Job Costing Calculator

This calculator answers the question that decides whether a trades or service business makes money: what did that job actually cost, and what did it actually make? It builds the cost from the ground up. Labour goes in at what an hour really costs you in wages, holiday pay, KiwiSaver, ESCT and ACC, not at the rate you charge the client, because costing labour at the charge-out rate books your margin as an expense and makes every job look break-even. Around that sit materials, subcontractor invoices, plant and vehicle time, consumables like blades and fixings, and travel. Then a share of your fixed overheads is allocated to the job, either as a percentage of direct cost or, more accurately for a labour-driven business, as a dollar rate for every labour hour. Against that total the calculator sets the price you quoted, excluding GST, and reports gross profit in dollars, gross margin as a percentage of the price, and profit per labour hour, which is the figure that lets you compare a two day job with a two week one. If the margin lands below the target you set, it says so and shows the price that would have met it. There is also a quoted versus actual variance view, because on most jobs the money is lost in hours rather than materials, and you cannot fix that until you can see it. Figures are indicative management estimates, not accounting records.

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What Job Costing Actually Tells You

Most trades and service businesses in New Zealand know their turnover and know their bank balance, and have very little idea which of their jobs made money. That gap is where profitable-looking businesses quietly fail. Turnover tells you how busy you were. The bank balance tells you about timing, not profitability, because it is inflated by deposits on work not yet done and by GST you are holding for Inland Revenue. Job costing is the only thing that answers the question that matters, which is whether the work you are doing is worth doing at the price you are doing it for.

The exercise is simple in principle: total everything the job consumed, set it against what the job earned, and look at the difference. The difficulty is entirely in the detail of what counts as a cost, and that is where most job costing goes wrong.

Why Labour Must Go In At Cost, Not At Charge-Out Rate

This is the single most common error and it is worth being blunt about. If you charge a client $95 an hour for a tradesperson and you also enter $95 an hour as the cost of that tradesperson, the labour on the job contributes exactly zero profit by construction. Every job then appears to make its money on materials markup alone, which leads people to conclude that labour is unprofitable and they should chase supply-heavy work. The conclusion is an artefact of the arithmetic, not a fact about the business.

The cost of an hour is what leaves your bank account to buy that hour. It is the gross wage, plus holiday pay at 8% or the equivalent in accrued annual leave, plus the cost of public holidays and sick leave during which you pay without billing, plus employer KiwiSaver contributions, plus ESCT on those contributions, plus ACC levies. For a New Zealand employee on $30 an hour, the fully loaded figure commonly lands somewhere near $37 to $40. Our True Cost of Employee Calculator builds that number properly, and it is worth doing once a year and then reusing.

The gap between the $95 you charge and the roughly $38 it costs is not profit. It is the contribution that hour makes towards overheads first, and only then towards profit. That is exactly what the overhead allocation on this page is for.

Overhead: The Cost That Belongs To No Job And Every Job

Rent, insurance, the accountant, software subscriptions, compliance, the vehicles, the phone, the time spent quoting work you did not win: none of it is caused by any particular job, and all of it has to be paid for out of the jobs you do win. Ignoring it does not make it go away, it just moves the loss somewhere you are not looking.

There are two sensible ways to allocate it. A percentage of direct cost is the simpler method and is fine for businesses where jobs are broadly similar in shape. It falls apart on any job with an unusual cost mix, because a job that is 80% pass-through materials will absorb a large slab of overhead despite consuming very little of your actual capacity. Allocating per labour hour fixes that, because in a trades business it is labour hours, not dollars of material, that consume the capacity your overheads pay for. Work out your annual fixed overheads, divide by the chargeable hours your team can realistically deliver, and apply that rate. Our Overhead Recovery Rate Calculator does exactly that, including the utilisation assumption that owners usually get wrong.

Neither method changes your total profit for the year. They change which jobs appear to carry the load, which matters when you are deciding what work to chase and what to decline.

Worked Example: A $9,800 Job That Made 21.71%

Take the default figures on this page, which describe a fairly ordinary residential job. Two people work it: a lead hand for 24 hours and an apprentice for 16, so 40 labour hours in total. The lead hand costs $38 an hour fully loaded and the apprentice $30, giving a labour cost of $912 plus $480, which is $1,392.

The job also consumed $3,200 of materials, a $1,400 subcontractor invoice, $260 of plant and vehicle time, $180 of consumables and $120 of travel, which is $5,160. Direct cost is therefore $1,392 plus $5,160, or $6,552.

