What is job costing with examples: the £5,731 rewire

Job costing is adding up everything one job consumes — materials, your own days, subcontractors, overhead, a contingency — then setting that total against the price. The rewire below costs £5,731.19 and sells for £8,817.22. The gap is £3,086.03.

That is the idea, and it is almost aggressively dull. The hard part is not the arithmetic. It is deciding what counts as a cost, then leaving the answer alone when it turns out smaller than the quote you wanted to send.

Both jobs in this post live in the workbook that ships with this site: sixteen material lines each, eight settings, formulas instead of typed totals. Every figure below is recomputed from the line data by a script in the repo, and the workbook agrees with the script to the penny across 270 cell comparisons. If a number could not be reproduced, it would not be here.

Download the workbook if you want to pull it apart while you read. It is 16,345 bytes, five sheets, no sign-up.

The rewire, line by line

TS-001 is a full rewire of a three-bed semi. Sixteen material lines: two 100m drums of 2.5mm twin and earth, a ten-way consumer unit with SPD, ten RCBOs, 45 double sockets, 18 fire-rated downlights, five interlinked smoke and heat alarms. Nine days of the electrician’s own time, two days of a plasterer making good after the chasing. Eleven days on site.

Read the price row again. It is not cost plus 35%. It is cost divided by 0.65, because a margin is a share of the price and a markup is a share of the cost. On this job the difference between the two habits is £1,080.11, which gets its own section below, and is why the workbook has a check cell.

Add VAT at 20% and the invoice is £10,580.66. A 25% deposit is £2,645.16, which clears the £2,021.66 of materials and subcontract labour committed before the first day and leaves £623.50. That is not decoration. It is the part of job costing that decides whether you are financing the customer’s cable.

Five things count, and one of them is you

Materials go in at what you paid, not what you charged. The waste allowance is a separate line because it is a separate decision: £151.06 on this job, 2.6% of the cost, and the first thing people delete when the quote looks high. Delete it and the cost falls to £5,568.05, the price at the same margin falls by £250.99, and the offcuts still go in the skip. You have not removed the waste. You have moved it from the quote to your own account.

Your own days go in at a day rate you would charge, £320 here. That is a choice, and it is worth being honest about it. A sheet that treats your time as free is not a job costing sheet, it is a hobby tracker with totals. Putting a rate on the days means the profit figure is what is left after your time has been paid for, which is the only version of profit that survives a quiet February.

Subcontract labour goes in at the subcontractor’s rate, £180 a day for the plasterer, not your own. Two days, £360. If you add a margin to that, add it in the price, where it is visible, rather than by writing down a cost you know is wrong.

Overheads are recovered per own day, £45 across nine days, £405. The workbook does not charge overhead on the plasterer’s two days, because your van, insurance and phone belong to the days you are running the job. It is crude. It is also the difference between a day rate that covers the business and one that covers the diesel.

Contingency is 8% of the subtotal, £424.53, and it is not a savings pot. It is the price of the day that runs long or the joist that is not where the drawing said. If you finish a job with the contingency intact you priced well or got lucky. Either way it was never profit you forgot to spend.

The same sheet, a different shape

TS-002 is a bathroom refit: seven days of own time plus a half day of an electrician for bonding, £4,731.93 of cost, £7,279.90 at the same 35% margin. Profit £2,547.97. On site for seven and a half days, that is £339.73 a day against the rewire’s £280.55.

£59.18 a day more, 21.1%, from the same settings and the same formulas. Not because bathrooms are better work. Because seven and a half days carry £4,731.93 of cost on one job and eleven days carry £5,731.19 on the other, and the margin is applied to cost, not to effort. This is the thing a job costing sheet shows that a bank balance cannot: not just whether a job made money, but where the money was tied up while it did.

The shape changes with the trade, too. I ran the same model on a plumber’s boiler swap and 67% of the cost was bought in; the plumber’s job costing sheet is mostly a materials tracker with a labour column. On this rewire, bought-in cost is 35.3% of the job’s cost and labour is half. Same arithmetic, different animal.

Two sample jobs are not evidence about your town’s rates. They are evidence that the arithmetic holds when the lines change. That is a smaller claim, and the only one I can support.

Two ways the same numbers lie

The first is markup. Put 35% on the £5,731.19 cost and you get £7,737.11. Profit £2,005.92, which is a 25.93% margin, not 35%. The gap to the margin-correct price is £1,080.11, or £98.19 for every day on site. Nobody sees it in the quote because both numbers look like a 35% job. The free job costing template has the whole argument and the three-cell fix; the short version is that margin divides and markup multiplies, and only one of them answers “what share of this price is mine?”

The second is free labour. Drop the £2,880 labour line, price the rest at the same margin, and the job costs £2,620.79 and sells for £4,031.99. The sheet now reports £1,411.20 of profit. Divide it by eleven days and you have £128.29 a day, against the £320 the sheet had already allowed. That is not a pricing strategy. It is a pay cut with extra paperwork.

There is a third, quieter one: treating contingency as profit at the quoting stage. Price the job without it and the cost is £5,306.66, the price £8,164.09, and the quote looks keener by £653.13. Then the first unexpected day arrives and the margin you thought you had is paying for it.

What job costing is not

It is not a quote. A quote is a promise to a customer; job costing is the private working behind it. The customer sees one number and a scope. You see the six lines that produced it.

Nor is it your annual accounts. It has no fixed costs beyond the per-day overhead, no tax, no drawings, no depreciation policy. It answers one question about one job.

It will not tell you the market rate either. It gives you a floor, built from your costs, and the market gives you a ceiling. When the ceiling is below the floor, the answer is a different job or a cheaper method, not a smaller margin typed into cell B3.

Nor does it replace a timesheet. The model uses nine days because the electrician wrote down nine days. If the days are guesses, the per-day profit is a guess wearing a currency symbol.

Doing it on one job this week

Take the next job you are about to price. Write the material lines from the merchant’s invoice or the quote, not from memory, and add waste. Write the days in half-days, including the hour you spend ordering and the hour you spend on the phone. Put a rate on your own time and a rate on anyone helping. Add overhead per own day and a contingency percentage you can defend.

Then three cells. Cost in one, margin as a decimal in the next, price as =ROUND(cost/(1-margin),2). On this job: 5,731.19 divided by 0.65 is 8,817.22. A check cell, =ROUND(price*(1-margin)-cost,2), must read 0.00. If it reads anything else, one of the three inputs is not what you think it is.

That is the whole method, and it takes about ten minutes more than pricing from the gut. The next rewire you quote will be the first one where you know which number was the guess.