Job costing tracks all costs associated with a specific project or job so you know if that work was profitable. You assign materials, labor, subcontractors, and overhead to individual jobs instead of lumping everything together.

This matters for contractors, consultants, agencies, and anyone who works on distinct projects. Without job costing, you have no idea which projects make money and which ones lose money.

Good job costing lets you compare estimated costs to actual costs. You can see where jobs go over budget, which types of work are consistently profitable, and how to bid future projects more accurately.

The process involves setting up each job as a separate tracking category in your accounting software, coding all expenses to the correct job, and allocating labor time and overhead proportionally.

Most contractors who don’t use job costing are shocked when they finally implement it and discover some work types or customers are unprofitable. You can’t fix pricing problems you can’t measure.