Overhead is allocated at $28 per labour hour, so 40 hours carries $1,120. The true job cost is $6,552 plus $1,120, which is $7,672.00.

The job was quoted at $9,800 excluding GST. Gross profit is $9,800 less $7,672, which is $2,128.00. As a margin that is $2,128 divided by $9,800, or 21.71%. Spread across 40 labour hours it is $53.20 of profit for every hour of crew time.

Against a 25% target the job fell short. To have made 25% the price needed to be the cost divided by 0.75, which is $10,229.33, or $429.33 more than was quoted. That is a useful number: it is not a disaster, it is one line item, and knowing it before the next quote is the entire point of costing the job after it.

Margin Is Not Markup, And The Difference Costs Real Money

Markup is calculated on cost. Margin is calculated on price. They are different numbers and the gap widens as the percentage rises. Adding a 25% markup to the $7,672 cost above produces a price of $9,590 and a margin of exactly 20%. To actually achieve a 25% margin you divide the cost by 0.75, giving $10,229.33, which is a markup of 33.3%.

A business that believes it is pricing at 25% when it is really achieving 20% is giving away a fifth of its intended gross profit on every single job. Over a year that is frequently the difference between a viable business and one that cannot pay its owner properly. Our Markup vs Margin Calculator converts between the two if you want to check your pricing sheet.

Profit Per Labour Hour: The Number To Rank Jobs By

Total profit on a job is a poor comparison tool because it says nothing about what the job cost you in time. In almost every trades business the binding constraint is not cash or materials, it is skilled hours. If you only have so many crew hours in a week, the right question about any job is what it returns per hour of that constrained resource.

A $2,128 profit over 40 hours is $53.20 an hour. A smaller job returning $1,200 over 12 hours is $100 an hour, which is nearly twice as productive despite looking half as good on the invoice. Rank your last twenty jobs by profit per labour hour and a pattern usually appears fast: a job type, a client, or a site that consistently underperforms. That pattern is worth more than any single job's result.

Quoted Versus Actual: Where The Money Actually Goes

The variance view exists because job costing after the fact is only half useful unless it changes how you quote. In the worked example the job was quoted on 34 labour hours and took 40. Those six hours at roughly $28 of overhead and around $34 of average wage cost account for most of the $772 cost overrun, and the whole of the shortfall against the 25% target.

Hours overrun for predictable reasons that estimates routinely omit: set-up and pack-down, site access and parking, waiting on other trades, variations agreed on site and never priced, rework, and travel between jobs. None of these are unusual. They are the normal condition of site work, which means an estimate that excludes them is not optimistic, it is simply wrong. If your actual hours exceed your estimate on most jobs rather than some jobs, the crew is not slow. The estimating method needs a realistic allowance, and the variance figure on this page is where you find out how big that allowance should be.

What This Calculator Does Not Include

This is a gross margin tool, so it stops at the job. It does not deduct your own wage as owner, income tax, provisional tax, interest on borrowings, or the cost of work you quoted and did not win. Those are business-level costs rather than job-level ones, and gross margin has to be healthy enough to cover all of them and still leave a net profit. A 20% gross margin is not a 20% profit. If your overheads consume 22% of revenue, that job lost money despite showing a positive figure here.

It also assumes you are GST registered and working in GST-exclusive figures throughout. If you are not registered, GST paid on materials is a genuine cost to you and should be included in the materials figure, and your price should be entered as the full amount charged.

Turn This Into A Habit, Not A One-Off

Costing one job is interesting. Costing every job is what changes a business. The practical version is to cost every job above a threshold that matters to you, record the margin and the profit per labour hour, and review the list monthly. You are looking for the pattern rather than the individual result. Within a few months most owners find that a specific job type, a specific client, or a specific way of quoting is responsible for most of the underperformance, and that is a fixable problem rather than a vague sense that the business is busy but not making money.

Related NZ Business and Trades Calculators

• Tradie Job Quote Calculator: build the price before you send the quote, which is the other half of this loop.
• Overhead Recovery Rate Calculator: work out the overhead per chargeable hour that this page asks you for.
• Tradie Charge-Out Rate Calculator: set the hourly rate that has to cover wage cost, overhead and profit.
• Gross Margin Calculator: the same margin arithmetic across the whole business rather than one job.
• True Cost of Employee Calculator: the fully loaded hourly cost to use in the labour rows above.
• How to Price a Job: the background to this calculation.
• Should I Delegate or Do It Myself?: the background to this calculation.