Job Costing 101 for Remodelers
Updated: 6 days ago
Most remodelers know roughly what a job should cost. Far fewer know what each job actually cost once it's finished. Job costing closes that gap: every dollar of labor, materials and subcontractor work is tied to the job it was spent on, so you can see your real margin on every project.
What counts as a job cost
Direct labor: wages for time spent on the job, plus the employer costs that come with them, such as CPP, EI, vacation pay and WSIB premiums.
Materials: lumber, fixtures, finishes and anything else installed or consumed on that job.
Subcontractors: electrical, plumbing, drywall and any other trade you hire for the project.
Equipment and rentals: bins, lifts, tools rented or charged to the job.
Permits and disposal: permit fees, dump fees and similar job-specific charges.
Rent, office wages, insurance, vehicles and marketing are overhead. They matter just as much, but they belong in your overhead budget, not on an individual job.
How to set up your job costing system as a remodeler
Create a job for every contract. In QuickBooks Online, JobTread or whichever tool you use, each signed contract gets its own job or project (and for insurances purposes at the very least, every job or project should have a contract).
At minimum, use a short, consistent list of cost codes. For example: demolition, framing, electrical, plumbing, drywall, finishes. Use the same codes on your estimates.
Code every cost as it happens. Every bill, receipt and timesheet gets a job and a cost code before it's entered, not at year-end.
Track change orders separately. Give each change order its own line in the job or project budget so that extra work is billed, not lost and absorbed.
Compare estimate to actual. Review each open job at least monthly and every job should be analyzed at close-out.
Reading the numbers
Gross margin per job is contract revenue minus job costs, divided by contract revenue. On an $80,000 kitchen with $58,000 of job costs, gross profit is $22,000, a 27.5% margin.
Compare that across jobs and patterns appear quickly: which project types, crews or clients make money, and which ones don't.
Common mistakes when implementing job costing
Leaving out labor burden (e.g., WSIB premiums, EI, and labor-related costs beyond just wages), which makes labor look cheaper than it is.
Buying materials for several jobs on one receipt and never splitting them.
Doing change-order work without a signed change order or an invoice.
Only looking at job costs at year-end, when it's too late to fix pricing.
Riley FAA sets up job costing for residential contractors and keeps it current every month, so you know your margin on every job while it still matters.
This article is general information for contractors, not tax or legal advice. Rules change, so confirm the details for your situation.
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