Most NZ tradies know roughly what they charged for a job. Far fewer know what they actually made. That gap — between revenue and real profit — is where businesses quietly bleed money, and job costing is the tool that closes it.
Job costing means tracking every dollar spent on a specific job: labour hours, materials, subcontractors, plant hire, and a share of your overheads. When you compare that against what you invoiced, you find out whether the job made money or ate it. It sounds simple, but according to IRD's small business compliance data, poor financial tracking is one of the top reasons NZ trade businesses underreport income or misprice work — not through intent, but because they genuinely don't know their numbers.
This guide walks through how to set up job costing for your trade business, what to track, and how to use the results to quote smarter and grow your margins.
Why Most Tradies Don't Know Their Real Margin
Quoting is usually based on gut feel and experience. You estimate hours, add materials, apply a markup, and send the invoice. The problem is that the real world rarely matches the estimate:
- Jobs run over time because of site issues, rework, or scope creep
- Material prices shift between quote and purchase
- Subcontractors invoice more than expected
- You forget to charge for travel, small consumables, or callbacks
By the time the job is done and invoiced, you've moved on to the next one. No one stops to check whether the $8,000 bathroom reno actually returned anything beyond wages. Over a year, those small losses stack up to a significant drag on your business.
The Four Elements of a Job Cost
A complete job cost has four components:
1. Direct Labour This is the time you and any employees spend on the job, priced at your true hourly cost — not just wages, but the full loaded rate including employer ACC levies, KiwiSaver contributions, annual leave, and a share of overhead. For most NZ trade businesses, the loaded cost of an employee earning $30/hr is closer to $38–$42/hr once you include on-costs.
Use our Hourly Rate Calculator to work out what your time actually costs to deliver.
2. Direct Materials Every item of material, consumable, and hardware purchased for the job. This means keeping purchase receipts separate by job — either physically or in your accounting software. Don't average materials across jobs. Track them individually or you'll consistently undercharge.
3. Subcontractors Any subbies engaged specifically for the job. Their full invoice amount goes into the job cost. If you're adding a margin on subcontractor work (which is standard), track the cost and the margin separately so you can see whether your subby margins hold up in practice.
4. Overhead Allocation This is where most tradies stop — but ignoring overhead means you're not recovering your true costs. Your overhead includes rent (or home office), insurance, vehicle running costs, phone, software subscriptions, accounting fees, and the time you spend on admin, quoting, and chasing invoices.
Divide your total annual overhead by your billable hours to get an overhead rate per hour. If your overhead is $40,000/year and you bill 1,200 hours, your overhead rate is $33/hr. Add that to every job's labour cost.
Setting Up a Simple Job Costing System
You don't need expensive software to start job costing. A spreadsheet works fine for most smaller operations. For each job, record:
- Job reference and client name
- Quoted amount (excl. GST)
- Date started and completed
- Labour hours (broken down by who worked it)
- Material costs (from supplier invoices)
- Subcontractor costs
- Overhead allocation (hours × overhead rate)
- Total cost
- Gross profit (invoiced amount minus total cost)
- Gross profit margin (%)
Once you've done ten or twenty jobs, you'll start to see patterns: which job types are consistently profitable, which clients or project types run over budget, and whether your quoting is systematically off.
Our Job Cost Calculator lets you plug in all four cost components and instantly see your margin — useful both for pre-job estimates and post-job reviews.
What Margins Should You Be Targeting?
Healthy gross profit margins vary by trade, but as a general guide for NZ trade businesses in 2026:
- Residential building (general contractor): 18–28%
- Electrical: 20–30%
- Plumbing and gas: 18–25%
- Painting: 22–32%
- Roofing: 20–28%
- Tiling and flooring: 22–30%
If your actual margins are consistently below these benchmarks, you're either underquoting, over-running on costs, or both. Job costing tells you which.
Note that these are gross margins — before your owner's wage and after all direct job costs including overhead allocation. Net profit (what's left after paying yourself) should be at least 8–12% for a healthy trade business.
Reviewing Jobs and Adjusting Your Quotes
The discipline is in the review. After each job is invoiced and paid, compare actual costs against your estimate:
- Labour over by more than 10%? Your time estimate was wrong, or you had rework. Either adjust future quotes or fix the process causing rework.
- Materials over by more than 5%? Wastage is higher than expected, or you're not accounting for off-cuts and consumables. Add a waste factor to your material estimates.
- Margin consistently lower than expected? Your overhead rate may need to be recalculated, or your markup isn't covering all costs. Use our Breakeven Calculator to see what revenue you need to cover your full cost base.
Do this review monthly — not just at year end. By the time your accountant runs the annual P&L, it's too late to fix the jobs that eroded your margin in March.
Using Job Costing Data to Quote Better
After tracking 20–30 jobs, you'll have real data to quote from instead of estimates. You'll know that:
- Your bathroom renovations average 22 hours of labour, not 18
- Tile work consistently runs 8% over on materials due to cuts and breakage
- Retaining wall jobs take 15% longer when excavation access is tight
Feed that back into your quoting. If your estimates have been consistently low by 15%, increase your quoted hours by 15% across similar job types. That one adjustment can add thousands to your annual profit without charging clients any differently — because you were always doing the work, just not charging for it.
Tools That Make Job Costing Easier
If you're ready to move beyond spreadsheets, Fastcrew is built for NZ trade businesses and includes job tracking, timesheets, and cost reporting that directly feed into your job costing. Timesheets captured on-site sync automatically, so you're not relying on tradies to remember and report hours at the end of the week. The accuracy improvement alone typically recovers more than the subscription cost.
Other options include Fergus, Tradify, and Xero Projects — each has different strengths depending on your trade type and team size.
Getting Started This Week
You don't need to overhaul your whole business to start job costing. Pick your next five jobs and track them properly: write down the hours each day, keep the material receipts in a folder or photo on your phone, and note the subcontractor invoices. At the end of each job, add up the costs and compare to the invoice.
Five jobs. That's enough to see whether your margins are where you think they are — and to start making better decisions about what work to take, how to price it, and where your money is actually going.
Download our free NZ tradie templates at tradietools.nz/templates/ — including a job cost tracker spreadsheet ready to use from your first job.
NZ Tradie Tools provides free calculators, templates and guides for New Zealand tradies. Visit tradietools.nz.