Why Tradies Lose Money on Materials (And How to Stop It)
If your trade business turns over $200K+ in materials each year, there's a good chance you're losing between $30,000 and $60,000 of it. Not to theft. Not to supplier errors. To four simple, fixable process failures that most trade businesses never even notice — because the money doesn't disappear dramatically, it just quietly doesn't show up as profit.
The Problem, The Fix, and The Tool
The Numbers That Should Make You Uncomfortable
Let's be direct about this. A plumbing or electrical business billing $800K/year typically has a materials cost somewhere between $180K and $280K annually. That's a lot of money flowing through your business in the form of pipe, fittings, conduit, wire, and van stock — and most of it is tracked loosely at best.
The average across the businesses I've spoken to: somewhere between 15% and 30% of materials spend doesn't make it back into revenue. Some of it was never charged. Some was charged at cost with no markup. Some was wasted or left on site. Some was ordered and went missing between the supplier and the job.
On $200K of annual materials spend, that's $30,000 to $60,000 per year. On $400K of spend, it doubles. This isn't a rounding error — it's the difference between a business that's profitable and one that's busy but barely breaking even.
The good news: there are four specific failure points causing most of this loss, and each one has a practical fix. Here they are.
The Four Money Leaks
Not Charging Markup on Materials
This is the most common and most expensive leak. Most tradies pass materials at cost — or close to it — and absorb the procurement time, the carrying cost, the wastage, and the risk of price changes into their labour rate. That's a mistake.
The industry standard for materials markup in Australian trade businesses is 15–25%. A 20% markup on $200,000 of annual materials spend is an extra $40,000 in revenue — revenue that doesn't require a single extra job. It's just pricing correctly.
To be clear: markup is transparent and standard. You're not hiding it from your clients — you're charging for your procurement expertise, the risk of holding materials, and the cost of having the right materials on the job when you need them. Clients in every trade expect it. If a client pushes back on materials markup, that's a pricing conversation worth having, not a reason to drop the charge.
Van Stock That Never Gets Charged
Your technicians carry hundreds of dollars of small fittings, connectors, clips, and consumables in their vans. When a $20 fitting goes onto a job — pulled from the van, not ordered specifically for the job — it's extremely unlikely to ever appear on the invoice. The tech doesn't write it down. The office doesn't know it happened. The cost hits your account. The revenue doesn't.
Run the maths on this. If each technician uses $15–$30 of uncharged van stock per job, and you're doing 200 jobs per year per technician, that's $3,000–$6,000 per tech per year in pure margin walking out the door in small increments. For a team of five technicians, that's up to $30,000 annually.
The material isn't expensive on its own — it's the volume and the invisibility that makes it lethal. Small items that go uncharged are the slow leak in the bath that never quite empties but never has any water in it either.
Over-Ordering and Write-Off
Ordering more than you need "just in case" is a deeply human instinct, particularly in trades where running out of materials mid-job is genuinely painful. The cost: unused materials that get left on site, absorbed into overhead, or written off. Worst case: left with the client, who got $400 of pipe fittings as a parting gift.
Over-ordering is often correlated with poor quoting. When you don't have accurate materials quantities in your quote (because you're estimating from memory rather than a catalogue), you order conservatively — which means ordering more. The fix is upstream: better quoting accuracy means you order what you need, not a buffer.
The less obvious version of this leak: materials ordered for a job that gets cancelled or reduced in scope, where the materials have already arrived. Without a returns process and someone tracking the order, those materials disappear into cost of goods with no offsetting revenue.
Not Reconciling Supplier Invoices
Your supplier charges you for 10 units of a fitting. You can account for 8 going onto specific jobs. The other two: unknown. Over a year of trading, across dozens of suppliers and thousands of line items, these discrepancies add up to real money — money you're paying for that's not making it into revenue.
The reconciliation gap also works the other way: you know you used 12 units on that job, but the supplier only charged you for 10. If you quote based on your actual cost record rather than the invoice, you've under-quoted yourself. Consistent reconciliation creates accurate cost data, which creates accurate quoting, which creates accurate margins.
Most trade businesses have no systematic reconciliation process. The accounts person matches invoices to orders at the "does this look about right?" level and approves payment. That's not reconciliation — that's approval. Real reconciliation compares invoice quantities and prices against what was received and what was used, job by job.
Fixes That Don't Require Enterprise Software
You don't need to spend $15,000 on implementation to stop losing money on materials. The low-tech version of each fix works. Here's the minimum viable approach for each leak:
Default markup in your quote template
Whatever you use to quote — software or spreadsheet — add a markup column that defaults to 20%. Remove it when appropriate; don't add it case by case. Default to charging it.
