How to Track Job Costs and Stop Losing Money on Every Job

What Is Job Costing?

Job costing is the practice of tracking every cost that goes into a specific job — labour, materials, subcontractors, travel, equipment hire — and comparing it against what you quoted and invoiced.

It answers the question: did this job actually make money, and if so, how much?

Without job costing, you're flying blind. You might be winning jobs and staying busy while consistently under-earning on the jobs that take the most time.

Why Most Tradies Don't Do It

Job costing has a reputation for being complicated or time-consuming. In the past, it required spreadsheets, manual time tracking, and careful materials logging — which most tradies on the tools don't have time for.

But modern job management software makes basic job costing practical even for a one-person operation. The goal isn't to build a detailed cost accounting system — it's to know which jobs are profitable and which ones aren't.

The Four Costs to Track

1. Labour

Labour is usually your biggest cost and the hardest to track accurately if you're not disciplined about it.

For employees: use timesheets or time tracking in your job management software. Record start time, finish time, and travel time separately.

For yourself as the business owner: if you're on the tools, your time has a cost. Work out your effective hourly cost (including super, insurance, and the non-billable hours discussed in the hidden costs article) and apply it to every hour you spend on a job.

2. Materials

Materials costs are often tracked at the purchasing level (you know what you ordered) but not always at the job level (which materials went to which job).

The simplest fix: allocate purchase orders and supplier invoices to specific jobs as you go. If you buy materials for three different jobs in one trip, split the receipt. Most job management software lets you attach purchase orders to jobs.

3. Subcontractors

If you use subbies for specialist work, their invoices are a direct cost of the job. Keep them allocated to the specific job they relate to, not just coded to a generic "subcontractor" expense.

4. Other Direct Costs

• ✓Equipment hire specific to the job
• ✓Permit or inspection fees for the job
• ✓Waste disposal
• ✓Unusual travel costs (ferry, tolls, parking for a specific site)

The Job Costing Process

You don't need to build a sophisticated system. A basic process looks like this:

At quoting stage: - Record your estimated labour hours and cost - Record your estimated materials cost with margin - Record any other anticipated costs

During the job: - Log time spent (even rough daily totals are better than nothing) - Allocate materials purchases and subcontractor invoices to the job

At job completion: - Compare actual labour, materials, and other costs to your estimate - Calculate actual gross margin: (Invoice amount − Total job costs) ÷ Invoice amount

Monthly: - Review job margins across all completed jobs - Identify which job types, clients, or locations are most and least profitable

What a Healthy Gross Margin Looks Like

Gross margin targets vary by trade and business model, but as a rough guide:

If your margins are consistently below these ranges, you're either underpricing or your actual costs are higher than your quotes assume.

Using Job Management Software for Job Costing

The main advantage of job management software over spreadsheets is that cost tracking happens in the same place as job management — you're not maintaining a separate system.

When evaluating software, look for:

• ✓Ability to attach purchase orders and supplier invoices to jobs
• ✓Time tracking or timesheet functionality
• ✓Job profit summary showing revenue vs costs
• ✓The ability to compare quoted vs actual at job completion

The Most Valuable Insight: Your Actual Hourly Rate

Once you're tracking job costs consistently, you can calculate what you're actually earning per billable hour across your jobs — not what you're charging, but what's landing in your pocket after costs.

If you're charging $95/hr but your actual net after materials, travel, and overhead is $38/hr, you need to know that. Job costing is how you find out.

Key Takeaways

• ✓Job costing compares what a job actually cost you against what you quoted and invoiced
• ✓Track four things: labour, materials, subcontractors, and direct job costs
• ✓Even basic time tracking and materials allocation gives you far more visibility than nothing
• ✓Use job management software to keep cost tracking in the same workflow as job management
• ✓Review margins monthly to identify which job types and clients are most profitable