Intro

Job costing is how you know if a job made money. It tracks labour, materials, and other costs against your price. Simple job costing helps you bid right and avoid surprises. It does not need fancy software or long spreadsheets. Start small, keep it steady, and improve each week.

On most jobs, things change. A wall is crooked. A pipe is older than you thought. Without job costing, your margin slips. In this guide, you’ll learn what to track, how to track it fast, and how to use it to price better. You’ll also see simple tools and habits that fit real site work.

Quick Answer

Job costing means tracking labour hours, material spend, and extra costs by job and task. Keep clear cost codes, log time daily, save receipts, and compare to your estimate weekly. Use clean proposals and matching invoices to lock scope and price. This keeps your margins steady and your bids accurate.

Table of Contents

• What Is Job Costing And Why It Matters
• Set Up Simple Cost Codes
• Track Labour The Right Way
• Control Material Costs Without Extra Work
• Use Proposals And Invoices To Lock The Budget
• Review, Learn, And Improve Your Pricing

Key Takeaways

• Track three buckets: labour, materials, other job costs.
• Use 6–10 simple cost codes to keep it clear.
• Log hours daily; a 2-minute note saves headaches later.
• Compare estimate vs. actual weekly; adjust fast.
• Align proposals and invoices to reduce scope creep.

What Is Job Costing And Why It Matters

Job costing connects your estimate to real costs. It shows where you gain or lose money. When you see it weekly, you can steer the job, not just react.

Here’s the simple view:

1. Labour: hours by task (demo, framing, finish, etc.).
2. Materials: what you buy for this job.
3. Other: equipment, permits, dump fees, small tools.

If you’re also looking to improve pricing accuracy, this pairs well with understanding pricing strategies for small contractors. Strong job costing makes your pricing honest and repeatable.

Common mistakes

• Tracking only total hours, not hours by task.
• Tossing receipts into a glove box.
• Waiting until month-end to check costs.

Fix these and you’ll feel the difference in 1–2 weeks.

Set Up Simple Cost Codes

You don’t need a giant chart. Keep 6–10 codes you’ll actually use.

Example set for renovation work:

1. 100 – Site Setup & Protection
2. 200 – Demo & Disposal
3. 300 – Framing/Carpentry
4. 400 – Mechanical/Electrical/Plumbing Rough-In
5. 500 – Insulation/Drywall/Taping
6. 600 – Flooring/Tile
7. 700 – Cabinets/Finish Carpentry
8. 800 – Paint & Finishes
9. 900 – Fixtures/Final Install
10. 990 – Punch & Clean

Label timecards and receipts with the code. That’s it. In general, many contractors add a small contingency code or a buffer line (like 5–10%) on complex jobs. Keep it visible.

If you’re also building better documents, see how professional proposals help clients understand scope. Clear codes make clear line items.

Track Labour The Right Way

Labour is where money is won or lost. Track it daily, not weekly.

Simple routine:

1. Each worker logs start/stop times per code.
2. Foreman snaps a photo of the board or notes.
3. Send a 2-minute summary at day’s end: hours by code.

Tips that work on site:

• Round to the nearest 15 minutes. Keep it honest.
• Note delays: “Waiting on inspection 10:30–11:15.”
• Move hours to the right code when plans change.

Commonly, a daily habit like this can save 2–3 hours per week in cleanup time. It also helps you explain the bill when clients ask.

For teams growing fast, this pairs well with managing project timelines effectively. When hours match tasks, your schedule is easier to adjust.

Control Material Costs Without Extra Work

Materials are simple if you set basic rules.

Do this on every job:

1. One purchase method per job (POs, card, or supplier account).
2. Put the job name and cost code on every receipt or PO.
3. Photograph receipts the same day. Store them in a job folder.
4. Track returns and credits; they matter.

Buying tips:

• Order once per phase, not five times per day.
• Use standard materials where the client won’t see a difference.
• Keep 2–3 common items on the truck to cut store runs.

When you reduce store trips, you reduce lost labour too. It’s common for small teams to save a few hours each week with simple bundling.

If you want to speed up billing later, explore invoice templates that save time. Templates keep items consistent and easy to track.

Use Proposals And Invoices To Lock The Budget

Clean paperwork protects your margin. Your proposal is your map.

Best practices:

1. Match proposal line items to your cost codes.
2. Spell out inclusions, exclusions, and allowances.
3. Use e-signatures to lock the scope before mobilizing.
4. Convert accepted proposals to invoices without retyping.

Platforms such as Donizo make this easier. You can capture scope with voice, text, and photos, generate a branded proposal, get a digital signature, and convert it to an invoice in one click. This keeps scope and billing aligned and reduces missed items.

If you’re also looking to streamline professional proposals, our guide covers clear line items and client-friendly wording. This helps avoid scope creep and complaints.

Review, Learn, And Improve Your Pricing

The close-out is where you learn. Do it every job.

Weekly check during the job:

1. Compare estimate vs. actual by cost code.
2. If a code is running heavy, adjust the plan now.
3. Flag change work and confirm in writing.

End-of-job review:

1. Final hours and spend by code.
2. Note the causes of overruns (design, site, supplier, crew).
3. Update your price book and crew rates.

Two powerful habits:

• Save one photo per phase with a short note. It tells the story.
• Write a 5-line job summary. Next time, you’ll price faster and cleaner.

For contractors dealing with client communication, we recommend building client communication templates. Clear words prevent costly misunderstandings.

FAQ

What’s the difference between job costing and estimating?

Estimating is your plan and price before the job starts. Job costing tracks real costs during and after the job. Estimating sets the target. Job costing shows how close you came and why. Together, they improve your next bid.

How often should I update job costs?

Daily for labour, weekly for materials and other costs. A quick weekly review catches problems early. Waiting until month-end is too late. Small, steady updates beat big cleanups.

Do I need software for job costing?

No. You can start with a simple sheet, folders for receipts, and daily notes. Software helps when your team grows. Choose tools that match your workflow and save time in the field, not just at a desk.

How do I handle change work without losing money?

Write it down, price it, and get approval before doing the work. Use clear language, show the impact on price and time, and keep it tied to your original line items. Then bill it as a separate line when invoicing.

What cost codes should I use?

Use codes that match how you build: demo, framing, rough-in, drywall, finishes, fixtures, etc. Keep 6–10 codes. Too many codes slow your crew. Too few codes hide problems. Adjust the list as you learn.

Conclusion

Solid job costing is simple: track labour daily, label materials, and compare to your estimate weekly. Align your proposal and invoice line items to the same cost codes. This keeps scope tight and margins steady.

Next steps:

• Create a 6–10 code list and post it in the truck.
• Start daily hour logs with a 2-minute end-of-day summary.
• Run a weekly estimate vs. actual check and adjust.

Tools like Donizo can speed up proposals, e-signatures, and invoicing so your paperwork matches your job costing. Start small today. You’ll feel the difference on your very next job.