A trade job is quoted on day one, and what it cost often turns up weeks later, after the invoice is out. Construction was the most common industry for company insolvency appointments in 2025–26, at 24.5%.1 ASIC does not give the cause, but a margin you only see afterwards is one you cannot protect.
The short answer: job costing for a trade business means recording four cost lines against every job (labour, materials, subcontractors and variations) and comparing them with the quote every week. Do it while the job is open, so overruns are caught early.
Scene 7 of 7
The quote for job 2205. Switchboard upgrade (sample). The quote sets $10,900.00 of cost against a $14,500.00 price.
Then the week's costs arrive. Timesheets and supplier bills have put $12,350.00 of cost on the job. No single entry looks wrong.
Job software · Quote 2205Accepted
Switchboard upgrade (sample)
Quoted price $14,500.00
- Labour52 h at $100.00$5,200.00
- MaterialsSwitchboard parts$4,100.00
- SubcontractorsSwitchboard sub$1,600.00
- Quoted cost
- $10,900.00
Accepted by the customer.
Timesheets and bills · Job 2205To date
Switchboard upgrade (sample)
Entered this week
- Labour64 h at $100.00$6,400.00
- MaterialsSupplier bills$4,350.00
- SubcontractorsSwitchboard sub$1,600.00
- Cost to date
- $12,350.00
Entered by the office and the techs.
Claude reads both. Claude, Anthropic's AI model, turns the quote and the cost to date into the same fields. It decides nothing.
Plain rules compare them, line by line. The same checks every time, against a limit you set: 5% or $200. Labour and materials are over. Subcontractors are on the quote.
Read by Claude Quote 2205
Read by Claude Cost to date
Labour, hours
Labour, hoursQuote 2205: 52 h
✕Labour, hoursCost to date: 64 h
Labour, cost
Labour, costQuote 2205: $5,200.00
✕Labour, costCost to date: $6,400.00
Materials
MaterialsQuote 2205: $4,100.00
✕MaterialsCost to date: $4,350.00
Subcontractors
SubcontractorsQuote 2205: $1,600.00
✓SubcontractorsCost to date: $1,600.00
Total cost
Total costQuote 2205: $10,900.00
✕Total costCost to date: $12,350.00
- Labour 23% over the 5% limit
- Materials $250 over the $200 limit
- Subcontractors on the quote
The difference, in dollars. Job 2205 is $1,450.00 over its quote. The margin has fallen from 24.8% to 14.8%.
Job 2205 against its quote
Quoted cost$10,900.00
+13.3%Cost to date$12,350.00
- Labour, 12 h at $100.00
- $1,200.00
- Materials
- $250.00
- Over the quote
- $1,450.00
Margin on the $14,500.00 price: 24.8% quoted, 14.8% now. Margin is price less cost, as a share of price.
A person decides. You choose: raise a variation for the extra work, or absorb it. Claude and the rules only bring it to you.
Messages · Job 2205
- Claude, for the officeJob 2205 is $1,450.00 over its quote: 12 hours of labour and $250.00 of materials. The quote has no line for either. The margin is down from 24.8% to 14.8%.
Over the quote Waiting for the officeVariation draftedAbsorbed, on the record
Raise a variation for the extra work on job 2205?
Labour and materials are past their limits, and no extra work has been invoiced.
Drafted for you to price and send.Absorbed, with the reason on the record. The extra work is written against the job: 12 hours and $250.00 of parts. A person prices it and sends it. Nothing goes to the customer from here.Sometimes that is the right call. The $1,450.00 stays in the job's cost and the margin stays at 14.8%. It is a decision, not a surprise.
Job software · VariationDraft
Switchboard upgrade (sample)
- Extra labour12 h, at cost $1,200.00To price
- Extra partsMeter box, at cost $250.00To price
A person prices it and sends it.
Job software · Job 2205Absorbed
Switchboard upgrade (sample)
- Extra workNot billed, by choice$0.00
Margin stays at 14.8%.
End of the day Every open job's cost to date is read and set against its quote each week. Only the jobs over their limit wait for a person, each with a one-line reason. The build never raises, prices or sends a variation.
