Do you ever feel like you’re losing money on certain jobs?

Either they take more time than you anticipated or the materials end up being more than you thought. In fact, there are many ways companies like yours are losing money.

But once you’ve quoted and billed a client, it’s hard to go back and retract your initial fee.


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And going forward, how can you ensure you accurately quote jobs to ensure you stop losing money?

You need something effective, but that’s still easy to understand and doesn’t cost you much more. After all, the whole point is to make your business run better. Why use a tool to save your business time and money if it’s going to cost you a lot in return?

This is where labor job costing comes in.

Job costing means tracking the costs associated with a specific job; materials, labor costs and overhead. For many businesses that require employees to go out in the field, there can be outlying factors that contribute to how long a job takes or costs. Because of this, it can be hard to use just one standard pricing.

Benefits of Job Costing


With labor job costing, you can trace certain costs to specific jobs to help you see where your company’s money is being spent.

You can use it to ensure your employees’ time is being used productively, and materials are being used in the best ways possible. You can maximize all of your resources, monetary or not.

In fact, job costing come with quite a bit of benefits for small businesses, such as:

  • Compare estimated costs with actual costs. With detailed reports, you’ll be able to effectively identify cost trends.

  • Respond to changes quickly and efficiently. By carefully monitoring time and materials, it’s much easier to see any potential issues. The sooner they’re identified, the sooner adjustments can be made to save your business time and money.

  • Increase profits. As trends start to appear, you’ll start to see where you can save time, labor and materials, bringing your team’s cost down and productivity up.

  • Decrease costs. One of the biggest benefits of job costing is the savings. While there are multiple ways to reduce labor costs in your business, tracking labor and materials can easily make your team more productive without changing up the processes that work.

  • Easily track multiple employees. Keep track of what each employee is working on, and generate job costing reports that will give you even more detail. Use these reports to ensure that labor and costs match up with job status.

  • Create more accurate estimates for future jobs. By identifying labor and material costs for your current projects, you will be able to use the information to create better, more accurate estimates for future projects.

How to Use Labor Job Costing


As you can see, a job costing system can easily help your business find ways to save time and money, while making your team even more productive. Setting one up doesn’t take a ton of tools, or money, to get started.

Here are some easy steps that you can follow:

  • Identify the job. Start by listing the job and all the direct costs associated with it.

  • Identify indirect costs. You also want to identify any indirect costs such as tools, labor and overhead. Use tools to help you track projects, jobs, employees and clients to accurately keep track of those indirect costs.

  • Apply all the indirect costs to your job to determine an accurate total cost.

  • Use this information to help calculate profit and loss, as well as make any necessary adjustments to your processes or time management.

CLICK HERE to download our free PDF Benefits-of-Job-Costing

Tool to Make Job Costing Easier

Once upon a time, businesses relied on spreadsheets to track their costs, time and materials, using separate columns to track hours, rates and totals for labor.

Now, with time tracking tools and online payroll, it’s much easier for businesses to keep track of employees and their hours. Time worked can easily be tallied and compared to other data to ensure a project is on task and on budget.

In fact, with features like phone-in time tracking, your employees can still work out in the field and still easily keep track of their hours.

Labor job costing is an accounting tactic that can actually save your small business time and money. By keeping track of your time and more, you can actively find ways to improve those times and processes.