Your supplier price is not the full job cost
Materials can also involve collection, delivery, storage, breakage, waste, returns and time spent sourcing the right product. Start with the actual purchase cost, then account for the work and risk involved in supplying it.
Keep your method consistent. Some businesses apply a material markup; others include sourcing time in labour or a separate charge. The important thing is that the quoted total covers your costs and is clear to the customer.
Know the difference between markup and margin
Markup is added to cost. Margin is the share of the selling price left after that cost. As a simple example, a $100 item sold for $125 has a 25% markup and a 20% gross margin, before other business costs. Mixing up the two can make a job less profitable than expected.
Before you send
- Check the current supplier price and availability.
- Allow for reasonable waste and delivery.
- Show material descriptions or specifications that affect the result.
- State how substitutions or price changes will be handled.
Make the total transparent
You do not need to expose every supplier invoice, but the customer should understand what you will supply and what they will pay. Show the final price clearly, including GST where applicable, and agree to variations before charging extra.