CONTRACTOR GLOSSARY · MATERIALS & PURCHASING
What is a Restocking fee?
A restocking fee is the charge a supplier deducts when taking back returned material — the price of un-buying what got over-ordered.
Returns aren't free money coming back. Standard stock in resellable condition usually goes back on the shelf, sometimes minus a restocking fee; special orders, custom-cut wire off the reel, and job-specific gear often don't go back at all. The policy varies by house and by item, and the time to learn it is before the special order, not at the return counter.
For a sub, the real cost of a return is the stack: the fee, the trip to bring it back, and the chase to make sure the credit actually appears. Over-ordering feels safe on the front end — nobody wants the crew standing around short a box of connectors — but a pattern of fat orders and fee'd returns isn't caution — it's a takeoff problem, and the fees are what it charges.
Every return should end in a credit memo, and the credit needs to land twice: on the supplier statement, and against the right job's cost. A return that's credited to the account but never to the job leaves that job's material cost overstated — which quietly distorts the next bid.
Common questions
What material usually can't be returned?
Special orders, custom-cut wire and cable, non-stock items brought in for one job, and anything opened or damaged — though policy varies by supply house. Ask about returnability before placing a special order.
How do you keep returns from eating margin?
Tighter takeoffs so there's less to return, prompt returns in original packaging with the original ticket, and follow-through: confirm the credit memo shows up on the statement and gets applied to the job that bought the material.
Related terms
RevnuPros tracks the thing, not just the word
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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