Job Profitability
Definition
Job profitability is the measure of how much actual profit a single job generated after all direct costs and allocated overhead are subtracted from the billed revenue.
What Job Profitability Means for Your Business
What it means
Job profitability is the report card on each individual job. It answers the most important question in the business: did we actually make money on this one?
Why it matters
Averages lie. A shop can look profitable overall while hemorrhaging money on entire categories of work. Job-level profitability reveals the truth and points to exactly where to raise prices, retrain techs, or stop bidding.
How contractors use it
Software pulls labor hours, material costs, and allocated overhead for each job and compares to billed revenue. Managers review the job profitability report weekly and drill into any job below target margin.
Real-World Example
A plumbing company found that bathroom remodels averaged 42% gross margin but drain cleaning averaged 19%. Repricing drain cleaning by 22% brought it to 34% gross margin and added $86,000 to annual profit.
Related Terms
Job Costing
Job costing is the practice of tracking every labor, material, and overhead cost tied to a specific job so you can measure its true profitability.
Gross Margin
Gross margin is revenue minus the direct cost of labor and materials, expressed as a percentage of revenue.
Net Margin
Net margin is the percentage of revenue that remains as profit after all operating expenses, taxes, and interest are paid.
Effective Hourly Rate
Effective hourly rate is total billed revenue divided by total paid hours, revealing what each tech is actually earning the business per clock hour.
Overhead Allocation
Overhead allocation is the accounting method of spreading indirect costs like rent, insurance, and office salaries across jobs or departments so true profitability can be measured.
Put This Into Practice with Free Software
Kaldr Tech handles job profitability and everything else you need to run your shop. $0/month, 3.5% + 30¢ per transaction.