Why You Should Audit Your Material Markups Twice a Year

Many trades businesses fall into the trap of using a 'set and forget' markup percentage for materials. While this keeps your quoting process simple, it ignores the reality that supplier prices and your own administrative costs change frequently throughout the year.

When the price of copper, timber, or specialty hardware spikes, your flat markup might cover the product cost, but it often fails to cover the time spent ordering, picking up, and managing that stock. Failing to adjust these numbers means you are essentially paying for the logistical work out of your own profit margin.

We recommend conducting a material markup audit at least twice a year. Compare your actual purchase prices against your recent invoices to see if your margins are holding up as expected across different supplier accounts.

If you find that your margins are shrinking, it is time to have a frank conversation with your clients about updated pricing or to renegotiate better trade rates with your local suppliers. Being proactive about your margins is the easiest way to ensure your business remains profitable as you take on larger projects.

Remember that your pricing strategy should reflect your expertise and the value you provide, not just the raw cost of goods. By regularly reviewing these figures, you ensure that every job you complete contributes properly to your business growth rather than just keeping you busy.