You quoted €40,000. The job is finished and the invoice is paid. Did it make money, and how much? Most contractors cannot answer that, and price the next one off the same guess.
Your year-end accounts will tell you the business made a margin of, say, 14%. That is an average across everything you did. Inside it there are jobs that made 30% and jobs that lost money, and the accounts cannot tell you which was which — so you keep quoting for both.
Job costing is the work of finding out. It is not complicated. It is mostly discipline, and it starts with one thing.
This is the single most common reason a correctly priced job loses money.
If you pay an operative €20 an hour and you price work at €35 an hour, that looks like a healthy margin. Work it through properly and it usually is not.
| Cost | Illustrative | Why it belongs in the rate |
|---|---|---|
| Gross hourly wage | €20.00 | What you think the hour costs. |
| Employer PRSI | €2.23 | Around 11% above the threshold. Rates change in most budgets — use the current one. |
| Holiday and public holidays | €2.60 | Four weeks plus ten public holidays. You pay for about 52 weeks and get about 46 worked. |
| Statutory sick leave, pension | €0.40 | Small per hour, real over a year, and rising. |
| Van, fuel, tools, PPE, phone, insurance | €4.00 | An operative cannot work without these. If they sit in overheads they never reach a job. |
| Cost per paid hour | €29.23 | Already far above €20. |
| Cost per chargeable hour, at 80% productive | €36.54 | Travel, loading, waiting on other trades and returns to site are paid and not chargeable. |
So the €35 an hour you were pricing at is a loss of about €1.50 for every hour on site, before a single sheet of material. The numbers above are illustrative — your van costs and your productive percentage will differ — but the shape is almost always the same, and the gap is almost always bigger than contractors expect.
Run your own version of this once. It changes how you price permanently.
| Leak | What happens on site |
|---|---|
| Variations never priced | The customer asks for something extra, the lads do it because it is easier than arguing, and nobody raises a variation. This is usually the biggest single leak and it is entirely recoverable — it just has to be written down the day it happens. |
| Non-productive hours | Two trips back to the merchant, an hour waiting on the electrician, travel between three sites in a day. All paid, none chargeable, and none of it in the quote. |
| Materials waste and over-ordering | Ordered against the drawing, used against reality. If nothing is returned and nothing is counted, the difference is margin. |
| Plant left on hire | The dumper was needed for four days and was on hire for eleven because nobody rang to collect it. Hire invoices arrive a month later with no job number on them. |
| Retention forgotten | Commonly 5%, half released at practical completion and half after the defects period. It is earned profit sitting in someone else's account, and a surprising amount of it is never chased. |
| Overheads never recovered | Office, insurance, your own time quoting and supervising. If these are not in the rate or priced as preliminaries, every job is quietly subsidised by the business. |
Neither changes whether a job is profitable. Both change when you have the money.
Both are routinely mistaken for a pricing problem. A subcontractor on 35% RCT with no VAT coming in can be making excellent margins and still be unable to pay wages on Friday. That is a cash problem with a cash solution, and the fix is a forecast, not a price increase. There is more on that distinction in profitable but no cash.
In this order. Step one is 80% of the result and none of the software.
Every purchase invoice, delivery docket, hire note and timesheet hour gets a job number at the point it is created. Not reconstructed at month end from memory. This is an operational habit, not an accounting task, and it is the whole battle.
The table above, with your own wage rates, van costs and productive percentage. One afternoon, once a year.
A line in a notebook with a date and a price beats a conversation three months later. Price it, send it, get it agreed in writing even if that writing is a text message.
Quoted price, actual labour hours at full cost, actual materials, actual plant, variations. The difference is what you really made. Do it on every job, not just the ones that felt wrong.
One bad job is bad luck. Twelve of them tell you something: a customer who always wants extras, a job type you consistently underprice, a crew that takes longer. That pattern is the money.
If you do more than a handful of jobs a year, you are already guessing on every quote. A business doing €800,000 across forty jobs that gets 3% back on pricing has found €24,000 — which is more than most owners take out in a good month. Small is the reason to do it, not the reason not to.
Xero, QuickBooks and Sage all have tracking categories or project features, and they work. What they cannot do is put the job number on the docket for you. If the coding does not happen on site, the software has nothing to report and you get a very tidy report of nothing.
Some will not, and a system that depends on them doing it perfectly will fail. Start with the thing that is easiest to control — put a job number on every purchase and hire invoice. Materials and plant are often half the cost, they arrive with paperwork anyway, and you can get that right without changing anybody's habits.
If you have job costs recorded properly, your work in progress figure is calculable rather than estimated — which makes the year end quicker and the figure defensible. Your accountant will be glad of it. It is also the number that explains why a profitable year left no cash behind.
The first month shows you what the data is missing. By the third you can see which job types make money. By six months you have enough finished jobs to spot a pattern, and that is the point at which it changes what you quote.
Yes. Margin by job against what you quoted is part of the Analyse tier. I set up the coding with you, then it comes with the monthly accounts — so the job margins and the profit and loss agree with each other, which is not always the case when they are built separately.
Twenty minutes on the phone, no charge. Tell me what you do and how you price it, and I will tell you where the margin is most likely leaking and whether it is worth chasing. If your pricing is sound, I will say that too.