Job Costing Calculator
By BRIX Editorial Team · Updated
Job costing tracks what each job actually cost (labor, materials, subcontractors and other direct costs) and compares it to the estimate. Actual gross profit = revenue − actual cost. A $16,000 job estimated at a 35% margin that ran $1,320 over kept only 26.8%: a profit fade of 8.25 points.
- Estimated gross profit
- $5,600 (35.0%)
- Actual gross profit
- $4,280 (26.8%)
- Total cost over (+) / under (−) estimate
- +$1,320
- Labor variance
- +$720
- Materials variance
- +$450
- Subcontractors variance
- $0
- Other direct costs variance
- +$150
- Labor hours over (+) / under (−)
- 16
This job came in $1,320 over estimate and kept 26.8% instead of 35.0%, a 8.2-point margin fade. The biggest overrun was labor (+$720). Check whether the estimate's hours were too low or something on the job went wrong.
Key takeaways
- Job cost = labor hours × burdened rate + materials + subcontractors + other direct costs.
- Compare each cost line, estimated vs. actual. The total hides which line went wrong.
- Profit fade = estimated margin − actual margin. Track it on every job, not just the ones that felt bad.
- Approved change orders are revenue. Extra work you didn't bill is pure fade.
What is job costing?
Job costing means recording every direct cost against the job it belongs to, so you know what each job really made. Without it, you only see profit for the whole business at year end, and you can't tell the jobs that paid for everything from the ones that quietly lost money. See job costing for the full explanation.
Actual gross profit = (C + CO) − (H × R + M + S + D) Profit fade = estimated margin − actual margin
- C
- contract price
- CO
- approved, billed change orders
- H × R
- actual labor hours × burdened labor cost per hour
- M
- actual materials
- S
- subcontractors
- D
- other direct costs: permits, disposal, equipment rental
How to job cost a project
- 1
Start from the estimate, line by line.
Break the estimate into the same buckets you'll track: labor hours, materials, subs, other. If the estimate is one lump sum, you'll have nothing to compare to.
- 2
Track labor hours per job, daily.
Have crews clock in and out by job, not just by day. Labor is the line that drifts most and the hardest to rebuild from memory.
- 3
Code every bill to the job.
Supplier invoices, sub invoices, permit fees and dump tickets all get a job name or number. In QuickBooks, that means projects or classes; see how to do job costing in QuickBooks.
- 4
Add approved change orders to revenue.
Only work the customer signed for and you billed. Get it in writing before you do it; see change orders.
- 5
Compare and write down why.
For every line that ran over, note the cause: underestimated hours, price increase, return trip, scope creep. That note is what makes the next estimate better.
Job costing report: what to look at
| Cost line | Estimated | Actual | Variance | Variance % |
|---|---|---|---|---|
| Labor | $3,600 | $4,320 | +$720 | 20.0% |
| Materials | $4,200 | $4,650 | +$450 | 10.7% |
| Subcontractors | $2,000 | $2,000 | $0 | 0.0% |
| Other direct costs | $600 | $750 | +$150 | 25.0% |
| Total job cost | $10,400 | $11,720 | +$1,320 | 12.7% |
| Gross profit | $5,600 | $4,280 | −$1,320 | — |
| Gross margin | 35.0% | 26.8% | −8.25 pts | — |
Where jobs run over, by trade
Every trade has a line that drifts. Watch it first; it's where your estimates need the most work.
| Trade | Line that usually drifts | Typical cause |
|---|---|---|
| Remodeling and general contracting | Labor and materials | Hidden damage, owner-requested extras done without a change order |
| Roofing | Labor and disposal | Extra layers, rotted decking, weather days |
| HVAC installs | Labor and materials | Duct modifications, electrical upgrades, line-set replacement not in the quote |
| Plumbing | Labor | Seized fittings, access problems, return trips for parts |
| Electrical | Labor | Old wiring, panel or service issues found during the job |
| Landscaping and hardscape | Labor and equipment | Rock, poor soil, access for machines |
Common job costing mistakes
- Costing labor at the wage. Use burdened cost (wage plus taxes, comp and benefits) or every job looks more profitable than it was. See the labor burden calculator.