The four cost lines to record
| Cost line | What to record | The usual trap |
|---|---|---|
| Labour | Hours by job, at a cost rate rather than the rate you charge | Time booked to “general” or the wrong job |
| Materials | Supplier bills and van stock used, against the job | Bills entered weeks after the work |
| Subcontractors | Subcontractor invoices, against the job | An invoice that arrives after you have invoiced |
| Variations | Any work outside the quote: the request, the hours and the parts | Done on site and never written down |
Record each line against the job, not against the business. A job needs a cost for all four lines before its margin means anything. Start with hours, because time is easy to book to the wrong job. Add overheads such as rent and vehicles separately, once you trust the job costs.
A worked job on sample data
Cost, A$ · orange: over the quote
Labour ran 12 hours over at $100.00 an hour. Materials ran $250.00 over. Subcontractors matched the quote.
Illustrative figures, not client data.
Sample data, not a client’s. Job 2205 was quoted at $14,500.00 with $10,900.00 of cost, a 24.8% margin. By invoice week it had cost $12,350.00, a 14.8% margin. The whole $1,450.00 was work the customer asked for on site: 12 extra hours and $250.00 of parts. Without a weekly check, nobody wrote it down and nobody invoiced it. With one, the same $1,450.00 shows as a flag while the job is still open, and a person can raise a variation.
Job 2205, quote against actual, line by line
| Line | Quoted | Actual |
|---|---|---|
| Labour | 52 h, $5,200.00 | 64 h, $6,400.00 |
| Materials | $4,100.00 | $4,350.00 |
| Subcontractors | $1,600.00 | $1,600.00 |
| Total cost | $10,900.00 | $12,350.00 |
| Margin on $14,500.00 | 24.8% | 14.8% |
Margin is price less cost, as a share of price: $3,600.00 of $14,500.00 is 24.8%, and $2,150.00 is 14.8%. Labour cost is $100.00 an hour in this sample. The extra 12 hours and $250.00 of parts came from moving the meter box, which the customer asked for on the day.
The weekly check
- Pull the costs. For every open job, list the labour hours, materials and subcontractor costs to date.
- Compare by line. Set each line against the quote. Work from cost to date, not from the final invoice.
- Flag the overruns. Mark any line over its quote by more than a limit you set, such as 5% or $200.
- Ask what changed. Extra work, a quote that was too low, or rework? Each needs a different fix.
- Raise the variation. Check your contract’s variation terms, then write down the extra work and send it to the customer.
The limit is an example, so set your own. A flag is a reason to ask, not a verdict.
What your software already records
ServiceM8
Its Job Costing add-on shows an estimated profit or loss for each job. Its help calls the numbers estimates.
MYOB AccountRight
A job number goes on each amount, and a Jobs Profit & Loss report shows selected jobs.
Xero
Its job costing page describes comparing budget estimates with actual costs to spot overruns.
Simpro Premium
Its help compares estimated and actual cost for quotes, jobs and cost centres, but not for individual items.
Start with what you already pay for. Each tool is only as good as the costs entered against the job. ServiceM8’s Job Costing is an add-on, available only on certain plans.2 Simpro compares estimated and actual cost for a quote, a job or a cost centre, not for individual items.5
What the ServiceM8, MYOB, Xero and Simpro pages say
ServiceM8. Its help gives the formula as “Profit = (Invoiced Amount) - (Material Cost + Labor Cost + Admin Cost)”. It says “the numbers produced by the Job Costing add-on are estimates”.2 It says you can compare what you estimated a job would cost when quoting “against your actual time and materials used”.2
MYOB AccountRight. MYOB’s help says “you can assign a job number to each individual amount”, and “Only one job can be chosen per line”. It says “You can use the Jobs Profit & Loss report to view the profit and loss of selected jobs.”3
Xero. Xero’s job costing page says you can “compare budget estimates with actual costs to spot overruns”.4
Simpro Premium. Simpro’s help says actual and estimated cost “can be compared for entire quotes, jobs and cost centres, but not individual items”. It adds that “Actuals are added to the job, but do not replace or change the original estimates”.5
Markup is not margin
Sample figures Change them to yours. Amounts exclude GST. Nothing you type leaves this page.
