What Is Job Costing?

Job costing is the process of calculating the true, total cost to complete each job your company performs. That includes everything: labor, materials, equipment usage, fuel, and a share of your overhead. It tells you whether a job actually made money or just looked like it did.

Why Most Field Service Owners Get This Wrong

The most common pricing mistake in field services is charging based on what competitors charge or what feels right, without knowing your actual costs. You might quote a lawn at $45 because that is what others charge in your area. But if that job costs you $38 to complete once you account for everything, you are making $7 — not the $25 you assumed.

This happens because most owners only think about direct, obvious costs. They see the hourly wage they pay a crew member and the gas in the truck. They forget about:

• Loaded labor cost — Your employee costs more than their hourly wage. Add payroll taxes (7.65% for FICA alone), workers comp insurance, any benefits, and paid time off. A $18/hour employee often costs $24-28/hour when fully loaded.
• Equipment depreciation — That $12,000 mower does not last forever. If it runs 1,500 hours before replacement, every hour of use costs you $8 in depreciation alone, plus maintenance.
• Vehicle costs — Fuel, insurance, loan payments, maintenance, and eventual replacement. A work truck can easily cost $0.50-0.75 per mile when you account for everything.
• Overhead allocation — Your office rent, phone bill, software, insurance, accounting fees, and your own salary all need to be covered by the jobs you complete. Every job should carry its fair share of these costs.

How to Calculate Job Cost

Start simple and get more detailed over time. Here is a basic framework:

Step 1: Know your loaded labor rate. Take each employee’s hourly wage and multiply by 1.3-1.5 to account for taxes, insurance, and benefits. If you pay $18/hour, your loaded cost is roughly $23-27/hour.

Step 2: Track time per job. Not just time on-site, but travel time to and from. A 30-minute mow that requires 15 minutes of drive time each way is actually a 60-minute job from a labor cost perspective.

Step 3: Add materials. Fertilizer, mulch, chemicals, parts — whatever gets used on that specific job.

Step 4: Factor in equipment cost. Estimate a per-hour or per-job cost for major equipment based on purchase price, expected lifespan, and maintenance costs.

Step 5: Add overhead. Total your monthly overhead expenses and divide by the number of jobs you complete per month. That gives you a rough per-job overhead allocation.

What Good Job Costing Reveals

Once you start tracking costs accurately, patterns emerge quickly:

• Some jobs you thought were profitable are actually losers once you include drive time and overhead
• Certain service types consistently produce better margins than others
• Specific properties eat up disproportionate time due to terrain, access issues, or picky customers
• Your pricing needs to go up — this is the most common realization

Simple Ways to Start

You do not need software to begin job costing. A spreadsheet works fine for tracking your first month of data. Record the basics for each job: time spent (including travel), materials used, and crew members assigned. Then apply your loaded labor rate and overhead allocation.

After a month, you will have enough data to see where you are making money and where you are leaking it. Many owners find that 10-20% of their jobs are actually unprofitable, and raising prices on those jobs or dropping them entirely can significantly improve the bottom line.

The goal is not perfect accounting on every job. It is having enough visibility to make informed pricing decisions instead of guessing.