Tendering and estimating, 29 October 2026
Supply-and-fit vs labour-only: pricing and risk
Labour-only means you price your time and the main contractor buys the materials. Supply-and-fit means you buy them too and add a markup. Supply-and-fit earns more per job and gives you control of quality and delivery, but you carry the cash, the waste, price rises and any defects in the materials. Labour-only is lower risk and lower margin.
What's the difference in practice?
Who buys the materials, and so who carries the risks that come with them.
| Labour-only | Supply-and-fit | |
|---|---|---|
| Who orders materials | Main contractor or client | You |
| What you price | Labour, plant you bring, small consumables | Labour plus materials plus markup |
| Cash out before you're paid | Wages | Wages and the merchant bill |
| Waste and over-ordering | Client's cost | Your cost |
| Price rises after you quote | Client's problem | Yours, unless you qualified it |
| Late or wrong deliveries | You lose time; claim it | You lose time and pay for it |
| Material defects | Client deals with the supplier | You deal with the supplier |
| Margin on materials | None | Your markup |
Labour-only is common for subcontract trades on bigger sites: bricklayers, groundworkers, carpenters, roofers. Domestic work and specialist trades such as electrical, heating and fire protection are more often supply-and-fit.
How does each change your price and your margin?
Supply-and-fit adds the material cost and your markup to the price. That makes the job bigger and your profit in pounds higher, but the markup has to cover the extra risk and the cost of money tied up.
One £3,600-labour package, priced both ways
A small fencing and paving package for a main contractor: £3,600 of labour and £1,400 of materials at merchant price. CIS registered subbie at 20%.
| Labour-only pricelabour | £3,600 |
| CIS deducted (20% of labour)£3,600 × 0.20 | −£720 |
| Labour-only: paid to you | £2,880 |
| Supply-and-fit price: labour + materials + 15% markup£3,600 + £1,400 + £210 | £5,210 |
| CIS deducted (20% of price less materials you paid for)(£5,210 − £1,400) × 0.20 | −£762 |
| Supply-and-fit: paid to you | £4,448 |
| Extra earned on the materials£210 markup | £210 |
| Less 10% waste or over-order you can't return£1,400 × 0.10 | −£140 |
| What the materials earned after waste | £70 |
The £210 markup looks like profit until waste takes £140 of it, and an 8% price rise between quote and order (£112) would turn the remaining £70 into a £42 loss. That's the case for marking up properly. See material markup for tradespeople and, if your merchant prices move, keeping up with merchant price rises.
Keep receipts for the materials you buy for each job. If you don't have them, the contractor estimates the material cost, and an estimate is rarely in your favour. Ask your accountant how your markup is treated for CIS if you're unsure.
What are the risks of supply-and-fit?
Cash, waste, price movement, and getting paid on the full sum. You pay the merchant on their terms, perhaps 30 days from end of month, but you may not be paid for 30 to 60 days after you apply, less retention.
Ordering too much, stuff's getting wasted.
On a supply-and-fit job, every overorder comes out of your margin. A good take-off is the cheapest protection: see the quantity take-off guide and turning a bill of quantities into a material order.
Buying well matters as much. One national groundworks firm we spoke to cut its material costs by about 30% by switching suppliers on £300,000 to £400,000 a year of materials. On supply-and-fit work, savings like that go straight to you.
What are the risks of labour-only?
Waiting time, wrong materials and getting drawn into things you didn't price. If the main contractor's delivery is late, your gang stands; if the materials are wrong, you're blamed for the delay.
Protect a labour-only price with a few lines in your tender:
- Materials to be delivered to the work area, checked and in sufficient quantity before you start.
- Standing time caused by late or incorrect materials charged at a stated day rate.
- Fixings, sealants and consumables: say who supplies them, because it's the most argued line on labour-only jobs.
- Unloading, distribution and storage: say who does it.
Use the tender qualifications and exclusions template to word them.
Which suits the job in front of you?
Run the quick check. It won't decide for you, but it points to the questions that matter.
Mark materials up enough to cover waste, price rises and the cash tied up. State how long your price holds.
Quote supply-and-fit but list the drawings and quantities you priced, and exclude anything beyond them. Or offer labour-only as an option.
Price your time properly, including standing time, and set out who supplies fixings, unloading and storage.
Should you offer both in a tender?
If the tender allows it, yes. Pricing both lets the main contractor choose and shows you've thought about their buying. Keep the labour figure the same in both so the comparison is honest, and check the main contractor's payment terms before you commit to carrying materials.
Where Nexley fits
Nexley is the AI back office for UK trade firms: five AI assistants run your tenders, quotes, buying, scheduling and invoicing. It connects to the tools you already work in, you run it all from WhatsApp, and you approve everything. £799 a month.
For subcontract packages, Nexley reads the tender pack you forward on WhatsApp, takes off quantities, and prices the package both labour-only and supply-and-fit from your rates and your latest merchant prices, with CIS and VAT set out. You choose which to send and approve the price.
Common questions
What markup should I put on materials for supply-and-fit?
Enough to cover waste, price rises, the cost of carrying the bill and your time ordering. Many trades use 10% to 20%, but work it out from your own waste and payment terms rather than a rule of thumb.
Does the VAT reverse charge affect supply-and-fit?
It can apply to both. When you supply construction services to a VAT-registered contractor and the payment is reported under CIS, the domestic reverse charge usually applies to the invoice. Check HMRC's guidance on whether materials supplied with the service fall within it.
Can a main contractor make me use their materials on a supply-and-fit price?
Only if you agree. If they switch to free-issue materials after you've priced supply-and-fit, the price should change. Treat it as a variation.
Is labour-only work always CIS?
If it's construction work for a contractor, yes. The contractor deducts CIS from your labour unless you have gross payment status.
Sources
- GOV.UK: CIS, make deductions and pay subcontractors
- GOV.UK: What you must do as a CIS subcontractor
- GOV.UK: What you must do as a CIS contractor
- GOV.UK: How to use the VAT reverse charge if you supply building and construction services
Every rule, rate and date above was checked against these sources on the date shown at the top.
Topic: Tendering and estimating
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