Job costing means adding up what one job actually cost you — labor, materials, other direct costs — and comparing that total with what you charged. You do it after the job closes. The gap between the estimate and the real numbers is what changes your next quote.
What is job costing, and what did the job earn?
Job costing compares one job's real costs against its price. Three lines carry it: labor at your hourly cost with payroll burden in it, materials consumed, and other direct costs charged to that job alone. Below, a fictional painting company costs a $4,000 interior repaint.
| Cost line | Estimated | Actual | Variance | What it points at |
|---|---|---|---|---|
| Labor | $1,600 | $1,950 | +$350 (22% over) | The hours, or a scope that grew |
| Materials | $800 | $950 | +$150 (19% over) | The takeoff, or waste and extra trips |
| Other direct costs | $200 | $200 | $0 | Nothing to fix here |
| Total direct costs | $2,600 | $3,100 | +$500 | 70% of the miss is labor |
| Left on the $4,000 quote | $1,400 | $900 | −$500 | 35% of the quote, down to 22.5% |
The job made money. It made $500 less than the estimate promised. If you price by markup and read the result as margin, that gap runs wider still — markup vs margin is the arithmetic.
Why does the variance on each line matter more than the total?
A total variance tells you the job missed; a per-line variance tells you what to fix. The painting job missed by $500, and $350 of it is labor, so re-pricing paint recovers $150 at most. You only know that because the lines are split.
One rule reads the table: if a single line is over, that line's estimate is wrong, and if every line is over by about the same share, the scope was wrong rather than the rates.
Write the reason on the same row as the variance, while the job is fresh. "Two hours waiting for site access" changes how you schedule the next one. "Labor too high" is the number said twice.
Added work is only a loss when nobody priced it. A signed change order turns those two hours into $350 of revenue instead of $350 of variance.
Which three questions change your next quote?
A cost review pays only when it changes a number you will use again. Ask these three on the same page as the variance table, while the reasons are still written next to the numbers. Answer each one with a number.
- Were the hours wrong, or the job bigger than quoted? Raise the hours, or fix the walkthrough.
- Did the customer get work nobody priced? Fix the approval step, not the price.
- Would I sell this job again at $4,000? At $3,100 of cost, decide the price now.
A cost you cannot find is marked missing, never zero. Barry reports a missing cost input as missing rather than guessing it, and it cannot produce a complete job cost report unless every cost input is connected.
There are three practical ways to do this: use a spreadsheet, ask your accountant or bookkeeper, or connect your tools so Barry AI can combine estimates, time, and receipts, calculate job cost and gross profit, and explain the biggest differences.
Barry, cost my latest completed job using the connected estimate, time entries, and expenses. Compare planned and actual gross profit, explain the largest differences, and list any missing inputs.
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