Who buys the materials is a pricing decision, a warranty decision and a cash-flow decision all at once, and most contractors treat it as a favor. If you supply, you carry the cost before you are paid, you carry the waste, and you warranty what you fitted, so you charge a markup for it. If the customer supplies, you have given away that markup and taken on the risk of the wrong item arriving late, and you need it in writing before you agree. Here is how each version works, and the exact lines to put in the quote.
The three ways it gets done
You supply everything. The normal arrangement, and the one to default to. You buy the materials, mark them up, and the customer buys a finished job rather than a shopping list. It is simplest for them and it is where your margin and your control both live.
The customer supplies specified items. Common in remodeling: they choose and buy the tile, the fixtures, the appliances, the vanity, and you fit them. Sometimes reasonable, always worth pricing properly, and never worth agreeing to informally.
The customer supplies everything. Rare and usually a warning sign. You are supplying labor only, so you are effectively on a day rate with none of the material margin, and every delay and every wrong item is a day you are on site with nothing to do.
Why you mark materials up
Marking materials up 15 to 25 percent is standard across the trades, and it is not a fee for ordering. It pays for five real things:
- You carry the money. You buy on day one and get paid later, sometimes much later. On a commercial job with retainage that gap can be months. That is your cash financing somebody else's project.
- You carry the waste. Cuts, offcuts, breakage, the extra you have to order because material comes in fixed sizes. Waste of around 10 percent is a normal allowance on many materials, and on tile with a pattern or a diagonal layout it is more.
- You carry the running around. Sourcing, quoting, ordering, checking the delivery, chasing the backorder, taking back the wrong item. None of that is billable time on its own and all of it is time.
- You carry the warranty. What you supplied and fitted, you are responsible for. If the fixture fails, that is your callback and your relationship with the supplier, not the customer's problem.
- You carry the price risk. On a fixed price quoted in March for a job in July, a material price rise comes out of your margin unless you protected against it.
Pass materials through at cost and you have given all five away and taught the customer that only your labor has value. The stack it belongs to is in How to price your work so you actually make money.
Should you show the markup separately?
Two schools, and the honest answer depends on the format of the job.
On a fixed price, do not itemize it. You are selling a finished job for one number. Breaking out "materials $4,000 plus 20 percent" invites a negotiation about a component of a price the customer already accepted as a whole. Show what is included, not how the number was built.
On time and materials or cost plus, you must state it. The whole model is that the customer sees actual costs, so the markup has to be a number in the agreement from the start. A markup a customer discovers on an invoice is a markup they will dispute, and they will be right to feel misled even though the percentage was fair.
The same logic applies to change orders. Lock a stated overhead-and-profit percentage for changes into the original contract so there is nothing to argue about when the job moves. Change orders: how to actually get paid for extra work has the mechanism and the Change Order Form is the template.
When the customer wants to supply the materials
Sometimes it is genuinely the right answer, usually when they want a specific thing, they have already bought it, or it is a high-value item they would rather choose and own themselves. It is a bad answer when they are doing it only to remove your markup, because everything the markup was paying for is still going to happen and now it happens to you for free.
If you agree, price the labor properly to reflect what you have lost and what you have taken on. That is not a penalty, it is the same total cost of doing the job arriving in a different column.
Then write these lines into the quote. Every one of them exists because of a job that went wrong without it:
- What exactly they are supplying, item by item, with model numbers where it matters.
- When it has to be on site, by date, and in whose care it sits when it arrives.
- That you are not responsible for the suitability, quality or warranty of anything you did not supply. This is the important one. If a customer-bought faucet fails in a year, you fitted it, you did not warrant it.
- That you will inspect on delivery and report anything obviously wrong, but that checking quantities and specifications against the design is their responsibility.
- What happens if it is late, short, wrong or damaged. Name the charge: a stated call-out or standby rate for a day your crew cannot work, and the right to reschedule to your next available slot rather than the next day.
- Who pays for a second delivery or a return.
- Shortfalls. If they order the quantity, they own the shortfall, including the waste allowance. Somebody who buys exactly the square footage on the drawing has bought too little tile.
The single most common failure is not a wrong item, it is a late one. Your crew arrives, the material is not there, and the day is gone. Without a standby clause you eat that day, and there is no version of the conversation afterwards where you get paid for it.
The purchase you make on their behalf still needs protecting
Even when you supply, two things are worth building into how you price and bill:
Take a deposit that covers the materials. The fastest way to go broke on a profitable job is to buy everything up front and collect at the end. A deposit sized to your early material and setup costs is standard and legal, but many states cap what a contractor may take on residential work as a dollar figure or a percentage, and some require it held in escrow. Stay inside your state's cap. Deposits and progress billing has the rule and the structure, and Progress Billing Pack is the paperwork.
