Did this job actually make money?

A full diary feels like proof that a job went well. It proves you were busy, and busy is different from profitable. The invoice gets paid and the next job starts. Nobody adds up the hours that made this job thinner than it looked. Repeat that for every job in a year. “Always busy” quietly turns into “always broke.” The diary will not tell you why.

The hours nobody bills

A job’s real cost is more than the hours on site. Four things routinely eat into a job and never show up as a line on the invoice:

• Unbilled hours. Quoting the job, the phone calls before it started, and chasing the client for a decision all take real time. You bill none of it.
• Travel. The drive there and back happened, and nobody paid for it. On a small job, it can take a bigger share of the day than the work itself.
• Materials waste and second trips. Offcuts, a part that didn’t fit, and an unplanned supplier run all leave a real receipt. The quote may never have included them.
• Rework and callbacks. Going back to fix something costs the same hours and the same fuel as the first visit. You send no extra invoice for it.

These costs are common. Most jobs carry at least one of them. A job that looked fine on the quote can come out thin once you count all four.

The arithmetic, on one real job

Take a job quoted at $400, excluding tax, with $40 in materials and other direct costs. It took six hours on site and an hour and a half of travel. Writing the quote and chasing a decision took half an hour. That makes eight hours in total once you count everything:

Compare that $45 to the target rate this job should have cleared. Say the target is $60 an hour, the figure a rate calculator would give this business owner. The job fell $15 an hour short, or $120 short across the whole job. To hit $60 an hour, the price needed to be $40 in costs plus $60 × 8 hours, or $520. That is a full $120 more than the price charged.

Run your own job through the free job profit check. It does this arithmetic for you. Type in the price, the costs, and the hours. It gives back the real rate and the gap. It also names the block of hours that ate the biggest share of the day.

Read the number

A real rate below the target usually points at one of four causes. Each one has its own fix:

• The scope was underquoted. The price covered less than the job took. See how to price a job so the number holds up to build a price from real costs.
• Extras never made it onto the invoice. Work got added mid-job and was done for free. The extra work and scope scripts cover how to ask for approval before the work happens.
• Travel ate the day. A long drive for a short job can outweigh the work itself. Run the next one like it through the minimum job price calculator before you quote.
• Admin and rework quietly added hours. A slow decision chain or one return visit can turn a good price into a thin one. The scope stays the same.

What to change on the next quote

A single thin job is no reason to panic. Most businesses have a few. A pattern of them is a pricing problem. Suppose the real rate keeps landing under the target across several jobs of the same kind. The fix is raising the price on that kind of work. Working faster will not fix it. Suppose a job’s materials keep eating more margin than expected. Run the numbers through the markup & margin calculator before the next quote. It catches the problem before the job starts.

Make it a routine, not every job

Checking every job this closely would take longer than most jobs are worth. Review three finished jobs a month. Pick a mix of your usual work. Then you catch a pattern before it costs you a whole season. Pick jobs that felt ordinary, and skip the ones that already felt like trouble. A job that seemed fine is exactly the kind that quietly lost money.

This review works on what a job paid. Your account balance today is a different number. A busy month can leave the bank thin if the money from it has not landed yet. The cash flow glossary entry covers that gap. It is a different problem from the one this page solves.

Common questions

How much should I pay myself from a job?

That is a drawings question, and this page does not cover it. This page gives you the real hourly rate the job paid. Once you know that number, you decide whether to draw it all, save some, or leave it in the business. An accountant can help if you are unsure.

Should I put money aside for a quiet month?

Your overhead keeps costing you whether or not a job comes in that week. Insurance, a vehicle, software, and a phone bill all stay on the bill. A quiet-month fund is overhead saved up in advance. You then pay for the quiet month from savings, and the next busy week’s jobs stay free. No fixed amount fits everyone. It depends on your overhead and how uneven your work is.

How much should I keep in the bank?

No single number is right. It depends on your overhead and how uneven your work is. A reasonable start is enough to cover your fixed overhead for as long as your slowest realistic stretch runs. Adjust the figure once you have been through one.

How do I stop underquoting?

Price the job from its real costs and your own hourly rate. A feeling is a poor guide. That is the whole method in how to price a job so the number holds up. The review on this page tells you whether a quote held up once the work was done.

How do I work out my break-even?

Break-even is a business-wide number. It is the revenue you need before a job counts as profit. Until then, jobs only cover your overhead. The break-even glossary entry shows how to work it out. The real hourly rate on this page is the per-job number. It shows whether you are on track to clear break-even.