Material markup explained

Markup on materials is one of the most under-thought parts of running a trade business. Tradies routinely apply a 10% markup, take a payment terms hit of 30 days, and end up effectively financing their suppliers for free. Karven defaults to a markup level that reflects the real cost of materials handling, and lets you adjust it transparently.

What markup actually covers

Markup isn't profit. Or rather, it isn't only profit. It covers:

• Cash float. You pay the supplier on 7- or 14-day terms; you bill the customer and get paid 30+ days later. The gap costs you.
• Returns and waste. A 5-8% materials waste factor is normal for most trades. You order it, you cut it, some of it ends up in the bin.
• Storage, handling, fuel. You're driving to Bunnings or the supplier yard. That's not free.
• Errors. Wrong colour, wrong size, change of mind by the customer. You wear the cost or the time.
• Margin. The profit bit. The reason the business exists.

A 10% markup covers roughly half of that list. A 25% markup covers most of it. A 35-40% markup is where you actually start banking margin from materials.

Karven's default

The default is 30% on most trades. Garage doors and entry doors are 25% because the unit costs are higher and the volume per quote tends to be larger. Concreting is 20% on the concrete itself and 35% on the trim items (saw cuts, sealing, formwork).

These numbers come from talking to a couple of dozen tradies running profitable shops. They're a starting point, not a target.

Where to change it

Settings → Calculator → Markup.

You can set markup three ways:

1. Single rate. One number applies to all materials. Simplest.
2. By material category. Different numbers for timber, fixings, sealants, fittings. Use this if you buy categories at very different terms.
3. By supplier. Different rate per supplier. Use this if you're getting trade pricing from one supplier and retail from another.

You can mix: set a default, then override by category or supplier.

Visible or hidden on the PDF

By default, Karven shows materials as a single bundled line with markup baked in. The customer sees "Materials: $X". They don't see your cost vs your sell.

If you want to itemise, show the materials list with each sell price, turn on Show materials breakdown in Settings → PDF. Some customers appreciate the transparency; others use it to start re-negotiating each line, so think about which kind of customer you serve.

There's also a middle path: itemise materials but show only your sell price, not your cost. Karven's PDF supports that.

Per-quote override

Inside a quote, you can override markup just for that job. Useful if it's a mate's rate or a referral-source customer where you want to show some love. Click the markup row in the breakdown, change the number, add a note ("Mark's referral, 15% markup").

The note appears in your audit log, never on the PDF.

What the receipts say

Some customers will ask for material receipts to "verify the cost". You're not legally obliged to provide them on a fixed-price quote, that's the whole point of a fixed-price quote. If you want to share them as a goodwill gesture, fine, but understand you're inviting line-by-line re-negotiation.

If you're billing cost plus (time and materials), then yes, receipts are appropriate, and Karven generates a "T&M invoice" that shows your supplier cost plus an agreed-in-writing markup percentage.

A real example

Decking job, $4,000 of timber at supplier cost.

• 10% markup: sell $4,400. Gross $400.
• 30% markup (Karven default): sell $5,200. Gross $1,200.
• 40% markup: sell $5,600. Gross $1,600.

The 30%-to-40% jump is $400. If you do six decks a month, that's $2,400 a month, $28,800 a year, that you're either banking or you're handing to your customers.

It's worth thinking about which one of those you'd rather do.

A common objection

"Won't customers go to another tradie if my markup is too high?"

The customer doesn't see your markup. They see one price for the job. The tradie who comes in cheaper is either taking less margin (their problem) or taking shortcuts (eventually, their reputation). Don't run your business by what an undercutter could charge, they'll be out of business in three years.