400 part = $400 × 1.25 = $500 charged to the customer. The markup is $100.
- Margin is a percentage of your selling price. That same $100 profit on a $500 sale = 20% margin.
Important: If you want a 25% margin on materials, you need a 33.3% markup on cost ($400 ÷ 0.75 = $533.33). To go the other way, margin = markup ÷ (1 + markup). The calculator works in margin, not markup. If you also want a materials markup, use the optional Material Markup field.
How to Handle Customers Who Want to Supply Their Own Materials
This comes up regularly, especially with clients who think they can save money by ordering from Amazon or a big-box store. Here's how to handle it professionally:
Option 1: Allow it with adjusted pricing
You can absolutely let customers supply their own materials, but your labor rate goes up. If you're no longer providing material management services, you're also no longer absorbing any risk when the customer's product fails, arrives wrong, or is damaged. Your quote reflects labor only, and your terms should state clearly that material-related issues (wrong product, defective items, returns) are the customer's responsibility and may result in additional labor charges.
Option 2: Decline politely but firmly
Some contractors simply don't allow customer-supplied materials. This is a completely legitimate business decision. When a product fails on a job, the customer will call you first regardless of who bought it. You can protect yourself from that liability by controlling the supply chain. Frame it as a quality and warranty guarantee: "I stand behind everything I install. To do that, I need to source the materials myself."
Option 3: Charge a handling fee
A middle-ground approach is to accept customer-supplied materials but charge a material handling fee. It covers your time receiving, inspecting, staging, and managing those materials, plus the risk you're accepting by installing products you didn't select. We found no reliable published figure for this fee, so set it from your own time and risk. For example, 10% of the materials' retail value.
Whatever you decide, put it in writing before the job starts. "Customer-supplied materials are installed as-is, with no warranty on product performance" should be standard language in any contract where the customer is providing materials. This is not adversarial. It's professional.
Applying Markup in Your Job Price
Enter materials at your cost. Your margin already earns profit on materials. If you also want a materials markup, use the optional Material Markup field: it adds profit on top of your margin, and the calculator shows your effective margin.
If you think in markup, convert it to margin with margin = markup ÷ (1 + markup). Say your shop marks up materials 25% (an example). That's 0.25 ÷ 1.25 = 20% margin. On a $400 part alone, a 20% margin gives $400 ÷ 0.80 = $500, the same as a 25% markup.
The calculator's margin applies to the whole job, labor included, not only materials. Here's an example job with a 20% margin: 3 hours, 1 worker, $45 an hour loaded labor cost, $400 of materials at cost, 15% overhead, 0.5 hours of drive time, and $10 fuel.
- Labor $135.00 + drive labor $22.50 + materials $400.00 = $557.50 direct cost
- Overhead at 15% of direct cost: $83.63
- Total cost with $10.00 fuel: $651.13
- Suggested charge: $651.13 ÷ 0.80 = $813.91, with $162.78 profit
That 20% margin is earned on the labor, drive, overhead, and fuel as well as the materials. If you want materials to carry more than the rest of the job, enter that percentage in the optional Material Markup field.
