CONTRACTOR GLOSSARY · MONEY & BILLING
What is a Materials markup?
Materials markup is the percentage added to a contractor's material cost when billing the customer — covering procurement, handling, warranty risk, and profit on materials.
When a contractor buys materials for $1,000 and bills them at $1,200, that's a 20% markup. The markup isn't padding — it pays for real costs that live nowhere else: time spent ordering, picking up, returning, and restocking; carrying the cost between supply-house invoice and customer payment; warranty exposure on installed product; and the portion of overhead materials handling consumes.
Markup and margin are different numbers, and confusing them silently cuts your price: a 20% markup yields a 16.7% margin. (Markup is profit over cost; margin is profit over price.) Typical trade markups run roughly 10–35% depending on trade, job type, and how much handling the material involves — small-quantity, service-work materials carry higher markups than palletized commodity stock.
The leak to watch isn't the percentage — it's the receipts that never get billed at all. Materials billed at cost lose the markup; materials never billed lose everything. Tracking every supplier invoice per job until it's billed through is worth more than any markup debate.
Common questions
What's the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 25% markup equals a 20% margin. Pricing with the wrong one understates your price.
What is a typical contractor materials markup?
Commonly 10–35% depending on trade and job type — higher for small-quantity service work with real handling time, lower for high-volume commodity material on bid work.
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Permits to sign-off, T&M tags to signature, materials to billed through, retainage to released — built for subcontractors. Browse the full contractor glossary or the Massachusetts permit guide.
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