Lesson B101.4 · Business Finance 101: Run It Clean
Job costing: know what each job earned
4-minute read · Figures checked October 2026
Photo: Alejandro Perez / Pexels, Pexels License
The short answer
A job made money if its price covered every cost it used, plus its share of overhead, with something left over. Count materials, crew wages plus payroll costs, equipment, fuel, mobilization and disposal, then add overhead for the days the job took. After each job, replay it: put the estimate next to what actually happened, line by line.
Count every cost the job used
Direct costs are the ones you wouldn't have had without the job.
- Materials: sealer, sand, additives, crack filler, paint.
- Labor, with payroll costs. A crew costs more than its wages. Add the employer's Social Security and Medicare (7.65% of wages), unemployment insurance, workers' comp and any benefits. That add-on is called labor burden.
- Equipment. Every machine costs something for each hour it runs, even after it's paid off: wear, repairs, insurance and upkeep, spread over the hours it works in a year. Charge each job for its hours. Business Finance 102: Bank-Ready shows how to figure the hourly cost.
- Fuel, mobilization and disposal. Mobilization is loading, the drive, setup and cleanup. Come back after a rain-out and you pay it twice.
- Subcontractors, if you used any.
Then add the job's share of overhead: your overhead per productive day (B101.5) times the days the job took. Leave out labor burden or equipment and every job looks better on paper than it was.
Labor hours on the job, like raking hot asphalt, are part of every job's true cost.
Photo: Rodolfo Gaion / Pexels, Pexels License
Replay the job
After each job, or at least once a week in season, put the estimate next to the actual costs and ask:
- Which lines came in over or under, and why?
- Was there downtime: rain, cars that didn't get moved, a machine that quit?
- Was there waste or rework, like extra material or a trip back to touch up?
- How many of your own hours went in unpaid: estimating, checking, phone calls?
- When did the money come in, compared with when you paid for materials and payroll?
Then write down one change for the next estimate.
One job, estimate against actual
Example (made-up numbers, not a price guide). Ray's crew crack-seals and restripes a church parking lot for $9,500. Rain stops them halfway through the first day, so they come back the next morning. The lot also has more cracks than the estimate counted and takes more crack sealant. Payroll costs here are 20% of wages, a made-up rate.
| Cost line | Estimate | Actual |
|---|---|---|
| Materials | $2,600 | $2,950 |
| Crew wages | $1,400 | $1,900 |
| Payroll costs | $280 | $380 |
| Equipment | $450 | $600 |
| Fuel | $150 | $210 |
| Mobilization | $200 | $400 |
| Disposal and cleanup | $50 | $50 |
| Direct costs | $5,130 | $6,490 |
| Overhead at $750 a productive day | $1,125 (1.5 days) | $1,500 (2 days) |
| Job profit | $3,245 | $1,510 |
The rain-out cost $1,385: the second trip, more crew time and payroll costs, equipment, fuel and another half day of overhead. The extra crack sealant cost $350. Ray's 9 hours of estimating and checking aren't in any line, so the real profit is lower still. And the church paid 45 days after the invoice, long after the materials and payroll were paid.
Ray's two changes for the next estimate: plan for a second trip on any job that might not finish in one day, and measure the cracks on site before figuring material.
Your Move
Do this week
- Pick your last finished job and pull its estimate.
- Gather the actual costs: material receipts, crew hours and wages, payroll costs, equipment hours, fuel and trips.
- Fill in estimate against actual for every line, in the Job profit replay tool or a spreadsheet, then add overhead for the days it took.
- Answer the five replay questions and write down one change for your next estimate.
Log it: Job profit replay done.
Common questions
What is labor burden?
The cost of a worker on top of wages: the employer's Social Security and Medicare (7.65%), unemployment insurance, workers' comp and any benefits. Your payroll reports and insurance bills give your own rate.
Do I need special software to job-cost?
No. A spreadsheet with estimate and actual columns works. Tagging every cost by job in your books (B101.3) makes the actuals quick to pull.
Should I replay every job?
Replay every job while you're learning your numbers. Once your estimates run close, replay the big ones, the ones that felt off, and a sample of the rest each month.
Watch out for
- Counting wages without payroll costs.
- Leaving equipment out because the machine is paid off. It's still wearing out.
- Closing the job file when it's invoiced instead of when it's paid.
Free help
- America's SBDC: Find your SBDC for free business consulting
- SCORE: Free business mentoring
Free practice
Lesson check
5 questions on this lesson, one at a time, with the answer and the reason after each. Pass with 4 right, including every must-know question.
This is general education, not tax, legal, investment or insurance advice. Rules change and every situation is different. Check the sources below, and talk to a qualified professional before you act on it.
Sources
- IRS: Topic 751, Social Security and Medicare withholding rates
- America's SBDC: Find your SBDC
- SCORE: SCORE home page