A markup of roughly 10 to 30 percent on materials is normal for Australian tradies, with small, fiddly or specially-ordered items often marked up more. It is not a hidden tax. The markup pays for the unpaid time you spend sourcing and collecting materials, the cash you tie up carrying them, and the warranty risk you take on when you supply a part.
If you pass materials on at cost, you are working for free on a real part of the job. Here is how to mark up fairly.
Why a markup is fair
When you supply materials, you are doing more than buying a box:
- Time: sourcing, pricing, ordering, collecting and returning faulty stock, none of it billable as labour
- Cash: you pay the supplier now and wait to be paid on the invoice
- Risk: if the part fails, you wear the callback and often the replacement
A markup covers all three. Charging cost price means giving that work away.
Typical markup ranges
Use these as a guide; the right number depends on the item and your supplier deals:
- Standard materials and fittings: roughly 10 to 20 percent
- Small, fiddly or low-value items: often 20 to 30 percent or more, because the handling time is the same regardless of price
- Specially-ordered or custom items: higher, to cover the extra sourcing and the risk you are stuck with them
- Large, expensive single items: often a smaller percentage, since 15 percent on a $4,000 unit is already a healthy margin
The principle: smaller and more annoying to source means a higher percentage; large and simple means a lower one.
How to price it without losing the job
- Quote a single price. Combine materials and labour into one supply-and-install figure, or split into "supply" and "labour" lines. Avoid itemising every part with its cost, which just invites haggling.
- Sell the result, not the receipt. The customer is buying a working hot water system, not a shopping list. Price the finished job.
- Offer the alternative honestly. If a customer wants to supply their own materials, you can let them, but make clear your warranty then only covers your workmanship, not their parts.
Build it into the whole price
Material markup is one piece of pricing a job properly, alongside your hourly or day rate and your call-out fee. Work the job up so the total covers your time, your materials with a fair markup, and your overheads. The free Charge-Out Rate Calculator helps you get the labour side right, then add materials on top.
When you send the quote, present it as a clean total with a clear scope. See how to write a quote that wins the job for the structure that stops price arguments before they start.
This is general information, not financial advice. Markups, margins and your tax position vary. For tax and GST questions, check the ATO website or a registered tax agent.