RHACOVA

Job costing and profitability

What Is True Job Cost?

Most jobs are not underpriced by a big number. They are underpriced by a dozen small costs nobody wrote down.

The short answer

True job cost is every cost the job causes, listed by class rather than lumped together: material, loaded labor, equipment, subcontractors, disposal, permits and fees, mobilization and delivery, and any other direct cost. If you also allocate overhead to the job, that allocation is its own separate line — never hidden inside material or labor.

The cost classes

Material
Everything consumed by the work, including the fasteners, adhesives and consumables that never make it onto a takeoff.
Loaded labor
Crew hours at the loaded rate, not the wage.
Equipment
Rental, fuel, and an internal charge for owned equipment used on the job.
Subcontractors
Contracted trades, at the price you are committed to pay them.
Disposal
Dumpsters, dump fees, haul-off trips.
Permits and fees
Permits, inspections and any fee the job triggers.
Mobilization and delivery
Getting people, tools and material to and from the site, including the trips nobody logs.
Other direct costs
Everything else the job caused: temporary protection, site facilities, specialist testing.

The formulas

Direct cost = sum of all cost classes

True job cost = direct cost + overhead you explicitly allocated

Overhead allocation is optional and it is a choice. You can allocate as a percentage of direct cost, as a dollar amount per labor hour, or as a flat amount — or you can leave it out of job cost entirely and recover overhead through pricing. What you must not do is bury it inside another class, because then neither the class nor the total can be compared against anything later.

Worked example

  • Material: $4,200.00
  • Loaded labor: $6,800.00
  • Equipment: $450.00
  • Subcontractors: $1,500.00
  • Disposal: $375.00
  • Permits and fees: $260.00
  • Mobilization and delivery: $310.00
  • Other direct costs: $180.00
  • Direct cost: $14,075.00
  • Allocated overhead (12% of direct cost, chosen explicitly): $1,689.00
  • True job cost: $15,764.00

The four smallest lines — disposal, permits, mobilization and other — add up to real money on a job this size. They are also the four most commonly left out of a quick estimate, which is why underpricing usually arrives as a slow leak rather than a single dramatic error.

True job cost is not a price

Nothing in this total pays you. A price is built on top of it, using a target margin — the subject of markup vs margin — and the profit that results is only real once actual costs are known. RHACOVA keeps that chain intact: an Estimate holds the cost classes, the Job it becomes freezes them as a baseline, and actual costs are tracked against that baseline rather than replacing it.

Common mistakes

  • Costing labor at the wage instead of the loaded rate.
  • Forgetting disposal, permits, delivery and mobilization — the quiet four.
  • Folding overhead into material or labor, which makes both numbers unusable for later comparison.
  • Using the subcontractor's verbal number instead of the committed price.
  • Leaving out warranty and callback work you know from experience will happen.
  • Counting the owner's site time as free because no payroll transaction exists for it.

Quick answers

Does overhead belong in job cost?
Only if you allocate it deliberately and show it as its own line. Burying overhead inside material or labor makes both numbers useless for comparison later.
What costs get forgotten most often?
Disposal and dump fees, permits, mobilization and delivery, equipment rental minimums, and the unbilled hours of the owner who ran the job.

Run the numbers

Every cost class separately, the direct cost subtotal, any overhead you explicitly allocate, and the true job cost.

Open the True Job Cost Calculator

Free, no account, and the answer stays on the page.

Cost the job line by line

A RHACOVA Estimate holds each cost class separately, and the Job it becomes tracks the actual costs against that baseline as the work happens.

Start an estimate

How RHACOVA defines these terms

Every calculator, estimate and job in RHACOVA uses one set of financial definitions, and they are written down rather than implied. Read the RHACOVA methodology for the full list of definitions this article relies on.

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