BuildWellWhat job costing is
Job costing is adding up everything a job will take, part by part, and turning it into a price. It’s the core of every estimate: materials, labor, the costs around the work like permits and disposal, your markups and the tax.
Pricing a job from its parts beats pricing it from a feeling. When the price is built from parts, you can explain it, defend it and change it. If the client wants to save money, you can show which part moves. If the job runs over, you can see which part was wrong.
The job cost formula
The calculator adds four parts.
- Materials at your cost, times one plus your material markup: $1,000 × 1.20 = $1,200.
- Labor is hours times your billable rate: 6.5 × $72 = $468.
- Other costs like permits, disposal and equipment rental, at what they cost you: $150.
- Sales tax on the marked-up materials, where they’re taxable: $1,200 × 7% = $84.
The job price is the sum: $1,200 + $468 + $150 + $84 = $1,902.
The labor rate already contains your overhead and labor markup. If you don’t have one yet, the labor rate calculator builds it from the wage.
The example, line by line
| Part | Worked out as | Amount |
|---|---|---|
| Materials | $1,000 at cost × 1.20 markup | $1,200.00 |
| Labor | 6.5 hours × $72 | $468.00 |
| Permits and disposal | Passed through | $150.00 |
| Sales tax | 7% of marked-up materials | $84.00 |
| Job price | Sum of the above | $1,902.00 |
Worked examples
A water heater replacement
A 50 gallon tank, connectors, a pan, venting parts and fittings cost $900. With a 20% material markup that’s $1,080. The crew plans 4.5 hours at $72, or $324. Permit and haul-away are $125. Tax at 6% on the materials is $64.80. The job price is $1,080 + $324 + $125 + $64.80 = $1,593.80.
A small deck repair
Replacement boards, joist hangers, screws and stain cost $600, marked up 20% to $720. Labor is 12 hours at $65, or $780. A dumpster bag is $90. With no tax on materials where the job is, the price is $720 + $780 + $90 = $1,590.
Checking the margin afterwards
The water heater job above costs you $900 of materials, the crew’s loaded cost for 4.5 hours, and $125 of permit and disposal. Run the price and that cost through the profit margin calculator to see what you keep. If it’s thinner than your target, look at the hours and the markups before you send the estimate.
Estimating labor hours
Hours are where most estimates go wrong, because they’re the hardest part to see from the driveway.
Start from units of work, not the job as a whole. "Install a vanity" is a better unit than "bathroom". Each unit has a typical time, and you can add them up. Your own records are the best source: how long did the last ten vanities take, including the trips to the truck?
Then adjust for the job in front of you. An old house, a third-floor bathroom, a tight crawlspace, a client who’ll be home asking questions, all add time. Write the adjustment down, so you can see later whether it was right.
BuildWell plans the labor hours for every line of an estimate. You can change any line’s hours, and your changes stay on that estimate.
What to include
| Part | What to count |
|---|---|
| Materials | Everything installed, plus fasteners, adhesives, caulk, tape, blades and the waste you’ll throw away |
| Labor | Every trade and helper, at their billable rate, including setup, protection and cleanup |
| Subcontractors | Their price, plus your markup if you add one |
| Permits and inspections | Fees and the time to pull them |
| Disposal | Dumpster, dump fees, haul-away |
| Equipment | Rentals, delivery and pickup |
| Sales tax | On whatever is taxable where the job is |
Pricing a change order
Change orders are priced the same way as the original job, from parts. The client asks for a second vanity light during a bathroom remodel. The fixture and box cost $140, marked up 20% to $168. The electrician plans 1.5 hours at $78, or $117. No extra permit. Tax at 7% on the marked-up fixture is $11.76. The change order is $168 + $117 + $11.76 = $296.76.
Price it, write it down and get it signed before the work, at your normal markups. Changes priced on the spot "because it’s small" are where many jobs lose their margin.
Tracking actual cost
An estimate is a prediction. When the job is done, write down what it really cost: the receipts, the hours on the timesheets, the dump fees. Compare each part with the estimate.
Patterns show up quickly. If tile jobs always run over on hours, your hours for tile are low. If materials are always over, your takeoffs are short or prices have moved. Fix the part that’s wrong, and the next estimate is better.
Common mistakes
Leaving out setup and cleanup. Floor protection, dust walls, moving furniture and the final clean take real hours on every job.
Pricing materials from memory. Prices move. A list priced from last year’s receipts can be off by enough to wipe out the margin.
Padding every line. A little extra on each line adds up to a price that loses jobs. Price what you can see, and write down how you’ll price what you can’t.
Forgetting tax on materials. Where materials are taxable, the tax is part of the price. Leave it off and it comes out of your profit.
Not tracking actuals. Compare each finished job with its estimate. That’s how the next estimate gets better.
From job cost to estimate
A job cost becomes an estimate when each part is written so the client understands it. Group the work in the order it happens, describe what’s included and what isn’t, and state the price. Keep your cost and markup inside each line, not on display.
BuildWell builds that estimate for you. Describe the job by voice, text or photos, and it lists the work line by line, plans the hours, prices materials at stores near the job and labor at your area’s wage, then adds your overhead, markups and sales tax. You review and edit every line, send it, and the client signs on their phone.
