Getting paid, 29 October 2026
How to know if a job made money: job costing for trades
A job made money if the price you charged, excluding VAT, is more than four costs added together: labour (at its true cost, not the day rate), materials from the supplier bills, subcontractors and plant, and a fair share of your overheads for the days on site. Job costing is writing those four down against every job, as it happens, and comparing them with the quote.
Why don't you know which jobs make money?
Because the costs arrive in different places at different times, and nobody joins them up. Wages go through payroll, materials arrive as supplier bills weeks later, receipts sit in the van, and the bank balance mixes every job together. Your accounts show whether the year made money. They don't show which jobs did.
The owner of a four-to-five-person renovation builder we work with said it in one line: "I don't know if I'm making money on jobs." He'd nearly gone bust a few times and was close to selling a share of the business. Once his supplier bills went into Xero against each job automatically, he could see cost per job for the first time.
What costs go against a job?
Four, and only four. Anything else is an overhead, already covered by the overhead share.
| Cost | Where it comes from | Watch for |
|---|---|---|
| Labour | Timesheets or day sheets × true cost per man-day | Using the day rate you pay, not the full cost |
| Materials | Supplier bills and receipts | Bills arriving after the job is closed |
| Subcontractors and plant | Subbie invoices, hire bills, skips | Hire left on site after the job ends |
| Overhead share | Overhead per man-day × man-days on site | Leaving it out altogether |
True labour cost is higher than the day rate. In 2026 to 2027 employers pay Class 1 National Insurance at 15% on earnings above £5,000 a year, and holiday is paid on days nobody bills. Work out both numbers once using overheads per man-day, then reuse them on every job.
How do you cost a job? A worked example
Take a two-person builder pricing a garage conversion at £18,500 plus VAT. They planned 20 days on site, so 40 man-days. Their true labour cost is £180 per man-day and their overheads work out at £24 per man-day.
Garage conversion as quoted
| Price, excluding VATagreed with client | £18,500 |
| Labour2 people × 20 days × £180 | £7,200 |
| Materialsfrom merchant quote | £5,400 |
| Subcontractors, plant and skipselectrician, plasterer, skip | £2,100 |
| Overhead share40 man-days × £24 | £960 |
| Profit as quoted£18,500 − £15,660 | £2,840 |
The job ran four days over waiting for a steel and a building control visit. The client added a second window and some extra sockets on site, and nobody priced them. Materials came in at £6,050.
The same job, actual costs
| Price, excluding VATno variations billed | £18,500 |
| Labour2 people × 24 days × £180 | £8,640 |
| Materialsfrom supplier bills | £6,050 |
| Subcontractors, plant and skipsas planned | £2,100 |
| Overhead share48 man-days × £24 | £1,152 |
| Actual profit£18,500 − £17,942 | £558 |
The quote was fine. The job lost four-fifths of its profit to two things you can control: overrun days, and extras done on site without a price.
Your numbers, not a promise. Change any figure to match your firm.
How do you get supplier bills onto the right job?
Make the job reference travel with the order. Give every job a short code, quote it on every merchant order and receipt, and code each bill to that job when it lands in your accounts. In Xero you can do this with tracking categories, which you can add to reports, or with Xero Projects, which shows revenue, costs and margin per project on the Ultimate plan. The step by step is in matching supplier invoices to jobs in Xero.
Receipts are the leak. A £60 trip to the merchant for fixings is easy to lose, and twenty of those on a job is £1,200. See getting your team's receipts into Xero.
What routine keeps job costs up to date?
A short weekly one beats a long yearly one. Twenty minutes on a Friday, or a few minutes a day if someone else does the coding, is enough for a firm running five or six jobs.
- Log days on site.
Who worked where each day. A WhatsApp message from each person before they leave site works if that's what they'll do.
- Code every bill and receipt to a job.
Anything without a job code gets asked about the same week, while people remember.
- Log variations as they happen.
Price them before the work is done where you can. See how to price variations.
- Check each live job against its quote.
Days used versus days quoted, materials spent versus materials priced.
- Close finished jobs with an actual-versus-quoted line.
Note which cost moved. That is your pricing lesson for the next quote.
What do you do with the numbers?
Use them to price the next job, not to feel bad about the last one. If one type of work keeps coming in under margin, raise the price, change how you run it, or stop doing it. For example, a firm might find its large domestic jobs make the least margin of anything it does, the opposite of what the owner assumed.
Over a year, the numbers tell you which clients, job sizes and trades pay. They also stand up when you talk to a bank, an investor or a buyer. For a running view across all jobs, see a job profit dashboard. For a broader list of costs that get missed at pricing, see how to price a job.
Where Nexley fits
Nexley is the AI back office for UK trade firms: five AI assistants run your tenders, quotes, buying, scheduling and invoicing. It connects to the tools you already work in, you run it all from WhatsApp, and you approve everything. £799 a month.
Nexley pulls supplier bills from your inbox and receipts from WhatsApp, codes each one to the job, and keeps a running cost against every quote. When a job runs over its days or materials, it tells you on WhatsApp while you can still do something about it. You check and approve anything it posts.
Common questions
What is job costing in construction?
It is recording the real labour, materials, subcontract and overhead cost of each job and comparing it with the price charged. It tells you which jobs made money, which didn't, and why.
Do I need special software for job costing?
No. A spreadsheet with one row per cost and a job code works if you keep it up. Accounting software with tracking categories or projects saves time once you have more than a few jobs running.
Should I include my own time in job costs?
Yes, if you work on the tools. Price your own man-days like anyone else's, or the job will look more profitable than it is and your pricing will drift too low.
How often should I check job costs?
Weekly while a job is live, and once more when the last supplier bill has arrived. Waiting until year end means you find out too late to change anything.
Sources
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- Xero: Track projects
- Xero: Run financial reports and tracking categories
- Xero: UK pricing plans
Every rule, rate and date above was checked against these sources on the date shown at the top.
Topic: Getting paid
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