You're closing deals. Crews are working. Revenue is growing. But somehow, your margins keep shrinking and there's never enough cash at the end of the month.
The problem isn't your sales team or your pricing. At least, not directly. It's that you don't know the true cost of each job until it's too late. You're flying blind on profitability.
Without job-level costing, you can't tell the difference between a job that made you $8,000 and one that lost you $2,000. They both look like revenue. But one is building your business and the other is quietly destroying it.
Job costing fixes this. It gives you a clear, per-job view of where every dollar goes, so you can stop subsidizing bad work with good.
Job costing means tracking every dollar of cost, including labor, materials, equipment, and subcontractors, against each individual job. Not in aggregate. Not by department. Per job. This is how you find out which jobs make money and which ones don't.
Crews consistently take longer than estimated, but estimates never get updated. Your estimator quotes 8 hours and the crew takes 12. That's 50% more labor cost than you priced. And it happens on job after job.
Over-ordering materials, not tracking returns, and letting leftover stock sit in a truck bed or dumpster. Without a material reconciliation process, you're bleeding money on every job without realizing it.
Extra work done on-site because the customer asked, the scope was unclear, or the crew wanted to 'do the right thing.' Nobody logged it. Nobody billed it. These three leaks alone can eat 10 to 15% of your margin.
Start with your last 10 completed jobs. Compare estimated vs. actual costs for labor, materials, and subs. Look for patterns. Which job types consistently overrun? Which estimators are most accurate? Use this data to recalibrate your pricing.
Job costing only works if it's done on every job, not just the big ones. Build it into your project management workflow. Require field teams to log hours and materials daily. Review job profitability within one week of completion.
Gather the estimates and actual costs (labor hours, materials, subs) for your 10 most recent completed jobs.
For each job, calculate the variance between what you quoted and what you spent. Look for patterns. Which job types overrun?
Is it labor hours, material costs, or unbilled extras? Rank the leaks by dollar impact across all 10 jobs.
Require crews to log hours and materials at the end of every day. No exceptions. This is the data that makes job costing work.
Close out every job financially within one week. Compare actual margin to estimated margin and feed learnings back to your estimating team.
The Setup
A $5.1M roofing company completing 400+ jobs per year. The owner was confident in his pricing. He'd been in the business for 15 years and 'knew his numbers.'
The Problem
When we ran a job costing audit on his last 20 completed jobs, 7 of them had negative margins. Labor overruns averaged 35% on insurance restoration work, and unbilled extras were happening on nearly every job.
The Fix
We implemented daily time tracking, material reconciliation on every job, and a mandatory change order approval process. Estimators recalibrated labor hours using actual data instead of gut feel.
The Bonus
Within 90 days, average job margin increased from 28% to 41%. The 7 unprofitable job types were either repriced or dropped entirely, freeing up crew capacity for higher-margin work.
1) Do I need special software for job costing?
No. You can start with a spreadsheet. The key is tracking estimated vs. actual costs for labor, materials, and subs on every job. Software helps at scale, but the discipline matters more than the tool.
2) Should I job-cost every single job?
Yes. Small jobs leak just as much margin as large ones. Sometimes more. The overhead of tracking is minimal compared to the thousands you'll recover by spotting patterns across all job types.
3) What's a healthy gross margin for home service jobs?
It varies by trade, but most healthy home service businesses target 45 to 55% gross margin. If you're below 40%, you likely have pricing issues, labor overruns, or both.
Most contractors price based on gut feel or competitors. This framework shows you how to price based on your actual costs, overhead, and target margin.
From unbilled change orders to labor overruns, these five profit leaks are costing you thousands every month. Learn how to find and fix each one.
Use our free Valuation Calculator to estimate your company's worth in under 2 minutes — based on your actual revenue, EBITDA, and industry multiples. See where your value is leaking, and what it could be worth with the Clear Results operating system.
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