Material Pricing & Supplier Accounts

Guidance, not advice. General information on pricing materials and using supplier accounts. As at 2026; sanity-check against your own accountant's view.‍‌‌‌‌‌‌‌‌‌‌‌‌‌‍

This is the materials side of pricing — supplier accounts, the markup-versus-margin trap, and protecting your margin when prices move. It sits on top of your labour rate (see Setting Your Charge-Out Rate); here we deal with materials only.

Trade and supplier accounts

Builders' merchants and plumbing and electrical wholesalers offer trade accounts on either cash terms (discounted, pay on collection) or credit terms (buy now, pay later — commonly "30 days end of month", giving you roughly 30-60 days depending on when you buy). Credit limits often start at a few thousand dollars and grow with your trading history; trade accounts also give agreed trade pricing rather than shelf price. Expect a credit application (business details and ABN, references, estimated spend), a credit check, and sometimes a personal guarantee for a small company or sole trader. The discipline: treat credit as a cash-flow tool, not free money — line up the due dates with your customer payments so you're not funding materials out of your own pocket — and keep two merchants so you're not trapped if one cuts your limit, without spreading so thin you lose volume leverage.

Markup vs margin (the trap that underprices you)

These are not the same number, and confusing them quietly costs you money:

Markup is the percentage you add on top of cost. A $800 unit sold for $1,000 is a 25% markup — (1,000 − 800) / 800.
Margin (gross) is the percentage of the selling price that's profit. The same sale is a 20% margin — (1,000 − 800) / 1,000.

Markup is on cost; margin is on the selling price. A "20% margin" is not a "20% markup" — a 20% margin needs a 25% markup, and a 30% margin needs roughly a 43% markup. So decide your target material margin (say 25-35% gross, depending on trade and risk) and convert it to the markup you actually punch into a quote.

Three ways to price materials

Cost-plus markup — your net cost plus a fixed markup (say cost + 20-35%). Simple and it scales with price, but consistency slips if your merchant discounts vary.
Menu / standard prices — a "materials menu" of standard supply prices for common items, set behind the scenes to hit your target margin. Fast to quote and clear for clients, but needs maintaining as costs move.
Blended supply-and-fit — materials and labour in one line price, with the split tracked internally so you can still see the material margin. Simpler quotes and less quibbling, but easy to miss when material cost is eating the job's profit if you're not watching.

Whichever you pick, keep the logic clean: labour margin lives in your day rate; material margin lives in your markup policy.

Handling price rises mid-job

Material prices can jump between quote and supply and quietly wipe a fixed-price margin. Protect it with: a materials variation clause (if a material cost moves beyond, say, 10% between quote and supply, the price may be adjusted, with the merchant invoice as evidence); provisional sums or allowances for volatile items (state an allowance and adjust to the actual cost at purchase); and time-limited quotes (a clear expiry, after which you re-quote). Practically, ask suppliers for a fixed-price hold to match your quote validity, and for big-ticket items (steel, timber packages, big units) order early or ring-fence contingency. If a price spikes mid-job with no clause, have the conversation early and evidence-backed, and offer compromises (split the increase, swap a product, phase the work) — see Variations in Writing and Your First Quote, Contract & Insurance.

Supplier rebates

Some merchants offer rebates — effectively cash-back, often around 1-8% of your annual spend, paid as a credit when you hit a threshold. Treat a rebate as extra profit or a buffer, never something a job needs to break even (you'd be gambling on hitting an annual target), and be wary of upfront fees to join a "preferred" list — tying yourself to one supplier for a small rebate cuts the flexibility that's worth more to a small operator.