Was That Job Actually Profitable? How to Check

Short answer: Take the final invoiced price and subtract everything the job really cost: materials, every labor hour at its loaded rate (including your own time and return trips), subs and permits, and the job’s share of overhead. What’s left is net profit; divide it by the price for net margin. Do this for a handful of recent jobs and you’ll see which kinds of work actually pay.

Why Profitable-Looking Jobs Often Aren’t

Most owners know what a job sold for. Far fewer know what it really cost once it was done.

The estimate said the job would take three days. It took four, plus a return trip for a missed item. The customer asked for a little extra work along the way, and nobody wrote it down. The owner spent hours on calls and site visits that never showed up anywhere. And the truck, insurance, office and software costs never got assigned to any job at all.

None of that shows up on the invoice, so the job looks fine. The bank account tells a different story at the end of the quarter.

Where the Money Usually Goes

• Hours that weren’t estimated: return trips, waiting on materials, rework, and crews arriving before the job was ready.
• Owner time: your calls, site visits and coordination cost the business something even if you don’t pay yourself by the hour.
• Unbilled extra work: scope that changed verbally and never made it onto the invoice. See why verbal change orders cost contractors.
• Overhead nobody assigned: trucks, insurance, office staff, rent and software are real costs of every job.
• Markup mistaken for margin: a 50% markup is only a 33% margin.

How to Check One Job in 15 Minutes

1. Start with the final price, including any change orders that were actually billed.

2. Add materials from receipts, including delivery and anything you returned at a loss.

3. Add labor: every hour on the job, including your own, times the loaded hourly cost (wage plus payroll taxes, workers’ comp and benefits).

4. Add subs and other direct costs: permits, dumpsters, equipment rental.

5. Add overhead per job: last year’s overhead divided by the number of jobs you completed.

6. Subtract and divide. Price minus all costs is net profit. Net profit divided by price is net margin.

The Job Profit Check does the math for you and shows the price you’d need to hit your target margin.

A Worked Example

These are example numbers, not a benchmark: a job sells for $12,000. Materials are $3,800, labor is 80 hours at $32 an hour ($2,560), subs and permits are $1,200, and the job’s share of overhead is $1,500.

Now suppose the crew needed a return trip and an extra 16 hours. Labor rises by $512, and net profit falls to $2,428, about a 20% margin. One return trip moved the margin almost five points.

Markup vs. Margin

Margin is always smaller than markup. If you set prices with markup but measure success with margin, you will consistently earn less than you think.

What to Do With the Answer

• Check five to ten recent jobs, not one. Patterns matter more than any single job.
• Group them by type: repair vs. replacement, small vs. large, residential vs. commercial. Some kinds of work usually earn much more than others.
• Look at where the unplanned hours came from, then fix that step, often the job readiness check before scheduling.
• Use what you learn to set prices for the next jobs of that type.

Frequently asked questions

How do I calculate profit on a single job?

Subtract materials, all labor at its loaded hourly cost, subcontractors and other direct costs, and the job’s share of overhead from the final price. The result is net profit; divide by the price for net margin.

What’s a good profit margin for a contractor?

It varies widely by trade, job size and market, so compare your own jobs to each other rather than to a single industry number. Set a target, then find which job types reach it.

Should I include my own time in job costs?

Yes. If you work on or coordinate the job, your hours cost the business something. Leaving them out makes jobs look more profitable than they are.

Related: Job Profit Check · Why verbal change orders cost contractors · Remodeling case study