Handle material price movement in the quote. On a fixed price with a long lead time, either put an expiration date on the quote, which you should be doing anyway, or name specific volatile items and say that the price holds for a stated number of days. Quietly absorbing a price rise is the least visible way a good job loses its margin.
There is also a supplier-side benefit worth taking. A trade account on net terms gives you 30 days of float on materials and builds business credit at the same time, and an early-payment discount like 2/10 net 30 is real money if you can take it. Business banking and building business credit covers setting that up.
Sales tax, briefly, because it changes the number
Whether you charge the customer sales tax on materials, and whether you are treated as the consumer of the materials or as a retailer reselling them, is decided by your state and it genuinely differs. In some states you pay tax when you buy and charge none on the invoice; in others you buy exempt for resale and charge tax on the sale. Get the treatment wrong and it surfaces at an audit, after you have spent the money. Do I charge my customer sales tax on a construction job? has the shape, and the answer for a customer-supplied item is not always the same as for one you bought.
Where to go next in this section
- How to price your work so you actually make money, where the markup sits in the stack.
- Day rate, fixed price, or time and materials: which should you quote?, because the format decides whether the markup is stated or not.
- How to write an estimate that wins the job and protects you, where the supply clauses go.
- How to explain your price when they say "that's a lot", for the customer who wants to buy it themselves to save money.
- Pricing residential vs commercial work: what actually changes, because supply is negotiated differently on each side.
- How to figure out how much concrete and material to order and the Material Quantity Sanity Check, so the quantity is right before anybody buys anything.
Common questions
How much should a contractor mark up materials?
Marking materials up 15 to 25 percent is standard across the trades and it is not a fee for placing an order. It pays for carrying the cost before you are paid, the waste that is unavoidable when material comes in fixed sizes, the sourcing and chasing and returning that never appears on an invoice, the warranty on what you supplied and fitted, and the risk that prices move between quoting and buying. Passing materials through at cost gives away all five and teaches the customer that only your labor has value. On a fixed price the markup sits inside the number; on time and materials it has to be stated in the agreement up front.
Should I let the customer buy their own materials?
Sometimes, and never informally. It is reasonable when they want a specific item, have already bought it, or would rather own a high-value piece themselves. It is a bad deal when the only purpose is to remove your markup, because everything that markup paid for still has to happen and now it happens to you for nothing. If you agree, price the labor to reflect what you have lost and taken on, and write down what they are supplying, when it must be on site, that you do not warrant anything you did not supply, and what you charge if a day is lost because the material is late, wrong or short.
Who is responsible if a customer-supplied item is faulty?
You are responsible for your installation, and they are responsible for the item, but only if you wrote that down before the work. Without it in the quote, a customer whose own faucet fails a year later will come to you, because you are the person who touched it. The clause to include is that you are not responsible for the suitability, quality, performance or warranty of any material you did not supply, that you will report anything obviously damaged on delivery, and that checking quantities and specifications against the design is theirs. Keep the packaging and the receipt where you can.
What happens if the customer's materials arrive late?
Whatever your quote says will happen, which is why the clause matters more than the delivery. Your crew turns up, the material is not there, and the day is gone with nothing to bill. Name the consequence in advance: a stated standby or call-out charge for a lost day, and the right to reschedule to your next available slot rather than the next morning. Do not agree to absorb it as goodwill. This is the single most common way a customer-supply arrangement costs a contractor real money, and it is completely avoidable with two sentences.
Should I show my materials markup on the quote?
It depends on the format. On a fixed price, no: you are selling a finished job for one number, and breaking out the material cost and the percentage invites a negotiation about a component of a price the customer already accepted whole. Show what is included, not how you built it. On time and materials or cost plus, yes, and it must be a stated number in the agreement from the beginning, because the entire model is that the customer sees the actual costs. A markup discovered on an invoice will be disputed even when the percentage was perfectly fair.
The honest bit
- The 15 to 25 percent markup range and the roughly 10 percent waste allowance are what the trades commonly use and what this site publishes elsewhere. Neither is a rule anyone enforces, and both move by material and by trade.
- There are no material prices in this guide. They move constantly and by region, and a figure here would be wrong within weeks.
- Deposit caps on residential work, and whether deposits must be held in escrow, are set by your state and several states enforce them. Check yours before sizing a deposit.
- Sales tax treatment of construction materials genuinely differs state by state, including whether you buy exempt for resale. Confirm it for your state and for the specific job.
- This is general guidance, not legal, tax or financial advice.
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