5 Job Costing Mistakes That Make Your Profit Numbers Wrong

Job costing only helps if the inputs are honest. Most contractors who "already do job costing" are still making one or more of these errors — and every mistake pushes reported margin higher than reality. Fix the inputs and the same jobs look very different.

1. Using unburdened labor rates

Pricing off the $28–$35 wage on the paycheck is the most common error. Payroll taxes, workers' comp, benefits, and paid time off push the real cost to something like $42–$52/hour for many field techs. Cost a job at the raw wage and every ticket looks 30–50% more profitable than it is.

Fix: Calculate a fully burdened rate and use it everywhere — quotes, job costing, and your calculator inputs.

2. Ignoring travel time

Logging only onsite hours makes short calls look like winners. Drive time is paid labor whether the customer sees it or not. Shops that skip travel in job costing systematically overrate dispatch-heavy days.

Fix: Log round-trip travel per job, or use a conservative average by zone until you track actuals.

3. Forgetting vehicle cost per mile

Fuel receipts are easy to remember. Depreciation, maintenance, tires, and insurance on work vehicles are not. Miles still cost money when the pump price is not top of mind.

Fix: Apply a per-mile rate (often $0.55–$0.75 for light trucks) to job miles, not just fuel receipts.

4. Skipping overhead allocation

Revenue minus labor and materials is gross profit, not net job profit. Rent, software, office staff, marketing, and vehicle payments have to be covered by jobs eventually. Without an overhead rate per labor hour, you cannot tell which tickets actually fund the business.

Fix: Divide monthly overhead by billable hours to get an overhead $/hour and apply it to onsite plus travel hours on each job.

5. Not allocating lead and marketing cost

A job from Google Ads, Angi, or a pay-per-lead platform carries acquisition cost. Spreading marketing only at month-end hides which services and channels produce real margin. A "winning" job type on average can be a loser on paid leads.

Fix: Assign a lead cost per job when the source is paid, or use an average allocation by channel until you track tighter.

How wrong numbers compound

Stack two or three of these mistakes and a job that looks like 45% margin might be 12% — or negative. That is how owners end up surprised at tax time despite a full schedule.

The fix is not a more complex spreadsheet. It is consistent inputs on every ticket: burdened labor, travel, vehicle miles, overhead per hour, and lead allocation when relevant.

Stress-test your method on one job

Take a job you thought was profitable and run it through the job profitability calculator with all five cost lines filled in. If the margin drops sharply, you found which shortcuts your current process is taking.