How do I set up job costing so I know my real profit on every job?

Calculate your true hourly cost by loading superannuation at 12% of ordinary time earnings, insurance and a share of fixed overheads onto your base wage. Add materials, subcontractor costs and your loaded labour to each job. The gap between that total and what you invoiced is your real margin, and tracking it per job shows which work earns money and which quietly drains it.

Updated 25/10/2026

What is job costing and why does it matter for tradies?

Job costing means assigning every dollar of cost, labour, materials, subcontractors, travel and overheads, to the specific job that caused it. The result is a profit figure per job, not just a profit figure per month.

Without it, a busy month can mask one or two jobs that lost money. As the Australian Government's business.gov.au advises, "Keeping accurate and complete records is a must for every business." For tradies, accurate records at the job level are what separate a business that grows from one that stays busy and stays broke.

The difference between job costing and general bookkeeping is specificity. Your accountant sees total revenue minus total expenses. Job costing shows you that the bathroom reno in Geelong earned a 28% margin (illustrative) while the emergency callout in Werribee lost money once you counted travel and the hour spent quoting it.

How do I calculate my true hourly cost?

Your charge-out rate is what the customer pays. Your true hourly cost is what it actually costs your business for every hour you spend on a job. They are not the same number, and the gap between them is your margin.

For a sole trader or small crew, the loaded hourly cost includes:

• Base wage or drawings. What you actually pay yourself per hour
• Superannuation guarantee. 12% of ordinary time earnings from 01/07/2025¹. If you employ staff, this is mandatory. Sole traders are not required to pay their own super but should factor it in as a real cost of sustaining the business
• Workers compensation insurance. Premiums vary by trade and state but typically run 1.5% to 8% of wages (illustrative range, varies by trade and claims history)
• Leave loading. If you employ anyone under a modern award, leave loading at 17.5% applies on annual leave
• Fixed overhead share. Your total weekly fixed costs divided by your billable hours per week

The combined loading typically brings your true hourly cost to 1.5 to 2 times the base wage (illustrative, depends on overhead level). A tradesperson paying themselves $45 an hour might have a true cost closer to $75 to $90 once super, insurance, vehicle finance, tools and software are loaded in.

What is the difference between markup and margin?

These two words sound interchangeable but they produce different numbers, and confusing them is one of the most common pricing mistakes in the trades.

A 30% markup on cost delivers only a 23% margin on revenue (illustrative). If you quote using a markup percentage but your accountant measures profit as a margin percentage, you are consistently earning less than you think. Over a year of jobs, that gap compounds into thousands of dollars.

Decide which number your business runs on, margin or markup, and use it consistently. Most accounting software and job management apps report margin (profit as a percentage of revenue), so pricing on a margin basis keeps the numbers aligned.

How do I set up an overhead recovery rate?

Fixed overheads run whether you are on a job or not. The overhead recovery rate spreads them across every billable hour so each job carries its fair share.

The formula is straightforward:

• Step 1. List every fixed weekly cost: vehicle finance or lease, fuel average, registration, insurance (public liability, professional indemnity, workers comp), tools and equipment depreciation, phone and internet, software subscriptions, accounting fees, training, workshop rent if applicable
• Step 2. Total them for one week
• Step 3. Divide by your billable hours per week. Not total hours, billable hours, because quoting, invoicing, driving between jobs and buying materials are real hours that do not earn revenue directly

If your fixed weekly overheads total $1,200 (illustrative) and you bill 30 hours a week (illustrative), your overhead recovery rate is $40 per billable hour. Every job quote needs to recover that $40 on top of labour and materials, or you are subsidising the job from your own pocket.

Recalculate this rate quarterly. Insurance renewals, a new vehicle, or adding a software subscription all shift the number.

What does a job cost sheet look like in practice?

A per-job cost sheet captures five categories. Here is an example for a mid-size residential job, with estimates alongside actuals so you can see where the variance lands.

