What did that job actually make?
Price minus materials isn't profit. Put in labor, dump fees, permits and a share of overhead and see what's left, in dollars and per labor hour.
Redline files your receipts against the job and shows profit per job after materials on the Money tab.
Try Redline freeHow the math works
Total job cost is materials, plus labor hours times what an hour of labor costs you, plus other job costs, plus your overhead share as a percentage of the price. Job profit is the price minus that total. Margin is profit divided by the price.
The last line, profit per labor hour, is the one to compare jobs with. A $9,000 job and a $900 job can't be compared on dollars, but you can see which one paid more for every hour your crew spent on it.
Worked example
A $4,800 job with $1,650 in materials, 28 crew hours at $38 an hour, $220 in dump and permit fees, and 10% of the price set aside for overhead:
| Line | Math | Result |
|---|---|---|
| Materials | $1,650 | |
| Labor | 28 hrs × $38 | $1,064 |
| Other job costs | Dump fee and permit | $220 |
| Overhead share | 10% of $4,800 | $480 |
| Total job cost | $1,650 + $1,064 + $220 + $480 | $3,414 |
| Job profit | $4,800 minus $3,414 | $1,386 |
| Profit margin | $1,386 ÷ $4,800 | 28.9% |
| Profit per labor hour | $1,386 ÷ 28 | $49.50 |
Example figures to show the math, not benchmarks for any trade.
The same job, three ways it can go
Same $4,800 price. What a labor overrun and a return trip do to it:
| How it went | Total cost | Profit | Margin | Per labor hour |
|---|---|---|---|---|
| As quoted, 28 hours | $3,414 | $1,386 | 28.9% | $49.50 |
| Ran over, 34 hours | $3,642 | $1,158 | 24.1% | $34.06 |
| As quoted, plus a $300 callback trip | $3,714 | $1,086 | 22.6% | $38.79 |
Six extra hours cost $228 in labor, but profit per labor hour falls by almost a third because the profit is spread over more hours.
Costs people forget
- Dump and disposal fees
- Permits and inspection fees
- Equipment rental and delivery
- Subcontractors
- Return trips for callbacks and punch-list items
- Card processing on the payment
What to watch for
- Labor cost per hour is what an hour costs you, not the wage. Payroll taxes, comp and paid time off push it up. The burdened labor rate calculator works it out.
- Count every crew hour on the job, including load-out, the supply house run and cleanup, not just time on site.
- Pull your overhead share from a full year of numbers. The overhead rate calculator gives it as a percentage of revenue.
- Run it on jobs you've finished, not only on quotes. The gap between the two is where pricing gets fixed.
- If a job type keeps coming in thin, check the price itself with the markup vs margin calculator and the materials side with the materials markup calculator.
Questions contractors ask
What should I put for overhead share?
Your yearly overhead divided by your yearly revenue gives a rough percentage. The overhead rate calculator does that division for you, and the hourly rate calculator helps you add up a year of costs.
What's a good profit margin on a job?
There isn't one number that fits every trade or every job. Compare jobs against each other and against your own past work: which job types, customers and sizes pay best per labor hour.
Why does profit per labor hour matter?
It's how you compare a quick repair with a week-long install. Dollars favor the big job; profit per hour tells you which one paid your crew's time better.
Should I count my own hours as labor?
Yes, if you work on the tools. Put your hours in at what you'd pay someone to do them. Otherwise a job can look profitable only because you worked it for free.
How does Redline track job profit?
Snap a receipt from Money's Expenses tab and file it against the job (you type the vendor and amount). Reports then shows profit per job after materials for the month, quarter or year. Labor and overhead aren't tracked inside Redline yet, so this calculator covers the rest. Money is part of Solo ($29 a month) and up. See expenses and reports.
Related
Keep reading
- Overhead rate calculatorOverhead as a share of revenue, per billable hour and as a markup on job cost.
- Burdened labor rate calculatorSee what an employee really costs per paid hour and per billable hour.
- Markup vs margin calculatorSee profit, markup and margin on any job, or price for a target margin.
- Expenses and reportsReceipts filed against the job, profit per job after materials, and CSV exports.