Why Back Costing Jobs Is Critical For Trade Businesses

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Pricing jobs at the right profit margin is something we teach all of our Trade Business Accountants clients how to do…

But pricing is only step one...

How do you know if you’re actually making that money?

Back cost your jobs...

Every. single. time!

Compare the actual costs of delivering a job once it’s completed against what you originally estimated.

Checking materials, labour hours, subbies, equipment hire, and all the costs spent on a job will tell you whether or not your estimate was actually accurate.

If actual costs are higher, then you’re getting very important feedback on how your jobs are being delivered and how well you’re pricing.

We recently helped a new client who thought they were making a killing on their jobs do this, only to realise they are actually only making 14% to negative gross profit across all of their work types... 

And they were mortified!

They thought they were doing really well and locking in jobs at fantastic prices!

Golden Rule:

Check the hours of labour vs budget: as labour overruns are the biggest cause of profit deterioration.

Calculate the gross profit margin on each completed job: not just the dollar amount of profit.

Check the different stages of the job: (under floor, pre-wire / pipe-out, fit off, drainage etc.)

Use a job management system to automate the process: it will save hours.

And back cost every single job!

If you're an electrician, plumber, painter, carpenter, or any other tradie business owner who is looking for assistance with your tax, accounting, and bookkeeping - click here to learn more!


Bayley Peachey | Client Advisor

About the author

As an accountant with a background in construction Bayley has advised trade businesses anywhere from start-up to $20M, helping to simplify financial management, increase business KPIs and generate millions of dollars’ worth of additional profit.

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