Mastering Job Costing: How to Improve Estimates and Grow Your Service Business

If you run a service-based business, be it HVAC, plumbing, roofing, or an agency, you have felt like you underquoted a job before. You won the job, did everything right, but when you ran the numbers at the end, there was nothing left from the job. It’s frustrating, but there is a way to make sure you’re pricing yourself correctly, as well as remaining profitable on the job.

That’s where infrastructure to do project costing and matching to estimates comes into play. Done right, it’s one of the most valuable tools you can use to grow a more profitable and sustainable business.

Getting Real with Your Numbers

Project costing is the process of accurately keeping records for the costs that you have put into a job, from materials, labor, subcontractors, and the overhead costs for your admin team. By tracking these costs against your original estimate, you’re able to create a feedback loop to not only ensure your job is profitable, but that when you go to market for any new jobs, you’re able to provide better quotes that get you profitable jobs.

Estimating is only as good as the data it’s based on, so if you’re winging it with guesses, you’re gambling with your business.

Why It Matters

When you consistently compare your actual costs to your estimates, you can:

·       Improve Future Quotes: You can see where you went wrong in previous jobs with your quotes, allowing you to get better, and making your future quotes more accurate.

·       Identify Your Most Profitable Work: Every job isn’t equal. Project cost tracking shows you which types of projects deliver the best return, allowing you to focus your marketing to win more of these higher margin jobs.

·       Spot Scope Creep Early: When your actuals start to drift away from your estimates, you can flag it quickly. It gives you a chance to reset expectations with the client or make changes before the profitability takes a hit.

Start Simple, But Start

You don’t need a fancy accounting system to get started. A spreadsheet can do the trick for smaller operators, but accounting software like Xero or QuickBooks Online supports estimates, and project costing, allowing you to do it in one software. The key is to become consistent with your operations. You get to capture every cost, match it to the job, and review it once the project wraps.

What We See at Pathfinder

At Pathfinder Accounting & Tax, we work with a lot of service-based businesses, from trades to agencies. The ones who nail project costing are the ones who tend to grow steadily, price with confidence, and build more resilient businesses.

If you want help setting up a better system for tracking job costs and refining your estimates, get in touch. It’s one of the smartest moves you can make for your bottom line.