How Do You Know Which Jobs Actually Make Money?

What goes into the cost of one job

A job’s cost is every cost the company would not have spent if the job had not been done. Each line below comes from a record, not from memory.

• Labor hours on the job, from the timecard or the ticket, at the loaded cost of an hour: the wage plus what the company pays on top of it.
• What sits on top of the wage. Per the IRS, the employer pays 6.2 percent of wages for Social Security, up to that year’s wage base, and 1.45 percent for Medicare. Add unemployment tax, workers’ compensation at the rate on the company’s own policy, health coverage, retirement and paid time off. For scale, in the Bureau of Labor Statistics’ June 2026 figures for private industry, benefits, which BLS counts to include paid leave, overtime premiums, insurance, retirement and the legally required Social Security, Medicare, unemployment insurance and workers’ compensation, were 31.4 percent of employer compensation cost for installation, maintenance and repair occupations. The company’s own payroll register is the number to use.
• Materials and parts at what the company paid, including whatever was bought on a second run to the supply house. The hours of that run are labor on the same job.
• Subcontractors, equipment rental, permits and disposal fees charged to that job.
• Drive time and the truck. The Department of Labor’s hours-worked fact sheet says travel “from job site to job site during the workday” is work time and must be counted as hours worked, so those paid hours belong on a job or a route, not in a general bucket. That is a plain reading of a federal fact sheet, not legal advice; state rules can add their own. Miles cost the company’s own vehicle expense per mile. The IRS business standard mileage rate, 76 cents a mile for July through December 2026, is a tax-deduction rate, useful only as a cross-check.
• Callbacks. A second visit to fix the first one is a cost of the first job; warranty work on equipment that failed on its own belongs on its own tag. A callback booked as a new no-charge ticket makes the original job look better than it was and leaves a $0 ticket that looks like nobody’s fault. The guide to what an HVAC callback costs shows how to tie each return visit back to the job that caused it.

What stays out: office rent, office staff, the owner’s salary, marketing, software and the company’s general insurance. Those are overhead. If the owner still works on jobs, those hours go on the job at a field wage, like anyone else’s. Revenue minus the job costs above is the job’s gross profit; overhead is paid out of the gross profit of all jobs together, and what is left is the company’s operating profit. Spreading overhead across jobs by a formula is a later step, and done first it can bury the answer the first pass is meant to show.

How to track estimated vs. actual hours without new software

The estimate already holds the first half of the comparison, because a price for labor implies hours even when nobody wrote them down. The job’s paperwork holds the second half. The work is getting both numbers onto the same row, in this order.

• Before the job: the estimator writes the estimated hours on the work order, the job folder or the dispatch ticket. If the quote was priced in dollars only, divide its labor dollars by the hourly rate used to price it. A flat-rate price book can carry the hour figure behind each task, if it was built from one.
• During the job: the crew lead or technician records start and stop times against the job number, on the timecard, the ticket or a line in the job folder. Drive between jobs goes on its own line, so it can be counted by route instead of hiding inside one job’s hours.
• At invoicing: whoever closes the job fills one spreadsheet row — job number, customer, kind of work, estimated hours, actual hours, materials from the receipts or purchase orders, subcontractor costs and the invoice total. A job is not marked closed until its row exists.
• Before payroll closes: any hours with no job number go back to the person who worked them. The share of paid hours that never land on a job is a finding in its own right.

Last quarter can be rebuilt from records already on file: the payroll export for hours by person and day, the dispatch board for where each person was, supplier invoices and the invoice register. Mark rows rebuilt from the schedule as estimated, so nobody mistakes them for measured hours. Illustrative example: a hypothetical electrical contractor estimates a panel upgrade at 10 hours, and the timecards show 14, four of them spent waiting on a utility disconnect the quote never mentioned. That is not a crew problem. It is a line missing from the estimate, and the next quote can carry it.

Gross profit by job, by customer and by kind of work

With one row per job, the spreadsheet answers the question by sorting, with no formula beyond subtraction and one division. Revenue minus labor at loaded cost, materials, subcontractors and other direct costs is gross profit in dollars; gross profit divided by revenue is the gross margin. Then read it four ways.

