Marking up the materials you supply is normal, fair and expected in the trades, because you carry the cost, the waste, the warranty hassle and the time spent sourcing. A materials markup somewhere in the region of 10 to 20 percent is common in residential work, more on small or fiddly orders, though the right number depends on your trade and your market. The thing that turns a fair markup into a problem is not the markup itself but hiding it: bury an undisclosed handling fee on top of an advertised price and you have strayed into drip pricing, which is prohibited. Mark up openly, quote one all-in number, and you stay both profitable and legal.
Why you mark up materials at all
A homeowner who could buy the tile themselves sometimes asks why they are paying you more for it. The markup is not a tax; it pays for real things you do that they do not see:
- You finance the purchase. Your money is tied up in their materials, sometimes for weeks, before you are paid.
- You carry the waste and the offcuts. Order ten percent extra for breakage and cuts, and that is your cost to absorb.
- You own the warranty problem. If a fitting fails, you are the one returning it, re-ordering and re-doing the work, not the manufacturer and not the client.
- You spend unbilled time sourcing. Finding the right product at the right price, collecting it and storing it is hours you do not otherwise charge for.
- You take the risk of price changes. With tariff-driven swings on imported steel and aluminium products since 2025, the price you paid last month may not be the price today.
A markup recovers all of that. Pricing materials at bare cost quietly loses money on every job.
Markup is not margin (the trap that costs trades money)
The single most common materials-pricing error is confusing markup with margin. Markup is the percentage you add to your cost. Margin is the percentage of the final price that is profit. They are different numbers on the same job.
- Materials cost you $1,000. You add a 20 percent markup, so you charge $1,200. Your gross profit is $200. But $200 out of $1,200 is a margin of about 16.7 percent, not 20 percent.
- To actually keep a 20 percent margin, you charge $1,250 (because $1,000 is 80 percent of $1,250). That is a 25 percent markup.
The pattern to remember: the margin you keep is always smaller than the markup you added. The full whole-job version of this maths, including labour and overhead, is in Pricing a Job and Understanding Markup.
Transparent markup versus margin
There are two honest ways to present a materials markup, and one dishonest one.
- Build it into one all-in number. You quote "$1,610 for materials supplied and installed" and the markup is simply part of your price. This is the cleanest approach and what most homeowners expect.
- Show cost plus a stated markup. On a cost-plus job you might show "materials at cost plus 15 percent". The client sees the markup and agrees to it. That is fully transparent and fine.
- The one to avoid: advertising or quoting a price and then adding a separate, undisclosed "handling" or "procurement" fee on the invoice that the client never agreed to. Adding a mandatory fee on top of an advertised price, without disclosing it up front, is drip pricing, prohibited under the federal Competition Act and tightened on 20 June 2024. The only thing you may add on top of an advertised price is government tax (GST, HST, PST or QST).
The test is simple: the client should know, before they say yes, the total they will pay. Whether your profit on materials is folded into the price or shown as a line item is your choice; concealing it after the fact is not.
A worked illustration
A small kitchen backsplash. All figures are illustrative.
- Tile, adhesive, grout and trim, your cost: $400
- Materials markup at 15 percent: $60
- Materials line on the quote: $460
- Your labour and overhead are priced separately, then the whole job is quoted as one all-in number plus tax
The $60 is not a secret. It is either inside the all-in price the client agreed to, or shown as "materials plus 15 percent" if you quote cost-plus. Either way the client knew the total before work began.
Setting a markup you can defend
- Be consistent. Pick a markup logic and apply it across jobs rather than guessing each time.
- Lift it on small or awkward orders. A $40 part you drove across town for cannot carry the same percentage as a $4,000 order; a higher markup, or a minimum materials charge, is reasonable.
- Re-check it when supplier prices jump. If you quoted weeks ago and a tariff or supplier increase has landed, a fixed quote already locked you in, which is one more reason to add a validity period to quotes.
- Do not race materials pricing to the bottom. Competing by shaving your materials markup to nothing just means working for free on the part of the job that carries real risk.
Common mistakes
- Charging materials at cost. You absorb the waste, warranty and sourcing time for nothing.
- Confusing markup and margin. Your margin is always less than your markup. Price accordingly.
- Hiding a handling fee. An undisclosed mandatory fee on top of an advertised price is drip pricing.
- One flat percentage on everything. Small fiddly orders need a higher markup or a minimum charge.
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