How do I cost a trade job before quoting?

Direct costs, then overhead, then margin

Include all relevant costs, such as materials, labour and overheads. This example assumes a GST-registered business with recoverable input GST and fully taxable sales. If you cannot recover GST on a cost, include that actual cost in your budget. Only add GST to your sales if registered and required for the supply.

Cost the labour at what an hour of that person costs the business, not at the rate you charge. Allocate overhead per labour hour from your own annual overhead total divided by your expected labour hours. Then set the price from a target margin, as in the markup and margin guide.

Sources[1][4]

Job cost sheet you can copy

Paste this into a spreadsheet or print it. Fill the estimate column before you quote and the actual column when supplier and subcontractor invoices arrive.

JOB COST SHEET (all amounts ex GST)
Job number: [J-0000]   Customer: [name]   Site: [address]
Quote number: [Q-0000]   Quote date: [DD/MM/YYYY]   Prepared by: [name]

LINE | ESTIMATE | ACTUAL | DIFFERENCE
Labour: [hours] x $[labour cost per hour] | $[ ] | $[ ] | $[ ]
Materials (from supplier invoices) | $[ ] | $[ ] | $[ ]
Subcontractors (from their invoices) | $[ ] | $[ ] | $[ ]
Overhead allocation: [labour hours] x $[overhead per labour hour] | $[ ] | $[ ] | $[ ]
Other (hire, permits, tip fees, travel) | $[ ] | $[ ] | $[ ]
TOTAL COST | $[ ] | $[ ] | $[ ]

PRICE
Quoted price ex GST: $[ ]
Approved variations ex GST: $[ ] (attach each written approval)
TOTAL PRICE ex GST: $[ ]

RESULT
Profit = total price minus total cost: $[ ]
Margin = profit divided by total price: [ ]%
Markup = profit divided by total cost: [ ]%

VARIATIONS
No. | Description | Date approved | Price | Cost
[ ] | [ ] | [DD/MM/YYYY] | $[ ] | $[ ]

REVIEW
What took longer or cost more than estimated: [ ]
What to change in the next quote: [ ]

Sources[1][2]

Fictional example, estimate against actual

Invented figures: labour cost $60 an hour, overhead allocation $18 per labour hour, target margin 25%. Estimate cost is $4,922, so price = $4,922 divided by 0.75 = $6,562.67. The base job ran 2 hours over and materials rose $160, but an $800 variation approved in writing before work started recovered its own $640 cost.

Sources[1]

Keep the paper behind the numbers

Business.gov.au says you must keep records of income, business expenses including cash purchases, and employee and contractor records, and that most business records are kept for 5 years. Keep supplier invoices, subcontractor invoices, timesheets and variation approvals with the cost sheet so the actual column can be checked. The sheet itself is a management tool, not a prescribed form. Retention periods can be longer for some record types, so check the rules for the particular records.

Sources[2]

Common questions

How do you calculate job costing?

Add the direct costs of labour, materials and subcontractors, add an overhead allocation, then add your margin to get the price. After the job, compare actual costs with the estimate. Business.gov.au lists materials, labour and overheads as costs to include in cost-plus pricing.[1]

How to create a job cost sheet?

Use one row each for labour, materials, subcontractors and overhead, with estimate, actual and difference columns, then rows for price, profit and margin. The copyable sheet above can be pasted into a spreadsheet. Keep the supporting invoices with it, since most business records are kept for 5 years.[1][2]