Materials markup calculator

Materials markup is one of those numbers everyone applies but few write down anywhere — a flat "add 20%" habit that might be leaving money on the table on cheap items and pricing yourself out on expensive ones. This tool takes the trade price, your markup percentage, and the VAT rate that applies, and shows exactly what the customer sees on the quote or invoice, alongside the profit before VAT.

Markup, then VAT — in that order

VAT is charged on the price you sell at, not the price you paid — so it applies after the markup, not before. Get the order wrong and the maths quietly drifts: applying VAT to the trade price first and markup afterwards understates what the customer actually owes. Most materials sit at the standard 20% rate, but some work (certain energy-saving installations, for example) qualifies for the reduced 5% rate — worth checking against HMRC's current list if a job might qualify, since it changes what customers should be charged.

A worked example

A part costing £100 trade, marked up 25%, sits at £125 before VAT. Add the standard 20% VAT and the customer sees £150 on the invoice — £25 of that is pure profit on the item, separate from whatever's charged for fitting it. Drop the markup to 15% on the same £100 part and the customer price falls to £138, a difference worth knowing before it's quoted rather than after.

Why the markup number matters more than it feels like it should

A flat markup percentage applied without thinking tends to undercharge on small, fiddly parts that took just as long to source and fit as a big one, and overcharge on expensive one-off items where a smaller percentage still makes good money. It's worth checking the actual customer-facing price this tool gives you against what a merchant or a competing quote would charge for the same part — a markup that looks reasonable on paper can still look steep sitting next to a supplier's own trade counter price.

What this isn't

This is a single line item, not a full quote — labour, waste disposal, delivery charges and any reverse-charge VAT treatment on construction services aren't factored in here. If the job involves the VAT domestic reverse charge for construction (common on subcontracted work), the VAT reverse charge calculator handles that separately. Once the numbers are right, the invoice & quote generator turns them into something to actually send.