Definition

Job costing is the practice of tracking all costs (labor, materials, equipment, subcontractors, and overhead) to individual projects or jobs. It answers the question: “What did this job actually cost, and did we make money on it?” For contractors, every deck, remodel, or commercial build is a “job” with its own revenue and costs.

Why It Matters

Without job costing, you only see company-wide profit and loss. You cannot tell which types of work are profitable, which crews or subs perform best, or which jobs went over budget. Job costing is the foundation for bidding accurately, controlling costs during the project, and making strategic decisions about which work to pursue.

Field Example

A residential contractor builds a deck. Revenue from the customer is $12,000. Job cost breakdown: Materials $4,000, Labor $2,500, Subcontractors (e.g., permit runner, electrician) $1,200. Job profit = $4,300. Tracking this per job shows whether deck work is worth repeating at current pricing.

Calculation / Formula (if applicable)

Job Profit = Job Revenue − (Direct Labor + Direct Materials + Subcontractor Costs + Equipment Allocation + Allocated Overhead)

Software Application

Software should allow assigning every expense and (where applicable) revenue to a job. Support job-level reports: cost by category, budget vs. actual, and job profitability. Link estimates and change orders to the same job for full lifecycle visibility.

Tooltip Version

Job costing means tracking all labor, materials, subs, and equipment to each project so you know exactly what each job cost and whether it was profitable.

Job Costing