Rosa, Bill and Ray: what a fair materials markup looks like

Your contractor hands you the bid. Materials: $4,000. Here's the question most homeowners never ask: Did they actually pay $4,000 for it?

Usually, no. And most of the time, that's fine. Here's how to tell the fine kind from the kind that isn't.

Rosa, Bill, and a $4,000 line

Rosa is redoing her kitchen. Her contractor, Bill, quotes $4,000 for materials. Bill really pays $3,450 at the supply house. The other $550 is his markup - about 16%.

Is Bill ripping Rosa off? No. Bill told her up front: "Materials include my markup for sourcing and delivery." That $550 pays for real work:

• Finding the right cabinets and comparing suppliers
• Driving to pick it all up - truck, gas, half a day
• Taking the risk if something shows up cracked or wrong
• Standing behind it if it fails later

Verdict: normal. A markup that's told to you is just a price.

Same kitchen, different contractor

Now say Rosa hired Ray instead. Rosa wants a new fridge too. The store can't deliver for three weeks. So Ray rents a truck, brings his helper, and picks it up himself. That's real work - a truck, half a day, and two sets of hands.

Ray's bill says: Refrigerator - $3,400. He never mentions a markup. Rosa thinks $3,400 is the price.

Months later, a friend opens Rosa's fridge and reads the model number. "I just bought this exact one," she says. "$2,100 at the store."

That's $1,300 on top - about 60%. Some of it paid for real work. But Rosa never knew any of it was there.

Ray didn't technically lie. But Rosa feels tricked - and she's not wrong.

Verdict: this is where it crosses the line. Not the markup. The silence.

When it really is a scam

Some moves are never okay:

• Padding the receipt - then marking up the padded number
• Billing for leftovers - tile from another job, charged to you as new
• Charging twice - billing the same materials again months later, betting nobody kept track
• A surprise "handling fee" - stacked on top of a markup, never in the contract

Did you know?

• Most contractors mark up materials 7% to 20%.
• Many general contractors land around 15% to 20%.
• Special-order items that can't be returned can run 35% or more.
• In high-cost areas, 30% to 50% isn't unusual.
• Builders report about 5.7% of a home's price goes to overhead and 11% to profit. (NAHB, 2024 data)

So 10% to 20% is normal. The number isn't the red flag. Not being told is.

What to do

• Ask: "Is there a markup on materials? About how much?"
• Ask for a list - what's being bought, about how much, and who's buying it.
• Get it in writing before work starts.
• Keep your own record of every payment. The double charge only works when nobody else is counting.

How PayBild does it

PayBild's Materials Card makes this simple:

• One flat 10% sourcing fee for your Pro - in the contract, before anything is bought.
• It's 10% of what's actually spent - not 10% of the budget.
• You see every purchase, with a receipt, as it happens.
• Whatever isn't spent comes back to you - with the sourcing and fees you paid on it.

Your Pro still gets paid for the real work. You just never get surprised.

See how the Materials Card works

---

Sources: National Association of Home Builders, "Cost of Constructing a Home" (2024 data, published January 2025). Markup ranges come from multiple construction cost guides and pricing surveys and vary by region and material. Rosa, Bill and Ray are made-up examples. General information, not legal or financial advice.