Many small businesses know how much they invoiced, but not which job made money and which lost it. Here is a simple formula for profit per job and how to track it while the job is still running, not only at the end of the year.
In short
- Profit = revenue minus materials, labour and other job costs.
- Price labour by real hours and your real hourly cost.
- Link costs to the job on the day they happen.
- Look at the margin in percent, not only the amount.
The formula
Profit on a job = revenue − materials − labour − other costs
Revenue is what you invoiced for that job, including extra work. Other costs are everything linked to the job: travel, plant hire, waste removal, subcontractors.
Example
Bathroom renovation, invoiced €6,200 excluding VAT.
- materials: €2,350
- labour: 52 hours × €30 = €1,560
- other costs (travel, waste removal, consumables): €540
Profit: 6,200 − 2,350 − 1,560 − 540 = €1,750, a margin of 28 %.
Why margin in percent
A €20,000 job with an 8 % margin brings in less than a €6,000 job with a 28 % margin, and carries more risk. When you track margin in percent, you quickly see which kinds of job pay off and where you need to raise prices.
Track it while the job runs
If you only calculate profit at the end, it is too late to change anything. When you link costs and hours to the job on the same day, you see straight away if materials or hours are going over plan, and you can react: talk to the client about extra work or change how the work is organised.
Common mistakes
- Your own work is not counted because "I did that myself".
- Costs are kept together for all jobs, so nobody knows what belongs where.
- Extra work is done but not invoiced.
- Supplier receipts get lost.
Profit per project in AdBooks
In AdBooks every job is a project: quotes, invoices, hours, materials and costs in one place. Take a photo of a supplier receipt and the details fill in, and at the end you see exactly whether the job paid off.
Frequently asked questions
How do I calculate the profit on a job?
From the revenue for that job, subtract materials, labour at real hours and all other costs linked to the job.
What is a good margin for trade work?
It depends on the trade and the market. What matters is tracking it by type of job and raising prices where the margin is always low.
Should I count my own work?
Yes. Your own hours are a cost of the job just like your workers’ hours, otherwise the profit looks bigger than it is.