What markup should I use on materials?

Usually 15–30%, by risk: commodity items (standard paint, basic timber) 12–18%, specialist or slow-moving stock 25–35%, high-breakage items like tiles 20–30%.

Is 20% markup or 20% margin better?

Margin is what you keep. A 20% margin needs a 25% markup; a 20% markup is only a 16.7% margin. Most trades aim for a 20–25% margin on materials to absorb waste and price swings.

Should I use the same markup on labour and materials?

No. Your labour day rate already includes overhead; materials markup only compensates for sourcing, storage and risk. Keep them separate — the job-cost calculator combines them correctly.

If I'm not VAT-registered do I worry about VAT in my markup?

No — work in net figures and your prices are final. Once registered, your cost base is still net (you reclaim the VAT); you add 20% to the final price, the markup percentage doesn't change.

Markup vs margin: the mistake that costs tradespeople thousands

Updated July 2026 · a guide, not advice

Why this costs money

You say "I add 20%." Your mate says "I work on a 20% margin." You both think you're pricing the same. You're not — and one of you is losing money every job without knowing it. It isn't maths, it's language, and the language costs.

The definitions

Markup is on cost. Buy a radiator for £200, add 20% (£40), sell at £240.

Margin is on selling price. Same radiator: margin is £40 ÷ £240 = 16.7%, not 20%.

Add 20% and you keep 16.7% of the sale — not 20%. To actually keep 20% (a 20% margin) you must add 25% markup.

Conversion table

Markup	Actual margin
10%	9.1%
15%	13.0%
20%	16.7%
25%	20.0%
30%	23.1%
40%	28.6%
50%	33.3%

A 50% markup is only a 33% margin. Don't do this in your head — the markup calculator converts instantly.

What it costs across a year

A plasterer prices materials-only jobs at "20% margin" but actually adds 20% markup. On £500 of materials he charges £600 and keeps £100 — that's 16.7%, not 20%. To truly hit 20% he'd charge £625. Over 100 jobs a year that gap is £2,500 — the difference between a business that works and one that scrapes.

Say what you mean

Use one phrasing and stick to it: "I mark materials up 25%" (what you add to cost) or "I work on a 20% margin" (what you keep of the price). When a supplier, accountant or main contractor quotes a percentage, always ask: of cost, or of price?

Common mistakes

Calculating markup on VAT-inclusive cost — your cost is net; VAT passes through. Including it inflates your "markup." The VAT calculator keeps it straight.
One markup for everything — a boiler carries more risk than a tin of paint; vary it.
Never reviewing it — supplier prices rise; if your markup doesn't, your margin shrinks. Check quarterly.

Price the whole job — labour, materials and margin together — in the job-cost calculator.

Frequently asked questions

What markup should I use on materials?: Usually 15–30%, by risk: commodity items (standard paint, basic timber) 12–18%, specialist or slow-moving stock 25–35%, high-breakage items like tiles 20–30%.
Is 20% markup or 20% margin better?: Margin is what you keep. A 20% margin needs a 25% markup; a 20% markup is only a 16.7% margin. Most trades aim for a 20–25% margin on materials to absorb waste and price swings.
Should I use the same markup on labour and materials?: No. Your labour day rate already includes overhead; materials markup only compensates for sourcing, storage and risk. Keep them separate — the job-cost calculator combines them correctly.
If I'm not VAT-registered do I worry about VAT in my markup?: No — work in net figures and your prices are final. Once registered, your cost base is still net (you reclaim the VAT); you add 20% to the final price, the markup percentage doesn't change.