Mark up materials from what you really paid.
Your trade discount is part of your margin on parts and materials. Start from the list price, take off your discount, add your markup, and see whether you end up above or below what the customer could pay at the counter.
On Solo and up, snap the supplier receipt in Redline's Money tab and file it against the job, and Reports shows what the job made after materials.
Try Redline freeHow the math works
Your cost is the list price minus your supplier discount. Your sell price is that cost plus your markup percentage. Profit is the difference, and margin is profit divided by the sell price, so it's always a smaller percentage than the markup.
The last line compares your sell price with list. That's the number a customer sees if they look the part up. A modest markup on a good trade discount can land right around list, which is easy to defend. A low markup can put you under list, giving away the discount you earned with your account.
This is the materials side only. For marking up a whole job, labor included, the markup vs margin calculator works from total cost and price.
Worked example
A $500 list price at an example 15% supplier discount, so your cost is $425:
| Markup on cost | Sell price | Profit | Margin | Against list |
|---|---|---|---|---|
| 10% | $467.50 | $42.50 | 9.1% | $32.50 under |
| 25% | $531.25 | $106.25 | 20% | $31.25 over |
| 50% | $637.50 | $212.50 | 33.3% | $137.50 over |
The discount and markups are examples to show the math, not typical figures. Your supplier account sets your discount.
What to watch for
- Markup on materials isn't only profit. It pays for the supply house run, picking up the wrong part and going back, handling returns and carrying the warranty when a part fails.
- Big-ticket equipment (a condenser, a water heater, a garage door opener) often carries a lower percentage than small parts, because the dollars are bigger. Run each.
- Customer-supplied materials take your materials profit to zero. Price your labor knowing that, and say in your terms who warranties a part you didn't supply.
- Discounts change. Rerun this when your supplier pricing does.
- Card processing fees come out of the sell price. On a thin markup they can take a real bite.
Questions contractors ask
Is it fair to charge more than list?
Some trades do, and they're pricing the service around the part, not just the part: sourcing it, the trip to get it, the right part the first time, and standing behind it. Whether you go over list is your call. This shows you exactly where you land.
What's the difference between markup and margin here?
Markup is profit over your cost. Margin is profit over the sell price. A 25% markup on materials is a 20% margin. The markup vs margin calculator shows more pairs.
How does Redline track material costs?
Snap the supply house receipt in Money's Expenses tab and file it against the job (you type the vendor and amount; there's no scanning). Reports then shows profit per job after materials. Tell the chat your markup ("I mark parts up 25%") and memory saves it. Money is on Solo ($29 a month) and up. Redline doesn't keep a price book or inventory, so part prices come from you each time.
Related
Keep reading
- Markup vs margin calculatorSee profit, markup and margin on any job, or price for a target margin.
- Job profit calculatorSee what a job really makes after materials, labor and overhead.
- Expenses and reportsReceipts filed against the job, profit per job after materials, and CSV exports.
- Overhead rate calculatorOverhead as a share of revenue, per billable hour and as a markup on job cost.