Job costing for trade businesses: a simple way to start
Busy doesn't always mean profitable. Job costing shows you which jobs, crews and services actually make money.
Ask an HVAC, plumbing or electrical owner which jobs make the most money and you'll usually get a confident answer. Job costing is how you find out if that answer is right.
What job costing is
Job costing means tracking the revenue and direct costs of each job separately, instead of lumping everything into one big profit and loss. The result is a profit number for every job, and when you group jobs together, for every crew, customer type or service line.
The three costs to track
- Labor: technician hours on the job multiplied by what those hours really cost you, including payroll taxes and benefits, not just the hourly wage.
- Materials: equipment, parts and supplies bought for or pulled from stock for the job.
- Other direct costs: permits, equipment rentals, subcontractors and disposal fees tied to that job.
Overhead such as rent, office staff and insurance usually stays out of job cost. It gets covered by the gross profit your jobs produce.
How to start without overhauling everything
- Give every job an identifier and use it on invoices, purchase orders and timesheets. In QuickBooks Online that's usually a project or customer; in Xero, a tracking category or project.
- Tag costs as they happen. Supplier bills and card charges get assigned to a job when they're entered, not months later.
- Capture time by job. Your field service software may already do this. If not, a simple daily timesheet with job numbers works.
- Review a job profitability report monthly. Look for patterns: certain job types, crews or customers that consistently come in under target.
What owners usually discover
Common findings: small service calls that look busy but barely break even once drive time is counted, change orders that never got billed, and one or two job types that quietly carry the whole business. Each one is something you can act on, whether that's pricing, scheduling or what kind of work you go after.
Want to check your pricing quickly? Try the markup and margin calculator. Job costing is also available as an add-on to any monthly plan.