- Lumping materials onto one job. Buying for three jobs on one receipt and coding it to one ruins all three reports. Split the bill or use truck stock you charge out per job.
- Waiting until the job is done. On longer jobs, compare costs to date with percent complete every week so you can fix the problem while there's still budget left. See WIP reports.
- Doing extras without change orders. Work you didn't bill is the most common source of fade, and the easiest to fix.
- Never feeding results back into estimates. If bathrooms always run 20% over on labor, add 20% to the next estimate's hours.
Want a spreadsheet version? Use the job costing spreadsheet. To price the next job with what you learned, use the job pricing calculator.
Frequently asked questions
How do you calculate job costing?
Add every direct cost of the job: labor hours times burdened labor cost, materials, subcontractors, permits, disposal and equipment rental. Subtract the total from the job's revenue (contract plus approved change orders) to get gross profit, then divide by revenue for gross margin.
What is profit fade?
Profit fade is the drop between the margin you estimated and the margin you actually earned. A job estimated at 35% that finishes at 27% faded 8 points. Tracking it on every job shows whether your estimates are consistently optimistic.
Should overhead be included in job costing?
Track direct costs per job first; that's what gross profit measures. You can add an overhead allocation (for example, your overhead percentage of revenue) to see net profit per job, but keep it separate so you can tell estimating problems from overhead problems.
How often should I job cost?
On every job when it closes. For jobs longer than a couple of weeks, compare costs to date against progress weekly, so overruns show up while you can still do something about them.
What's the difference between job costing and estimating?
Estimating predicts what a job will cost before you start. Job costing records what it actually cost. You need both: job costing is how you find out whether your estimates are right.
Can I do job costing in QuickBooks?
Yes, on the right plan. Intuit lists Projects, its job costing feature, as available in QuickBooks Online Plus and Advanced. You code bills, labor and invoices to each project and run profitability reports. The key is coding every cost to the right job as it comes in.
Related
- What Is Job Costing?Job costing tracks what each job really cost vs. the estimate. What to track, a sample job cost report with variances, and a simple system for small crews.
- How to Do Job Costing in QuickBooks OnlineJob costing in QuickBooks Online: turn on Projects, set hourly cost rates, code bills and time to jobs, read project profit and avoid mistakes.
- What Is a Change Order?What a change order is, what it must include, how to price one with overhead and profit, and how to track change orders so extra work gets paid.
- What Is a WIP Report (Work-in-Progress Schedule)?What a construction WIP report is, every column explained, a four-job worked example with over and under billings, how to read it, and mistakes to avoid.
- Job Costing Spreadsheet TemplateFree job costing spreadsheet for contractors: estimated vs. actual cost by category, gross margin, overhead and net profit per job, plus a cost log.
- Job Pricing Calculator for ContractorsPrice any job for profit: enter labor hours, burdened rate, materials, overhead and target profit to get the price to quote, your margin and markup.
- Labor Burden CalculatorCalculate labor burden with 2026 payroll tax rates, workers' comp, benefits, PTO and unbillable time. See an employee's true cost per billable hour.
- Bookkeeping for contractors that keeps your books tax-ready all yearContractor bookkeeping that stays current: categorized expenses, 1099 subcontractor tracking, sales tax and quarterly tax reminders, synced to QuickBooks.
- Maintenance Agreement Pricing CalculatorPrice HVAC, plumbing, pest control and lawn care maintenance agreements from your real costs. Get yearly and monthly prices, margin and tech hours needed.
- Markup and Margin CalculatorConvert markup to margin and margin to markup, or find both from cost and price. Free calculator with a markup-to-margin chart and trade examples.
Sources
- Intuit QuickBooks: Projects (job costing), plan availability (checked October 12, 2026)