Job costing is an essential part of any successful trade business. While no one can nail it with 100% accuracy—there are always things like material price fluctuations, delays, or changes in scope to consider—getting a solid handle on it is vital to staying profitable. 

The trick is finding that sweet spot between staying competitive and covering your costs.  

“In 2021, costs for construction materials such as steel and timber increased by 10-20%, significantly affecting job costs.” ​

Job costing is crucial for tradies to balance costs and stay competitive. The two main approaches—fixed pricing and calculated estimates—each come with unique benefits and challenges across different trades.

Whether you're a plumber, sparky, painter, or any other tradesperson, getting it right is key to ensuring you’re not undercutting yourself. 

Fixed pricing vs. calculated estimates

When it comes to job costing in trades, there are two main approaches businesses use:

What is a fixed price estimate?

Fixed pricing is the go-to for smaller or straightforward jobs. It’s when you give a set price for the whole project, covering everything from labour and materials to overhead like equipment upkeep, insurance, and salaries. 

This approach works well for tradies tackling things like painting a room, installing a fixture, or doing basic renovations.

Pros:

• Simplicity: The client knows upfront what they’ll pay.
• Predictability: You can build a buffer into your pricing to protect your margins against material cost increases or minor scope changes.

Cons:

• Risk of underquoting: In Australia, where construction labour is among the most expensive in the world, there’s always the risk of underquoting. If labour or material costs rise unexpectedly, you might find yourself absorbing those extra costs, which can eat into your profit

What is a calculated estimate?

Tradies use the calculated estimate approach for more complex jobs. In this method, businesses break down the project into individual cost components—materials, labour, equipment, etc.—and provide a more flexible cost estimate based on actual usage. 

Trades such as electricians and plumbers frequently use this approach for larger installations, where variables like labour time and material usage can fluctuate. 

Pros:

• Flexibility: Costs are more accurate and adaptable to changes in project scope.
• Detailed cost tracking: This method allows you to track where your time and resources are going, helping you refine future estimates.

Cons:

• Potential for cost overruns: If material prices increase or the job takes longer than anticipated, you may end up charging the client more than they expected, which can strain relationships.

Whether you choose fixed pricing or a calculated estimate, tools like plan estimating software can make life easier. They help you track and count materials accurately so you don’t order too much or too little.

Examples of job costing approaches by trade

Every trade tackles job costing a little differently depending on the type of work. Let’s break down how some of the main trades in Australia handle their pricing:

Painters

Painters usually offer fixed pricing, giving a set rate per room or by the square metre (square foot for our imperial users). They’ll factor in the cost of paint, brushes, and rollers and offer an all-in price to the client. 

Here’s an example:

• Charging a fixed price per room, including labour and materials, with a built-in profit margin to cover unexpected expenses.

Plumbers

Plumbers usually vary their pricing depending on the job. Smaller tasks, like installing a toilet or fixing a leak, often have a fixed price. But when it comes to more extensive installations or commercial jobs, they use calculated estimates, charging per fixture and adding a percentage markup on materials.

Here are some examples:

• Charging a fixed rate for toilet installation with a 15% markup on materials or hourly labour rates for larger jobs.
• For a commercial plumbing job, the company estimates 500 metres of piping at $10 per metre and 20 bathroom fixtures at $300 each, with a 20% markup on materials. They may calculate labour at 150 hours billed at $110 per hour, with the total cost adjusted based on actual material usage and time spent.

Electricians 

Electricians generally charge per metre of cable installed or per fitting, with labour calculated by the hour. 

Here’s an example:

• Charging $X per metre of cable with a 15-20% markup, plus hourly rates for labour.

When done right, job costing ensures you’re covering your expenses and helps boost your profits. Whether you're tackling big commercial jobs or smaller residential ones, tools like plan estimating software make the whole process smoother and more accurate. 

For example, you can set up automatic calculations to determine exactly how much cable you'll need for each light or how many hours of labour the job will take so that you can calculate materials and labour without the guesswork. It’s especially helpful for tradies handling more complicated installs.

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