Job Costing 101: How Contractors Can Regain Control of Their Profits

Jan 12

Intro

Ever finished a job thinking it went great, only to realize you barely made any money? That’s what happens when you don’t have a real job costing system in place.

Job costing helps you understand where your money is really going on every job—from labor to materials to overhead—so you can price accurately, prevent losses, and scale with confidence.

In this post, we’ll walk through what job costing is, why it matters, and how to set it up using tools contractors already trust.

What Is Job Costing—and Why Does It Matter?

Job costing is the process of tracking all the costs associated with a specific project. That includes:

Direct labor
Materials and supplies
Equipment use
Subcontractors
Overhead allocation (trucks, fuel, insurance, admin time)

Without this info, you’re flying blind—and possibly underbidding work without even realizing it.

Bottom line: If you don’t know your cost per job, you don’t know your profit per job.

Step 1: Set Up Job Cost Codes

Break your jobs down into categories that you can track consistently. Use codes that reflect the actual phases of your work.

Example Job Cost Categories for a Paving Contractor:

101: Site Prep
102: Asphalt Delivery
103: Equipment Rental
104: Crew Labor
105: Final Grading and Finish
199: Miscellaneous/Overhead

You can create cost codes manually in a spreadsheet or in tools like QuickBooks Online or Knowify.

Step 2: Track Labor and Material Costs in Real Time

Have your crew track time to the job site and task using a mobile-friendly app like ClockShark or TSheets by QuickBooks.

Why it matters:

You’ll know exactly how long each task takes and whether you’re staying within budget on labor.

For materials, keep vendor receipts tied to job numbers, and record material deliveries as they arrive.

Step 3: Use Your CRM to Track Sales and Close Rates

Your CRM can play a key role in job costing, especially at the front end. With Pipedrive, you can:

Track what you estimated the job would cost
Compare it to the final numbers after the job is closed
Analyze which types of jobs are most profitable (and which aren’t worth the effort)

Step 4: Review and Analyze After Every Job

Once a job is complete, compare your actual costs to your original estimate.

Key questions to ask:

Did we make the profit we expected?
Which tasks went over budget—and why?
Did we under-price labor, materials, or both?
Should we raise pricing for future jobs like this?

Run this review as a 10–15 minute team huddle after each project, or weekly if you have high volume.

Step 5: Use Your Data to Price Better (and Grow Smarter)

The end goal of job costing isn’t just data—it’s better decisions. Use what you’ve learned to:

Adjust pricing on future jobs
Identify your most profitable job types
Cut or outsource low-margin services
Staff based on actual productivity, not guesses

Bonus: Share your profit dashboards with key employees to build a performance-driven culture.

Conclusion

Job costing doesn’t have to be complicated—but it does have to be consistent. With the right tools and a repeatable process, you can take control of your profits and build a business that’s not just busy, but actually profitable.

Need help setting up a job costing system that works for your team?

Book a free consultation with Columbus Business Consulting—we’ll help you turn your job data into smart decisions and real growth.

Job CostingQuickbooksSoftware Tools

Alex Sheedy