Job Costing a Plumbing Job, Worked Start to Finish

The cost lines and where each number comes from

A job's cost has two layers. Direct costs exist only because of this job. Overhead and truck are the shop's running costs that no single job causes, spread over the hours each job uses.

Labor is the easiest line to understate. The example shop's plumbers earn $30.67 an hour, the 2025 BLS national median for plumbers, pipefitters and steamfitters (BLS). Each billable hour costs the shop $66.07, because the loaded figure adds the employer's Social Security (6.2%) and Medicare (1.45%) taxes (IRS Topic 751), federal and state unemployment tax, workers' comp, benefits and paid time off, then spreads all of it over billable hours only. The breakdown is in labor burden explained.

That last step assumes 65% of worked hours are billable. It is the only measured figure the site's research found: a sample of 300 HVAC companies from Field Promax, a dispatch software vendor, reported by ACHR News. Field Promax measured it as a share of paid time; applying it to worked hours, as the site does, gives fewer billable hours and a higher cost per billable hour. ServiceTitan's labor rate calculator, also from a vendor, calls 30% a good rate. Measure your own, because it moves the loaded cost a lot.

Overhead and truck come from the same labor-rate calculation: $120,000 a year of example overhead shared by three techs, plus one truck per tech, divided by billable hours. Allocating them per labor hour is the site's method; it assumes a job uses the office and truck in proportion to its hours.

Sales tax you collect is not a cost or revenue line. If you collect it and send it to the state, keep it out of the job's price and profit. Sales tax you pay when buying materials is different: it is part of what the materials cost you. Georgia, for example, deems contractors the consumers of the materials they use in a construction project, so they pay tax at purchase (Georgia DOR). Florida treats a contractor the same way on lump-sum, cost-plus, fixed-fee, guaranteed-price and time-and-materials real property contracts (Florida Rule 12A-1.051), and Texas does on a lump-sum residential repair contract, while a separated Texas contract has you collect tax on the materials instead (Texas Comptroller Pub. 94-116). Rules differ by state and contract type; see do plumbers charge sales tax. This is general information, not tax advice; your state revenue department or a tax professional can tell you which rule covers your jobs.

The example job: a water service line, estimate vs actual

The job: replace a water service line from the meter to the house. One tech, a rented mini-excavator, a subcontractor to saw-cut and patch the sidewalk, a permit and a dump fee. The shop quoted a fixed price of $3,450. Every dollar figure for materials, rental, sub, permit and disposal is an example, not a market price; permit fees are set by each city or county.

The shop pays sales tax on materials at purchase, at an example combined rate of 7%. On the actual job, the dig took three extra hours, a second trip for fittings added $41 of material, and the rental ran a half day longer.

Reading the numbers

Gross profit is price minus direct cost. It is the job-level version of the gross profit on a tax return, receipts minus cost of goods sold (IRS Pub. 334). Gross margin divides it by the price: $1,214.46 ÷ $3,450.00 = 35.20% on the estimate.

Net job profit subtracts overhead and truck too. Total job cost is also the job's break-even price: the SBA defines break-even as the point where total cost and total revenue are equal (SBA). Below $2,701.64 the estimated job loses money; after the overruns, the line moved to $3,233.55.

Profit per labor hour is net job profit ÷ labor hours. It is the easiest number to compare across jobs of different sizes. A useful yardstick is the profit built into the example rate itself: $125.20 − $112.68 = $12.52 of net profit per billable hour. The estimate planned $74.84 an hour; the actual job still beat the yardstick at $16.65, but by a thin margin.

Where the $531.91 went. Three extra labor hours cost $198.21. The same hours carried $139.83 of overhead and truck. Materials and tax rose $43.87 and the rental $150.00. On a fixed price, every extra hour costs this shop $112.68 ($66.07 + $46.61), so the overrun in hours did more damage than the extra parts.

What price would the actual job have needed? For a 10% net margin, divide total job cost by 0.90 (the margin formula in markup vs margin for contractors). On the estimate that is $3,001.82, so the $3,450 quote had room. On the actual costs it is $3,592.83. If jobs like this keep running long, the fix belongs in the estimate: more standard hours, a rental allowance for a second day, or both.

Mistakes that make a job look better than it was

1. Costing labor at the wage. At $30.67 an hour, the estimate's labor would be $306.70 instead of $660.70, and without the overhead line the job would appear to make $1,568.46 (45.46%) instead of $748.36. Use the loaded cost per billable hour.
2. Leaving out tax you paid on materials. In a pay-at-purchase state, the tax is part of material cost. Here it was $45.71 on the actual job.
3. Counting collected sales tax as revenue. It inflates price, profit and margin at once. For income tax, Pub. 334 says tax imposed on the buyer that you must collect and turn over is generally not included in income, while tax imposed on you as the seller and collected from the buyer must be included in gross receipts; ask your accountant which applies to you.
4. Two techs, one truck. The per-hour method charges the truck share ($13.74 here) on every labor hour, because the example shop runs one truck per tech. When two techs ride in one truck, the second tech's share still pays for the truck left in the yard; drop it and that truck's cost goes unrecovered. The truck line should cover the trucks you actually run: if your shop has fewer trucks than techs, enter your total yearly truck cost divided by the number of techs as the truck line when you build the rate, instead of leaving the truck off some hours.
5. Forgetting the callback. A return trip for a leak at a fitting belongs to the original job: its hours, at loaded cost plus overhead, come out of this job's profit, not a new ticket's. Warranty and callback cost prices one.
6. Confusing job costing with your tax return. Pub. 334 says labor is usually part of cost of goods sold only in manufacturing or mining. Job costing is a management tool; how costs land on your Schedule C is a question for your accountant.

Next step

Pick one finished job, pull the receipts, the hours and the sub and permit invoices, and enter them in the job cost calculator with your own loaded labor cost and overhead per hour. If you don't have those two numbers yet, start with how to calculate your labor rate.