Simple van stock sheet
A shared Google Sheet with your common van stock items. Techs record what they used at the end of each job. The office adds it to the invoice. That's it. Takes two minutes to set up a template.
Quote from a materials catalogue
Build a standard materials list for your most common job types. Use actual quantities from the list, not estimates. Order to the list. The variance between estimate and actual drops immediately.
End-of-job materials reconciliation habit
Before invoicing each job, compare what was ordered (PO) against what the tech recorded as used. Any gap is a question worth answering. Five minutes per job, every job, builds a culture of accountability.
When to Invest in Proper Inventory Software
The spreadsheet fixes above work. But they have a ceiling: they rely on human discipline, they don't enforce process, and they don't give you the visibility to know when the leaks are getting worse.
If your materials spend is above $100,000 per year, the maths on inventory software starts looking very different. AroFlo starts at around $65/user/month — roughly $780/year for a single user. If that user's job is to manage materials, and the platform recovers even $5,000 in uncharged or mis-priced materials in the first year, the ROI is immediate and obvious.
The real inflection point is usually around $150–200K in annual materials spend. Below that, disciplined manual processes can be enough. Above it, the volume of materials transactions makes software the more reliable option — not because humans are bad at reconciliation, but because the task becomes genuinely time-consuming at scale.
If you have multiple technicians each managing van stock, you're buying from multiple suppliers, and you're running 10+ active jobs at any time — that's the profile where AroFlo or simPRO transitions from "nice to have" to "you're probably losing more than the subscription costs you."
The Two Platforms Worth Considering
AroFlo is the platform to look at if materials management is the primary driver of your decision. Live pricing integrations with Reece, Tradelink, Rexel, and Coventry mean your quotes always reflect current supplier prices without manual updates. The van stock management is mobile-first and genuinely practical for technicians in the field — they can scan barcodes, record usage, and the system allocates costs to jobs automatically.
For businesses in plumbing, electrical, or HVAC buying high volumes from Australian trade suppliers, AroFlo's supplier integration alone can justify the cost. Every quote that uses outdated pricing is a quote with the wrong margin — AroFlo eliminates that problem.
Try AroFlo Free →simPRO is the enterprise option — best suited to businesses with 20+ staff, multiple trade divisions, complex commercial projects, and the need for deep reporting across all of it. The multi-division inventory management, real-time cost allocation to jobs, and advanced PO workflows are industry-leading. If your inventory problem is operational complexity rather than supplier pricing, simPRO has more depth.
The tradeoff: simPRO requires a proper implementation engagement — it's not a platform you trial independently. But if you've got the scale to justify it, the reporting and visibility it provides will change how you run your business.
Request a simPRO Demo →The $200K materials business losing $50K/year on uncharged materials: that's not a business problem, it's a process problem.
AroFlo's van stock and materials tracking starts at $65/month. That's $780/year to potentially recover $50,000. The maths are not complicated.
Try AroFlo Free →Frequently Asked Questions
The industry standard for materials markup in Australian trade businesses is 15–25%. This covers your procurement time, carrying cost, wastage, and the expertise involved in selecting the right materials. Markup is different from margin — a 25% markup (cost × 1.25) gives approximately 20% gross margin on materials. Some trades (electrical, HVAC) have higher standard markups due to specialised parts sourcing; plumbing fixtures are often lower due to price visibility to clients.
The most rigorous method is a job materials list — either in your job management software (ServiceM8, AroFlo, simPRO all support this) or in a simple paper or spreadsheet form. Best practice: record materials used at the end of each job, before leaving the site. AroFlo's mobile app lets you scan barcodes to record materials directly from the field, which is the most accurate and least time-consuming method for technicians.
Yes, if you regularly do jobs from materials carried in your van. Van stock tracking records what's in each van and automatically adjusts stock levels when materials are assigned to a job. The ROI is immediate: every uncharged item from the van is pure margin loss. simPRO and AroFlo both handle van stock well; even a simple spreadsheet stock sheet is better than nothing. If you have three or more technicians with stocked vans, the investment in a proper system is almost always justified.
Industry surveys suggest the average Australian tradie marks up materials by 10–15% — lower than the recommended 15–25%. The shortfall is typically due to underconfidence in charging markup and concern about client price sensitivity. In reality, clients expect a markup on materials — it's standard practice in every trade. If a client questions your materials markup, that's a conversation about value, not a reason to drop your prices. You're not a materials wholesaler; you're a trade professional who procures, manages, and warrants the materials you use.