- Quote price, excluding GST
- A$1,000.00
- Gross profit
- A$200.00
- Markup (percentage of cost)
- 25.0%
- Margin (percentage of price)
- 20.0%
25.0% markup on cost is 20.0% margin on the price. They are not the same number.
Price is cost × (1 + markup ÷ 100). Margin is gross profit ÷ price. Cost is entered excluding GST, so add GST to the quote separately. This is arithmetic, not a recommended margin.
Before a materials line goes on a Xero quote, check which percentage you mean. Markup is a percentage of cost. Margin is a percentage of the price. A 25% markup is only a 20% margin. Xero says getting them mixed up “can lead to underpricing”.6 Enter the cost before GST and read both numbers.
Where a person stays in charge
Rules check
Cost to date against the quote, line by line, with the same flags every week.
Claude reads
Timesheet notes and supplier bills, and the one-line note beside a flagged line.
You decide
Every flagged job goes to a named person, who decides whether to raise a variation.
I build workflows that read the job software, the timesheets and the accounting software through their APIs. Rules compare cost to date with the quote. A person decides what to do about extra work. For the owner’s view of job margin, see the job profitability margin calculator.
The Job Profit Report build gives you each job’s margin every week from Simpro, ServiceM8 or AroFlo with Xero or MYOB. It flags jobs below your margin threshold. It costs A$5,900 (AUD, no GST charged).7
If you are not sure which costs to record first, start with a Workflow Audit for A$990 (AUD, no GST charged). It is a 60-minute call, a read-only review of your systems and a written report, with a fixed quote for each of the top 3 things worth automating.7 This is the checklist I would work through with you in the audit.
Questions
What does job costing mean here?
Recording what each job costs, in labour, materials, subcontractors and variations, and comparing it with what you quoted and invoiced.
Which cost lines should I record on every job?
Four: labour, materials, subcontractors and variations. A job needs all four before its margin means anything.
How often should I check job costs?
Weekly, while jobs are open. A weekly check finds an overrun while the job is still open and the details are fresh.
Can AI do job costing?
Rules can add up cost to date and compare it with the quote. AI can read timesheet notes and bills and write a one-line note. A person decides what to do about a flagged job.
Sources
- 1. ASIC, “ASIC Corporate Insolvency Update, Issue 41, October 2026”, insolvency statistics, read 25 October 2026: asic.gov.au/…/asic-corporate-insolvency-update-issue-41-october-2026
- 2. ServiceM8 Help, “Job Costing Overview”, read 25 October 2026: support.servicem8.com/help-center/servicem8-add-ons/job-costing-markup-billing/job-costing-overview
- 3. MYOB Support, MYOB Business, “Jobs” (AccountRight), read 25 October 2026: myob.com/au/support/myob-business/projects/jobs
- 4. Xero, “Job costing software”, read 25 October 2026: xero.com/au/accounting-software/track-projects/job-costing
- 5. Simpro Help Guide, “Estimated and Actual Costs” (Simpro Premium, updated 28 April 2026), read 25 October 2026: helpguide.simprogroup.com/Content/Service-and-Enterprise/estimated-and-actual-costs
- 6. Xero, “How to calculate markup” (Xero AU, published 23 July 2026), read 3 November 2026: xero.com/au/glossary/calculate-markup
- 7. Works Better, “Pricing”, “Job profitability reporting” and “Workflow Audit”: worksbetter.ai/pricing (Job Profit Report A$5,900; Workflow Audit A$990; AUD, no GST charged), worksbetter.ai/job-profitability-reporting (the weekly report and the margin threshold) and worksbetter.ai/workflow-audit
Not sure which to fix first?
Get a free fit check by email and I will say whether it is worth automating. No call needed. The next step is a A$990 workflow audit: the top 3 things worth automating, with a fixed quote for each.
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