Working out whether a finished job actually made money

The quote planned a healthy margin. The job is done, the client has paid, everything seems to have gone well. But did the job really earn what you expected? Without checking afterwards, you cannot know. And without knowing, you may repeat the same pricing mistakes on the next jobs. Comparing planned and actual, job by job, is the most direct way to improve your quotes.

What you need

To work out the real profitability, gather:

1. 1the signed quote and any change orders: what you charged;
2. 2the hours actually worked, by you and any staff;
3. 3the receipts for materials bought for the job;
4. 4other costs: subcontractors, equipment hire, waste removal, travel.

The piece most often missing is the time record. A simple daily note (date, job, hours) is enough. Without it, the calculation rests on memory, which is always optimistic.

The calculation

The principle is simple: what the job brought in, minus what it cost.

The figures are examples. Here the job still made money, but the margin fell by a quarter. Your hourly cost rate must include your overheads: see our guide to setting an hourly rate.

Find the cause of the gap

A gap is only useful if you find why. The most common causes:

• time underestimated: a type of task always takes longer than planned;
• forgotten materials: small items, consumables, offcuts;
• unbilled extras: "while you're here, could you…";
• surprises in the existing structure not covered by a caveat in the quote;
• extra trips to the merchant or for forgotten equipment.

In the example, the 12 extra hours might come from longer preparation than planned. That is what to fix in the next quotes.

Correct your standards

Each job review improves the next ones:

1. 1Adjust your standard times: if fitting a certain unit takes 3 hours, not 2, write it down.
2. 2Complete your standard lines: add the small materials and items you tend to forget.
3. 3Strengthen your caveats about existing conditions in your quotes.
4. 4Charge for extras instead of giving them away: see our article on going from accepted quote to invoice.

A price catalogue saved in your software is updated once, and every new quote benefits.

Spot the jobs that pay

After a few months of reviews, patterns appear: some kinds of job earn good margins, others almost nothing. That is valuable information for steering your business:

• promote the most profitable jobs in your marketing;
• reprice the least profitable ones, or turn them down;
• rethink fixed price versus hourly billing: see our article on fixed price vs time and materials.

Keep it simple

There is no need to review every small repair. Do it:

• for every significant job;
• for a few small jobs of each type, to spot trends;
• for any job that felt difficult.

Fifteen minutes per job is enough once the hours and receipts are in one place. If the reviews show your prices are too low across the board, see our article on raising your prices.

Summary