• By job: sort on gross margin and read the bottom ten jobs of the quarter, with their estimated and actual hours side by side.
• By customer: total each customer’s jobs for the year and sort on gross profit dollars. A customer with a lot of revenue and thin gross profit can take more of the company’s time than one with less of both.
• By kind of work: tag every row once — install or replacement, service or repair, maintenance visit, project work, warranty — and total each tag. This is where an average hides the most.
• By estimator or crew: the same sort, used to find where estimates run short, not to grade people. A crew sent to the hardest jobs can show more overruns for that reason alone.

Illustrative example, with invented numbers: a hypothetical HVAC company tags one quarter’s jobs. Its 24 replacement installs bring in $288,000 against $201,600 in direct cost, a 30 percent gross margin. Its 520 service calls bring in $182,000 against $100,100, or 45 percent. Its 400 maintenance-agreement visits bring in $36,000 of agreement revenue against $40,000 in labor, drive and filters, a loss of $4,000. The quarter as a whole shows about 32 percent, and nothing in that figure says one kind of work ran below zero. Only the company’s own rows can say where its margin actually comes from.

Which customers or job types lose money, and what to do about them

A job or customer at the bottom of the sheet shows where to look, not what to do. The reason it lost money decides the fix, so name the reason first.

• Hours over the estimate on every job of one kind: the estimate is short. Rebuild the hour figure from last quarter’s actuals and price the next quote from it.
• Hours on estimate, but at a higher wage than the price assumed: the price has not moved since wages did. That is a price change, built from the job’s own wage rows.
• Extra work done and never billed: the gap sits between the request on site and the invoice. The fix is a written change order before the extra work starts, or the owner’s written decision to do it for nothing.
• Callbacks: the cost sits on the original job, and the cause sits upstream, in diagnosis, workmanship or a part. A callback list with a cause on each line says which.
• Drive time: the customer sits far off the route, or the job is so small that the drive outweighs the work. A trip charge, a minimum, or scheduling those jobs by area changes that.
• A price set to win the work: a reduced rate given once to close a deal and carried onto every job since. Decide whether it still earns anything.

For each one the decision comes from a short list: re-estimate, reprice, bill the extras, fix the cause of the return trips, re-route, or let the work go at the next renewal or quote. Some losing work is kept on purpose — maintenance visits that keep a customer for the next replacement, a small job for a customer whose large jobs pay well. That is a fair choice. Write it down as one, with its number next to it, and read the number again next quarter.

How often to review job costing, and who does it

Job costing read once a year is a post-mortem. Read on a fixed schedule by named people, it changes the next quote.

• Every job, at close: the person who invoices it fills its row. Nobody else has the paperwork in hand at that moment.
• Weekly, about half an hour: the estimator or service manager reads last week’s closed jobs that ran past their estimated hours by more than a threshold the owner sets once, and writes a reason next to each.
• Monthly: the bookkeeper checks that the month’s job costs add up to the direct labor and materials on the books. The difference is cost that never reached a job — hours with no job number, materials bought and never charged out — and it should shrink month to month.
• Monthly: the owner reads gross margin by kind of work and the ten customers with the lowest gross profit, each against its own previous months.
• Quarterly, and before any price change: the full sort by customer and by kind of work, and the decisions from the section above, each with a name and a date.

This guide prints no target margin. Margins differ by trade, by region and by the mix of work, and the comparison that holds up is the company against its own previous quarters. When one kind of work slips two months running, it goes on the next weekly review instead of waiting for the year-end numbers.

When this needs no outside help, and where the Review fits

All of this is meant to be run in-house. A company whose timecards carry job numbers and whose estimates hold hours can build the sheet in an afternoon and keep it with an hour a week. If the field software already reports estimated against actual hours by job, skip the spreadsheet and put that report on the weekly agenda.

An outside look earns its fee when the records do not connect: hours with no job number, estimates kept in someone’s email, extras agreed on site with no paper, callbacks booked as new tickets. The Revenue Review takes two weeks. From read-only exports of payroll, the job or dispatch records, supplier invoices and the invoice register, it sets estimated against actual hours and gross profit by job, customer and kind of work where the records support it, and ends in a written report that prices each gap as a monthly dollar figure. It changes no price and contacts no customer; those decisions stay with the owner. There are no client case studies on this site yet.

If it is unclear whether any of that is worth a fee, the next step is a free 20-minute call, where a company too small for the arithmetic is told so.