Typical contractor markup on material

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philly

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I work for an OEM as part of an engineering team supporting design for design/build projects for a lot of industrial applications. On most of these projects we partner with outside local contractor firms to support the construction/installation phase of these projects. As an OEM we typically supply major equipment content with contractor supplying construction materials IE, wire, conduit, etc....

I was having a conversation with a colleague the other day trying to guess what most contractors put as markup on material for a project (non-labor items). The guesses ranged anywhere from 5%-20%.

I was wondering if anyone here would be willing to share typical markups on material from either their approach or past experience.

Thanks
 
philly said:
I work for an OEM as part of an engineering team supporting design for design/build projects for a lot of industrial applications. On most of these projects we partner with outside local contractor firms to support the construction/installation phase of these projects. As an OEM we typically supply major equipment content with contractor supplying construction materials IE, wire, conduit, etc....

I was having a conversation with a colleague the other day trying to guess what most contractors put as markup on material for a project (non-labor items). The guesses ranged anywhere from 5%-20%.

I was wondering if anyone here would be willing to share typical markups on material from either their approach or past experience.

Thanks
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Some mark up items well over 20%. Think anywhere between 20 and 35% is pretty common to expect, especially if ordering then installing right away. If you are a service company and stocking some items for convenience yet they don't typically move that fast, that is where higher markup possibly makes it worth keeping it in stock.
 
$0.01 to $0.49 x 6
$0.50 to $0.99 x 5.75
$1.00 to $1.49 x 5.5
$1.50 to $1.99 x 5.25
$2.00 to $2.49 x 5
$2.50 to $2.99 x 4.75
$3.00 to $3.99 x 4.5
$4.00 to $4.99 x 4.375
$5.00 to $5.99 x 4.25
$6.00 to $6.99 x 4.125
$7.00 to $7.99 x 4
$8.00 to $8.99 x 3.75
$9.00 to $9.99 x 3.625
$10.00 to $19.99 x 3.5
$20.00 to $29.99 x 3.375
$30.00 to $39.99 x 3.25
$40.00 to $49.99 x 3.125
$50.00 to $59.99 x 3
$60.00 to $69.99 x 2.75
$70.00 to $79.99 x 2.625
$80.00 to $89.99 x 2.5
$90.00 to $99.99 x 2.333
$100.00 to $139.99 x 2.25
$140.00 to $169.99 x 2.166
$170.00 to $199.99 x 2
$200.00 to $239.99 x 1.855
$240.00 to $269.99 x 1.823
$270.00 to $299.99 x 1.789
$300.00 to $349.99 x 1.75
$350.00 to $399.99 x 1.725
$400.00 to $499.99 x 1.6875
$500.00 to $749.99 x 1.6
$750.00 to $999.99 x 1.55
$1,000.00 to $1,499.99 x 1.5
$1,500.00 to $1,999.99 x 1.45
$2,000.00 to $2,999.99 x 1.4
$3,000.00 to $4,999.99 x 1.35
$5,000.00 to $9,999.99 x 1.3375
$10,000.00 to $24,999.99 x 1.3333
$25,000.00 to $49,999.99 x 1.33
$50,000.00+ x 1.3
 
480sparky said:
$0.01 to $0.49 x 6
$0.50 to $0.99 x 5.75
$1.00 to $1.49 x 5.5
$1.50 to $1.99 x 5.25
$2.00 to $2.49 x 5
$2.50 to $2.99 x 4.75
$3.00 to $3.99 x 4.5
$4.00 to $4.99 x 4.375
$5.00 to $5.99 x 4.25
$6.00 to $6.99 x 4.125
$7.00 to $7.99 x 4
$8.00 to $8.99 x 3.75
$9.00 to $9.99 x 3.625
$10.00 to $19.99 x 3.5
$20.00 to $29.99 x 3.375
$30.00 to $39.99 x 3.25
$40.00 to $49.99 x 3.125
$50.00 to $59.99 x 3
$60.00 to $69.99 x 2.75
$70.00 to $79.99 x 2.625
$80.00 to $89.99 x 2.5
$90.00 to $99.99 x 2.333
$100.00 to $139.99 x 2.25
$140.00 to $169.99 x 2.166
$170.00 to $199.99 x 2
$200.00 to $239.99 x 1.855
$240.00 to $269.99 x 1.823
$270.00 to $299.99 x 1.789
$300.00 to $349.99 x 1.75
$350.00 to $399.99 x 1.725
$400.00 to $499.99 x 1.6875
$500.00 to $749.99 x 1.6
$750.00 to $999.99 x 1.55
$1,000.00 to $1,499.99 x 1.5
$1,500.00 to $1,999.99 x 1.45
$2,000.00 to $2,999.99 x 1.4
$3,000.00 to $4,999.99 x 1.35
$5,000.00 to $9,999.99 x 1.3375
$10,000.00 to $24,999.99 x 1.3333
$25,000.00 to $49,999.99 x 1.33
$50,000.00+ x 1.3
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I see two different ways to sell a thousand foot reel of cable that cost you 29 cents a foot.

