Home Service Job Costing: Estimated vs. Actual

Compare the job you estimated with the job you did

A profitable-looking quote can become a weak job when travel, setup or extra labor takes longer than expected. Job costing compares the estimate with actual delivery costs. It helps you decide what to change on the next quote without guessing whether the problem was price, scope or time.

Use the same cost categories for estimated and actual work. Include paid labor, travel, materials, equipment and an appropriate overhead allocation. Your own working time belongs in the calculation too. Owner labor is not free merely because you did not receive an hourly paycheck for that visit.

Decide which costs are included in each category so you do not count them twice. For example, if your labor rate includes payroll burden, do not add that same burden again as overhead. Use your own records and ask your accounting adviser how to treat costs you are unsure about.

Use person-hours, not just elapsed time

Two workers on site for two hours use four person-hours. A calendar appointment lasting two hours does not describe the full labor cost. Include paid preparation and travel under a consistent policy when comparing jobs.

The $25 figure is an example, not a wage recommendation or market benchmark. Substitute your actual business cost. Record enough context to explain a variance: unusually dirty rooms, obstructed access, a longer route or a customer-requested addition can all change the hours.

Do not treat a time variance alone as proof that someone worked poorly. Compare jobs with similar scope and conditions, check what was recorded, and ask the crew what changed. The goal is a better estimate and clearer plan.

A simple estimated-versus-actual worksheet

This fictional job was sold for $250 before tax. The business estimated $150 in delivery costs, but actual costs reached $180. Revenue minus those costs falls from $100 to $70. The worksheet makes it possible to investigate the difference.

At the estimated cost, the job's contribution after these assigned costs was 40% of revenue: $100 divided by $250. At actual cost, it was 28%: $70 divided by $250. These calculations are not a complete financial statement; taxes, financing and any unallocated costs can change the wider business result.

Keep margin and markup distinct

Markup divides the amount above cost by cost. Margin divides that amount by selling price. Adding 40% to a $150 cost produces a $210 price and a margin of about 28.6%, not 40%. If your target is a 40% margin on those costs, the calculation is $150 ÷ (1 − 0.40) = $250.

Choose a target using your business's actual expenses, capacity and risk. A formula does not establish what customers will accept or what every trade should charge. Test the scope and economics together rather than copying a competitor's visible price.

For a worked recurring-service price, use the lawn-care pricing worksheet and calculator. For changes discovered in the field, use the crew handoff checklist so additional work is approved before it becomes a surprise bill.