Module 07 of 09
Job costing
Job costing is how you know whether you're actually making money on each job — not just on the business overall. Without it, busy can feel like profitable even when the math doesn't work out. This is one of the most valuable financial habits in any trade or project-based business.
Why overall profit doesn’t tell you enough
A landscaping business might finish the year with $20,000 in profit on $120,000 in revenue. That looks like a 17% net margin. But hidden inside that number: some jobs made excellent money, some barely broke even, and a few might have lost money once all costs are counted. Without job costing, the owner can't tell which is which — so they can't fix it.
Job costing assigns every cost to the specific job that caused it, then compares those costs to what the job actually paid. It answers: did this job make money? How much? Was it worth the time?
WHO JOB COSTING MATTERS MOST FOR
Trades and project-based service businesses — landscaping, construction, cleaning, renovation, catering, custom manufacturing. Any business where each job or project has its own costs and revenue. If you sell the same product at the same price every day, standard cost accounting is sufficient.
In this Module
Why job costing matters
Three cost components
Job cost calculator
Using the data
Simple tracking habit
Related Modules
Pricing
Bookkeeping basics
Starting a trades business
The three components of job cost
Direct labor: The actual hours spent on this job, multiplied by your true hourly labor cost. Your true hourly labor cost is not just the wage — it includes payroll taxes (~7.65%), workers' comp insurance, and any benefits. A $20/hr employee typically costs $24–$28/hr fully loaded.
Direct materials: Everything you buy specifically for this job — lumber, plants, mulch, paint, cleaning supplies. Use the actual purchase cost, including delivery fees.
Allocated overhead: Your share of fixed business costs — vehicle costs, insurance, tools, office costs, software — spread across each job based on hours worked. Overhead allocation is optional at first but important for an accurate picture of true job profitability.
THE OVERHEAD MISTAKE
Ignoring overhead when calculating job cost makes jobs look more profitable than they are. If your monthly overhead is $3,000 and you work 150 billable hours per month, your overhead cost per billable hour is $20. A 4-hour job that doesn't include $80 in overhead cost is understating its true cost.
Job cost calculator
Enter the details of a specific job to see its true cost and profit.
What to do with job cost data
The value of job costing is in the pattern it reveals over time. After tracking 10–20 jobs, you'll see which types of work are most profitable, which clients take more time than the job pays for, and which parts of a job consistently go over budget.
If jobs consistently underearn: The first place to look is labor hours — jobs almost always take longer than estimated. The second is materials — job costs often exceed the estimate because of small forgotten items. Build a 10–15% contingency into every estimate.
If some jobs earn well and others don't: Look for patterns in job type, size, or client. You may be underpricing certain service categories, or certain client types require significantly more coordination time than the job pays for.
THE DISCIPLINE THAT CHANGES PRICING
Most trades business owners who start tracking job costs raise their prices within 6 months — because they see for the first time exactly what each job actually costs. The data makes the conversation with yourself unavoidable.
A simple job costing habit
You don't need software. A simple spreadsheet with one row per job — date, job name, invoice amount, estimated hours, actual hours, material cost — builds the data you need. Review it monthly. Look for jobs that took significantly longer than estimated. Those are where your money is leaking.
When you're ready for software: QuickBooks, Jobber, ServiceTitan (trades), and Builder Trend (construction) all have built-in job costing features. Most connect directly to your invoicing so the revenue side is pre-filled.