Material costs are one of the trickiest parts of running a tradie business in New Zealand. Charge too little and you're funding the client's renovation out of your own pocket. Charge too much and you lose the job. Get the timing wrong on a fixed-price quote and rising timber or steel prices can wipe out your margin entirely.
With Q1 2026 seeing price increases across timber, steel, aluminium, and glass, and the NZ construction market recovering after a sharp correction, getting your materials markup strategy right has never been more important.
This guide explains how to mark up materials properly in 2026 — and how to protect yourself when prices move.
What Is a Materials Markup (and Why It's Not Just Profit)?
Many NZ tradies undercharge for materials because they treat markup as pure profit. It isn't. Your materials markup needs to cover:
- Time to source and price materials — supplier calls, website quotes, comparison shopping
- Transport and delivery costs — your ute, courier charges, fuel
- Wastage and over-ordering — tile cuts, offcuts, broken stock
- Holding costs — materials you purchase before work begins, funded by your cashflow
- Admin — purchase orders, invoices, reconciling receipts against job costs
- Risk — if a product is unavailable and you need to substitute at higher cost
A 10% materials markup covers almost none of this. Most experienced NZ tradies should be marking up materials at 15–35% depending on trade and job type.
Standard Materials Markup Rates by Trade
These are realistic ranges used by established NZ trade businesses:
| Trade | Typical Materials Markup |
|---|---|
| Builder / Carpenter | 20–30% |
| Plumber | 25–40% |
| Electrician | 20–35% |
| Tiler / Floor Layer | 20–30% |
| Painter | 15–25% |
| Landscaper | 20–30% |
| Roofing | 15–25% |
| Drainlayer | 15–25% |
Higher markups are justified when materials are highly specialised, hard to source, or require significant time to procure. Plumbers and electricians typically sit at the higher end because fittings and components are highly variable and require expert specification.
If you're unsure where your rates sit, use the Job Cost Calculator to model your actual cost recovery across recent jobs.
Markup vs Margin — The Number That Matters
A 25% markup does not give you a 25% margin. This is the most common maths mistake in tradie quoting.
- Markup is calculated on cost: $100 cost + 25% = $125 sell price
- Margin is calculated on revenue: $25 profit ÷ $125 = 20% gross margin
If your accountant or business coach talks about gross margin targets (usually 35–50% for a healthy trade business), make sure you're converting that into the right markup percentage when you quote.
For a more detailed walkthrough, see our guide on markup vs margin for NZ tradies.
Fixed Price vs Cost-Plus for Materials
How you structure your quote affects how much materials risk you carry.
Fixed Price Materials
You quote a fixed dollar amount for materials. If the cost comes in higher, you wear the difference. If lower, you keep it.
Best for: Small jobs with predictable material lists and short timeframes (under 4 weeks). The pricing risk is low and clients like the certainty.
Watch out for: Supply disruptions, price escalation, substitutions. In 2026, fixed-price quotes on materials with lead times over 2–3 weeks are genuinely risky given ongoing supply variability.
Cost-Plus Materials
You charge the client the actual cost of materials, plus a fixed markup percentage or fee.
Best for: Larger projects, longer timelines, or jobs where the exact quantities can't be confirmed until work is underway. This is increasingly common for renovations and new builds in the current market.
Watch out for: Clients may ask for invoices to verify your costs. Keep your supplier invoices filed properly — IRD may also request them during an audit, and your markup must be consistently applied.
Which to Use in 2026?
For jobs over $10,000 in materials and/or any job running longer than 6 weeks, seriously consider cost-plus or include a price escalation clause. Timber prices, in particular, have been volatile this year.
Price Escalation Clauses: Protecting Your Quote
A price escalation clause allows you to revise your quoted materials price if supplier costs increase beyond a set threshold between quote and delivery.
A simple escalation clause might read:
"This quote is based on current supplier pricing as at [date]. If material costs increase by more than 5% prior to delivery, the variation will be charged to the client at cost."
Most residential clients will accept this if you explain it upfront, especially on larger jobs. It's increasingly standard in commercial and infrastructure work. You can include this as a standard term in your quote template — use our Quote Builder Wizard to build a professional template with supporting terms.
GST and Materials Markup
If you're GST-registered, you charge GST on the full amount you invoice — including your marked-up materials. You'll claim back the GST you paid on the original purchase.
Example: - You buy $500 of pipe fittings (exclusive of GST) - You mark up 30% = $650 ex-GST - You invoice $650 + $97.50 GST = $747.50 total - You claim back $75 GST on your purchase - Net GST payable to IRD: $22.50
Use the GST Calculator to check your figures before sending invoices.
The Investment Boost Deduction for Tool Purchases
One thing many NZ tradies haven't yet taken advantage of: the 20% Investment Boost deduction introduced by IRD from 22 May 2025. If you buy new equipment or tools for your business, you can claim an extra 20% depreciation deduction in the year of purchase.
For a tradie buying a $5,000 table saw or a $12,000 work trailer, this translates to a meaningful tax saving in your 2025/26 return. IRD's guidance on this is available at ird.govt.nz.
Tracking Materials Costs Properly
Accurate markup starts with accurate job costing. If you're not recording actual material costs against each job, you can't know whether your markup is working.
Apps like Fastcrew let you track time and materials against each job on-site from your phone, so your job cost data is real-time rather than reconstructed from receipts at month end. When you can see actual vs quoted materials on every job, you'll quickly spot if your markup is too thin.
A Quick Checklist Before You Quote Materials
- List materials by line item — don't lump them into a single "materials" figure
- Get real supplier prices — don't guess, especially on items with price variability
- Add wastage — typically 5–15% depending on trade and material type
- Apply your markup consistently — same rate for all materials on the job
- Add a price escalation clause for jobs over 6 weeks or $10,000 in materials
- Check your GST treatment — are you registered? Are materials GST-exclusive in your calc?
- File supplier invoices — IRD may ask, clients on cost-plus will often ask
Download our free NZ tradie templates at tradietools.nz/templates/ — including a quote template with a standard materials escalation clause built in.
NZ Tradie Tools provides free calculators, templates and guides for New Zealand tradies. Visit tradietools.nz.