What counts as a job cost
Direct job costs are the costs you wouldn’t have if you hadn’t taken the job. They usually include:
- Field labor, ideally including payroll taxes and benefits tied to that labor
- Materials and supplies used on the job
- Subcontractors
- Equipment rental, and sometimes an allocation for owned equipment
- Permits, dumpsters and other job-specific fees
Office salaries, insurance, rent, software and most vehicle costs are usually overhead, not job costs.
Job gross margin
Subtract direct job costs from the job’s revenue and you get gross profit. Divide by revenue for gross margin. A job with $40,000 in revenue and $30,000 in direct costs has a $10,000 gross profit and a 25% gross margin. That margin still has to cover overhead before the business makes a profit. See gross margin vs. net profit.
The habits that make it work
- Consistent job coding. Every bill, receipt and timesheet tagged to the right job.
- Time tracked by job. Labor is usually the biggest variable, and the hardest to reconstruct later.
- Change orders recorded. So added revenue and added cost land on the same job.
- Timely data. Reports are only useful while you can still act on them.
Where to start
Many businesses start by comparing margins across a handful of recent jobs or work types rather than every project at once. Job-profitability reporting is part of our Profit & Cash Flow package, and initial setup can be handled as an implementation project.
This guide is general information, not tax, legal or accounting advice for your specific situation.