Why does my contractor charge markup on materials?

Material markup is a standard business practice where contractors add 10-20% to material costs to cover procurement services, warranty responsibility, and business overhead. This isn't just profit-taking — your contractor is providing valuable services beyond simply purchasing items.

When contractors mark up materials, they're covering several important services you benefit from. They handle all the sourcing, ordering, delivery coordination, and quality control. More importantly, they take full responsibility if materials are defective, damaged, or wrong for the application. If your flooring arrives warped or your fixtures are the wrong size, your contractor handles the returns, exchanges, and delays — not you. They also leverage their trade accounts to get better pricing than retail, often passing some of those savings along even after markup.

Professional contractors also provide material warranties and project coordination that you can't get as a homeowner buying direct. They know which suppliers are reliable, which products work best in Toronto's climate, and how to time deliveries to keep your project on schedule. During Toronto's busy construction season (April through October), contractors with established supplier relationships can often secure materials faster than homeowners dealing with supply shortages.

In the Greater Toronto Area, typical material markups range from 10-15% for basic contractors to 20-25% for full-service renovation companies. Higher-end contractors often provide more comprehensive material management, including design consultation, sample coordination, and handling all the logistics. Some contractors offer "cost-plus" pricing where you pay actual material costs plus a management fee, while others build markup into their overall project pricing.

The key is transparency — reputable contractors should clearly explain their material pricing structure upfront. Be wary of contractors who won't discuss markup or seem evasive about material costs. A professional contractor will show you how their markup covers real services and often saves you money compared to managing materials yourself, especially when you factor in your time, potential mistakes, and lack of warranty protection.

For your next project, ask contractors to explain their material pricing approach during the quoting process. This helps you understand what services you're receiving and ensures you're comparing quotes fairly across different contractors.