What Is Job Costing?

By BRIX Editorial Team · Updated October 12, 2026

Job costing is tracking the actual cost of each job (materials, labor hours, subcontractors, equipment and permits) and comparing it with the estimate and the price. It shows which jobs made money and why. A $14,000 roof estimated at $9,600 of cost that actually cost $10,900 lost $1,300 of profit to overruns.

Key takeaways

Job costing answers one question per job: did this job make the money we priced it to make?
Track the same cost buckets you estimate with: materials, burdened labor, subcontractors, equipment, and permits or disposal.
Labor hours by job are the hardest and most important number. Without them, job costing is guesswork.
The value is in the variance: estimated vs. actual, line by line, so you can fix the estimate or the field process next time.
A small contractor can job cost with tagged receipts, timesheets by job and a simple report. Fancy software helps, but discipline matters more.

How does job costing work?

Job costing works by giving every job its own ledger. Each material purchase, each hour a tech works, each sub invoice and each rental gets tagged to the job it was for. When the job closes, you add those costs up, compare them with what you estimated, and subtract them from what you billed. The result is the job's real gross profit.

Job costing formulas

Job gross profit = Job revenue − Actual job cost   |   Variance = Actual cost − Estimated cost

Job revenue: everything billed on the job, including approved change orders, before sales tax
Actual job cost: materials + burdened labor + subcontractors + equipment + permits and disposal tagged to the job
Variance: positive means the job cost more than estimated (an overrun)

Sample job cost report (same roof, illustrative)
Cost bucket	Estimated	Actual	Variance	Note
Materials	$5,200	$5,710	+$510	Missed valley in takeoff; extra flashing
Burdened labor	$3,800	$4,340	+$540	Rain day: 12 extra crew-hours at $45
Dumpster and disposal	$350	$600	+$250	Second dumpster
Permit	$250	$250	$0
Total cost	$9,600	$10,900	+$1,300
Revenue	$14,000	$14,000		No change order written
Gross profit	$4,400	$3,100	−$1,300	Margin 31.4% → 22.1%

Want to run this on your own jobs? The job costing calculator lays out estimated vs. actual by bucket, and the job costing spreadsheet gives you a template to track every job.

What costs should you track on each job?

Track every cost that exists because of the job, in the same buckets you use to estimate. If your estimate has a line for materials, labor, subs and disposal, your job cost report needs the same four lines, or you can't compare them.

Materials and equipment: supplier invoices and receipts tagged with the job name or number, plus parts pulled from truck stock.
Labor: hours per tech per job, multiplied by each tech's burdened labor cost, not just their wage.
Subcontractors: sub invoices assigned to the job.
Equipment and rentals: lifts, excavators, jetters rented for the job.
Permits, dumpsters, disposal and inspection fees.
Overhead (optional): some shops allocate an overhead rate per labor hour to see net profit per job. Start with gross profit; add overhead allocation once the basics are reliable.

Job costing by trade

Every trade job costs differently, and the cost that usually blows up is different too. Focus your tracking on the line that moves.

Where job costs go wrong, by trade
Trade	Cost that drifts most	What to track	Typical fix
HVAC	Install labor hours on replacements; extra parts on service	Crew-hours per install by system type; parts used vs. pricebook	Update install hour standards by system type
Plumbing	Labor on diagnostics and repipes; second trips for parts	Hours per job, trips per job	Better truck stock and flat-rate task times
Electrical	Labor on old-house rewiring; wire and conduit	Hours by phase (rough-in, trim), material by circuit	Phase-level estimates; walkthrough before pricing
Roofing	Materials (waste, missed valleys) and weather days	Bundles ordered vs. used; crew-days	Measure-based takeoffs; weather contingency
Landscaping	Crew hours on installs; drive time on maintenance	Hours per property, per visit	Re-price routes that run long; tighter routing
Remodeling and GC	Scope creep and sub overruns	Change orders, sub invoices vs. bids	Signed change orders before extra work
Cleaning	Labor hours per visit	Clocked hours vs. quoted hours per home or site	Re-quote accounts that run over; adjust team size

How do small contractors set up job costing?

Small contractors can set up job costing in a week without new software: give every job a name or number, make sure every receipt and every hour is tagged to it, and review a report when each job closes. The habit is the hard part, not the tools.

1
Give every job an ID.
Use the customer name plus address or a job number, and use it everywhere: estimate, purchase orders, receipts, timesheets and invoice.
2
Tag hours by job.
Techs clock in and out per job, including drive time to the job. Daily paper timesheets work if they're filled out daily, not Friday from memory.
3
Tag every purchase.
Ask suppliers to put the job name on the invoice or PO. Photograph receipts and label them the same day.
4
Book it in your accounting.
In QuickBooks, assign costs to the customer or project. See how to do job costing in QuickBooks and classes vs. projects.
5
Review the job when it closes.
Compare estimated vs. actual for each bucket. Write down one thing to change in the next estimate.
6
Look at patterns monthly.
Which job types, crews or salespeople run over? That's where pricing or process needs to change.

Long jobs that span months need more than a close-out review. A work in progress report tracks cost to date against percent complete so overruns show up while there's still time to act.

Job costing vs. estimating

Estimating predicts what a job will cost before you do it; job costing records what it actually cost after. They're two halves of one loop. Without job costing, your estimates never get better, because you never learn which assumptions were wrong. Without good estimates, job costing has nothing to compare against.

Common job costing mistakes

Using wages instead of burdened labor. A $30 an hour tech can cost $40 or more an hour once payroll taxes, workers' comp and benefits are in.
Leaving drive time and shop time out. If it's paid and it's for the job, it's job cost.
Untagged truck stock. Parts pulled off the truck vanish from job cost unless techs record them.
Not writing change orders. Extra work without a signed change order shows up as an overrun instead of extra revenue.
Reviewing only at year-end. A pattern of overruns caught in month two saves the next ten jobs.
Blaming the crew for estimate errors. Variance tells you where to look; separate a bad takeoff from a slow job before you act.

Frequently asked questions

What is job costing in simple terms?

Job costing means adding up everything a specific job actually cost you (materials, labor hours, subs, rentals and permits) and comparing it with what you estimated and what you billed. It tells you which jobs made money, which lost money, and why.

Is job costing worth it for a small contractor?

Yes, especially for small contractors, because one underpriced job type can wipe out a month's profit. Basic job costing only needs hours and receipts tagged by job and a short review when each job closes. It's how estimates get more accurate over time.

What's the difference between job costing and process costing?

Job costing tracks costs for each unique job, which fits contractors because every roof, repair and install is different. Process costing averages costs across many identical units, which fits factories making the same product all day.

Should overhead be included in job costing?

It's optional. Start by tracking direct costs to see gross profit per job. Once that's reliable, you can allocate overhead with a rate per labor hour or per job to estimate net profit per job, but keep the allocation method simple and consistent.

How do you track labor hours by job?

Have techs clock in and out of each job, including drive time, on a phone app or a daily timesheet. Multiply each tech's hours by their burdened hourly cost. Daily entry matters: hours reconstructed on Friday are usually wrong.

Can I do job costing in QuickBooks?

Yes. QuickBooks lets you assign income and expenses to customers or projects, and some versions add classes or project profitability reports. Labor needs payroll or time entries assigned to the job. See the step-by-step guide on how to do job costing in QuickBooks.

How often should I review job costs?

Review each job when it closes, and review patterns across job types once a month. For long jobs, check cost to date against percent complete every week or two so overruns are caught while you can still fix them.