One is to sell one unit of a thousand feed that cost you $290 at 1.789 markup = 518.81

other is to sell 1000 units that cost 29 cents each at 6.0 markup = 1.74 times 1000 units = 1740. I'll pick this one, if customer doesn't complain.
 
For me it depends on the project. If its going to be a highly competitive bid, I usually have to stay at or below 10%. On fixture & gear that can go as low as 5-8%, and these are bids where we all land within 5% of each other. Some closer to 1%.

Less competitive bids I'll be at or above 15% profit. These figures don't include overhead %.
 
At the contractor I previously worked for, the basic markup was 210%. That's for stuff going out over the counter or to a service job. Installation material was lower, IIRC about 150%, and there were volume and other discounts applied, depending on circumstance.
 
rnatalie said:
Our local electrical supply store printed prices that were a bit more than twice what they charged us (we got a 55% discount). We'd show the catalog prices to the customers. No markup at all :)
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Supply houses deal with "list price" which is about double price

Then they give a so-called discount, usually based on volume.

I just charge double retail for materials on service work.
 

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For my company, the purpose of the material markup is to reimburse me for the expenses related to the material. I'm not attempting to make a profit on material. (Some other companies use material as a profit center.) The expenses I'm referring to are: researching the best material to use, researching where I can get the material, ordering the material, shipping costs, sale tax, the cost of the item, picking up the material, transporting the item to the job site, and an allowance for material that gets damaged while on the truck. These are all real expenses. Items I use routinely don't require much research, but items with specific requirements, (like a transfer switch) do require such research.

I find that doubling the retail price works out well on average except for very expensive items or when I am buying large quantities of the same product from the same location. In these cases, I calculate the actual costs and charge that instead. Since I try and keep a full stock of basic items on the service truck, I try to be efficient by limiting my trips to the supply house and purchasing as many items per trip as possible. This lowers the actual expense per item.

I have seen the chart that @480sparky posted before with people saying that they used it.
 
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We “target” 15% on materials and that’s a common number. On smaller jobs/materials we go for 20%.

Sales taxes average 7% most places and shipping averages 3%. At 15% that barely covers overhead for the labor involved in purchasing, which is why most engineering estimates use 15%.

Profit should be figured separately but most ECs are happy with 10% which puts the final markup at 26%. My employer charges high rates on labor and just makes materials a “pass through”.
 
philly said:
I work for an OEM as part of an engineering team supporting design for design/build projects for a lot of industrial applications. On most of these projects we partner with outside local contractor firms to support the construction/installation phase of these projects. As an OEM we typically supply major equipment content with contractor supplying construction materials IE, wire, conduit, etc....

I was having a conversation with a colleague the other day trying to guess what most contractors put as markup on material for a project (non-labor items). The guesses ranged anywhere from 5%-20%.

I was wondering if anyone here would be willing to share typical markups on material from either their approach or past experience.

Thanks
Click to expand...
Should be 30% markup
 
If you are itemizing items on an invoice, bid, etc. and have a large markup on them your client may scrutinize those costs. If you don't itemize them but have the same total cost they might not say a word about it.

Bottom line is if two contractors bid same job at nearly the same price but one marked materials up at a different rate than the other - the one with lower markup had added more to the bid in other areas. But cost to customer was still same either way.
 
brantmacga said:
For me it depends on the project. If its going to be a highly competitive bid, I usually have to stay at or below 10%. On fixture & gear that can go as low as 5-8%, and these are bids where we all land within 5% of each other. Some closer to 1%.

Less competitive bids I'll be at or above 15% profit. These figures don't include overhead %.
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It always depends on the mat/labor ratio at the bid summary.
If the owner furnished fixtures, gear, generator or any big ticket items...it becomes an all labor job, and my labor risk goes way up.
I look at margin dollars per man/hr and markup accordingly (as if I furnished everything)
 
Just about all of my overhead was driven by labor, so I decided to recover my overhead through my labor. Equipment (service gear and dock pedestals) would get 7% - 18% and "W" cable would get 10% to 20% depending on how I felt. :)

Most other materials would get 30% - 50% markup.

Just being honest.

ETA: If the customer wanted to supply some of the equipment, I would split the profit with him (keep 1/2 of it for myself). I didn't tell him that.
 
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