A Tradie's Guide to Calculating and Managing Material Markups
20 September 2026 · 6 min read · By Heaney Accounting
Why Your Markup Matters
Many tradies fall into the trap of simply passing on the cost of materials without adding a sufficient markup. If you aren't accounting for the time spent sourcing, transporting, and managing materials, you are essentially losing money on every invoice.
The Difference Between Margin and Markup
Understanding the difference is key to your business growth. Markup is a percentage added to the cost price of a product, while margin is the percentage of the final selling price that is profit. Getting these definitions right ensures you don't underestimate your profit targets.
- Time spent driving to the wholesaler
- Warehouse storage and inventory costs
- Project administration and ordering time
- Warranty and replacement liability
- Your business's target profit margin
Pro Tip: Always review your markup strategy every six months. As fuel costs and supplier prices fluctuate, your fixed markup percentage might no longer cover your rising operating expenses.
- Total your monthly overheads like rent and insurance
- Divide by the number of jobs you complete
- Identify the material cost for an average job
- Add the required margin to ensure a net profit
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