Job Costing
You're not sure what that project really cost. You charged $12k. You spent 25 hours, a contractor, and some tools. Job costing is tracking the actual cost of delivering a specific job or project—time, materials, overhead. It's essential for understanding profitability by client or service type. When you're deciding whether to hire or automate, job costing tells you what you're saving or gaining per unit.
Same project, with and without job costing. Without: you guess. With: you track your 25 hours at your opportunity cost ($200/h = $5k), the contractor ($1.5k), tools ($200), and a slice of overhead ($800). True cost = $7.5k. Margin = $4.5k. Now you know which clients and which service types are actually profitable. When you're evaluating an investment (e.g. a tool that saves 2 hours per project), job costing tells you the value of those 2 hours. It feeds cost analysis and true cost thinking.
Actual cost of one job or project. Track it so you know margin and where to invest.
How to do it
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Track direct cost per job. Your time (hours × your rate or opportunity cost), contractor fees, materials, any direct tool cost for that job. Do this for a sample of projects so you see the pattern.
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Allocate overhead. Rent, software, admin—allocate a share to each job. Simple rule: total overhead ÷ total billable hours = cost per hour. Add that to each job's labor cost.
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Use it for decisions. Which clients are profitable? Which service types? If you're considering hiring, job costing tells you the cost per unit today—and what would need to change (e.g. hours saved per project) for the hire to pay off. ROI and break-even analysis build on this.