If the job was quoted at $7,200 (illustrative), the estimated margin was 23% but the actual margin came in at 15%. The materials blowout and two extra hours ate $540 of profit. Without the cost sheet, you would have banked the $7,200 and assumed it was a good job.

Which job management apps handle per-job costing?

Most popular Australian trade apps have a job-costing view, but only if you actually fill in the cost fields. Here is how the main platforms handle it:

• ServiceM8. Job costs show materials and labour against each job. Integrates with Xero and MYOB for financial reporting. Best suited to sole traders and small crews
• Tradify. Built-in job costing with estimated vs actual comparison. Purchase orders link to jobs automatically. Good for crews of two to ten
• simPRO. Full project costing with cost centres, purchase orders and labour rates. Suited to larger operations with multiple crews
• AroFlo. Detailed job costing including plant and equipment allocation. Popular with electrical and HVAC businesses
• Fergus. Margin tracker per job with a traffic-light dashboard (green, orange, red). Designed around the New Zealand and Australian trades market
• Buildxact. Estimating-focused with detailed cost breakdowns for residential builders and carpenters

The catch with all of them: they only report what you enter. If your team does not log time and materials against each job, the profitability report is fiction. The discipline of entering costs is the system, not the software.

How do I use job costing data to improve future quotes?

The real value of job costing is not the backward look at what a job earned. It is the forward look at what the next similar job should be quoted at.

• Compare actuals to estimates weekly. Which cost categories consistently come in over? Materials, labour hours, and travel are the usual culprits
• Build a cost library by job type. After ten bathroom renovations, you know the average materials cost, the average hours, and the typical margin. That library becomes your quoting baseline
• Adjust for scope creep. If your actuals regularly exceed estimates by 10% to 15% (illustrative), your quotes are systematically too low. Increase the contingency or tighten the scope definition in your quote document
• Price unprofitable work out or up. If emergency callouts consistently deliver a 5% margin (illustrative) while scheduled maintenance runs at 25% (illustrative), either raise the callout rate or stop promoting the service

This feedback loop, estimating, tracking actuals, comparing, and adjusting, is what separates a trade business that grows its margins from one that stays busy and stays flat. For a deeper look at tracking whether individual jobs are profitable, see our guide on knowing if you are actually making money on each job.

What about TPAR and subcontractor cost tracking?

If your trade business is primarily in building and construction and you pay subcontractors, the ATO requires a Taxable Payments Annual Report by 28 August each year. You need each subcontractor's ABN and the total amount paid during the financial year.

Good job-costing records make TPAR straightforward because every subcontractor payment is already coded to a job with the subbie's ABN attached. Without job-level records, you are reconstructing a year of payments from bank statements in July, which is slow, error-prone and the kind of task that gets put off until the deadline passes.

From 01/07/2026, Payday Super requires superannuation to be paid each payday rather than quarterly. If you employ staff, your job-costing labour rates need to reflect the cash-flow timing change, because super is no longer a quarterly lump sum sitting in your account, it leaves with every pay run.

For tradies using ServiceM8 with Xero or a similar integration, subcontractor invoices coded to jobs flow through to both the job cost report and the TPAR data, so you get compliance and profitability tracking from the same data entry.

How do I get started with job costing this week?

You do not need new software to start. A simple weekly routine works:

1. Calculate your loaded hourly cost. Base wage plus super at 12%, insurance, and overhead recovery rate. Write it down once
2. Pick five completed jobs from the last month. Pull every receipt, supplier invoice and timesheet entry. Allocate each cost to the job
3. Compare each job's total cost to what you invoiced. The margin is the gap. Sort the five jobs from highest margin to lowest
4. Identify the pattern. Which job types earn the most? Which cost categories blow out? Where did scope creep eat the margin?
5. Adjust your next quote. Use the actuals from similar past jobs as your baseline instead of guessing

Once the habit sticks, move the tracking into your job management app so the numbers accumulate automatically. The goal is a feedback loop where every completed job makes the next quote more accurate.