Job costing is the practice of finding out what a job actually cost you, after it is finished, rather than what you assumed when you priced it.
Most plumbing companies never do it, and the ones that start are usually surprised by which jobs lose money. It is rarely the big ones.
The four components
Materials, at what you paid, including the small items and including waste.
Labour, at loaded cost. Not the wage. Wage plus payroll taxes, workers compensation, liability insurance, paid non-billable time, and the vehicle and tools that hour consumes.
Direct job costs. Permit, disposal, equipment hire, subcontractor.
Overhead. The share of the office, insurance, advertising, software, accountant and owner's time that this job has to carry.
Leave out the fourth and every job looks profitable. Leave out the loaded part of the second and most of them look better than they are.
A worked service call
Routine call: clear a slow kitchen drain, 40 minutes on site, 35 minutes of driving, minimal materials. Billed at $185.
| Component | Cost |
|---|---|
| Materials and consumables | $12.00 |
| Labour, 1.25 hours at $53 loaded | $66.25 |
| Vehicle running cost for the trip | $14.00 |
| Job cost | $92.25 |
| Overhead at 30% of job cost | $27.68 |
| Total cost | $119.93 |
| Invoiced | $185.00 |
| Profit | $65.07, a 35% margin |
Healthy. Now change one thing: the drive is 70 minutes each way instead of 35 total.
| Component | Cost |
|---|---|
| Materials | $12.00 |
| Labour, 3 hours at $53 loaded | $159.00 |
| Vehicle | $38.00 |
| Overhead at 30% | $62.70 |
| Total cost | $271.70 |
| Invoiced | $185.00 |
| Result | A loss of $86.70 |
Same job, same invoice, same customer satisfaction. The difference is entirely drive time, which appears on no invoice and in most companies is not measured at all.
This is the finding that changes pricing: the jobs that lose money are usually small jobs a long way away. Not complicated jobs. Small ones.
What to do about it
Price a minimum that covers a realistic trip, not a best case trip.
Charge for travel beyond a radius, or decline outside it. Both are more honest than absorbing it and wondering where the profit went.
Cluster by area. Two jobs in one trip changes the arithmetic completely. This is most of what dispatch software is actually for.
Do not treat the minimum as a floor to apologise for. It is the number that makes the visit viable.
How to do it without it becoming a project
Costing every job is unrealistic. Costing a sample is not.
- Pick ten jobs a month, mixed across types.
- Record actual hours including travel, actual materials, and any direct costs.
- Apply your loaded labour rate and your overhead rate.
- Compare against what you invoiced.
- Look for the pattern, not the individual job.
Three months of that tells you more about your business than a year of looking at the bank balance. The job profit calculator does the arithmetic, and the overhead rate calculator gives you the percentage to apply.
What to do with what you find
Usually one of four things. Raise the price on the job type that loses. Reduce the cost, normally by cutting travel or improving first-time fix. Stop doing it, if it cannot be made to work. Or keep it deliberately as a loss leader that brings better work, which is a legitimate choice as long as it is a choice.
What is not a plan is continuing to do it without knowing.
Figures are illustrative. Your loaded labour rate, overhead percentage and vehicle costs are specific to your business, and the arithmetic matters more than the numbers used here.
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