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Job costing glossary
The words that come up around job costing and trade accounting, explained in plain English. No jargon, no accounting exam, just what each term means for a tradesperson.
Actual cost
What a job really cost once every receipt and every hour is counted, as opposed to the estimate. Knowing it is the whole point of tracking job costs from receipts.
Billable hours
The hours you can charge to a job. The unbilled return visits and the extra half hour on site are the ones that quietly thin a margin.
Break-even
The point where a job's price exactly covers its costs. Price below it and the job loses money, however busy it kept you.
CIS (Construction Industry Scheme)
A UK scheme where contractors deduct tax from subcontractor payments and pass it to HMRC. It needs tidy records of materials versus labour, which job costing gives you.
COGS (cost of goods sold)
The direct costs of delivering a job, mainly materials, labour, and subcontractors. Price minus COGS is your gross profit.
Direct costs
Costs that belong to one specific job: its materials, your labour, subcontractors, and mileage. The opposite of overhead.
Estimate
A prediction of what a job will cost and what you will charge, made before the work starts. Compare it to the actual cost to see how good your pricing is. See job costing vs estimating.
Gross profit
The price of a job minus its direct costs, before any share of overhead. A useful first look, but not the final profit.
Hourly rate
What you charge for an hour of your time. The floor is whatever you would have to pay someone else to do your work. Work yours out with the job profit calculator.
Indirect costs (overhead)
Shared business costs that are not tied to one job: insurance, tools, the van, your phone. You spread a slice of these across every job.
Itemize
To break a receipt into its individual line items rather than recording only the total. It matters when one receipt covers several jobs. See how to itemize a receipt.
Job costing
Tracking every cost that belongs to one job, then setting it against the price, so you can see the profit on that job by itself. The complete guide explains it in plain English.
Job cost accounting
The formal accounting name for job costing: organising costs by job rather than by category. See job cost accounting explained.
Job order costing
The same thing as job cost accounting, costing each job separately. It suits trade work, where every job is different.
Labour
The cost of time spent on a job, both yours and any help, counted at a real hourly rate. Leaving your own labour out is the most common job costing mistake.
Margin
Profit shown as a percentage of the price. Gross margin uses gross profit; net margin uses net profit. A job can have a big price and a thin margin.
Markup
The amount you add to a cost to reach a price, shown as a percentage of the cost. It is not the same as margin: a 50 percent markup is a 33 percent margin.
Materials
The parts and supplies bought for a job. Often watched closely because they are obvious, while smaller costs slip through.
Mileage
The trips to the merchant and to site that a job requires. A real cost, and one that is almost never logged unless you capture it as you go.
Net profit
What is left after every cost, including overhead and your own labour, is taken off the price. The number that actually tells you what a job made.
OCR (optical character recognition)
Reading text, such as a receipt total and line items, from a photo. VanReceipts does this on your device. See on-device versus cloud OCR.
Overhead allocation
Splitting your shared costs across your jobs, for example by dividing your monthly fixed costs by the number of jobs you usually do in a month, and adding that slice to each job.
Quote
The price you give a customer for a job before starting. Good quotes come from knowing what similar jobs actually cost, not from instinct.
Retention (retainage)
A portion of payment a customer holds back until the work is signed off, common on larger jobs. Track it so a job's profit is not overstated before the money lands.
Schedule C
The US tax form sole proprietors use to report business profit and expenses. Every cost you track for job costing is also a line on it.
Self Assessment
The UK system where sole traders report income and expenses to HMRC each year. Receipts captured as you go make the return far easier.
Sole trader
The UK term for a self-employed person trading as an individual. The US equivalent is a sole proprietor.
Subcontractor
Someone you pay to do part of a job. Their cost belongs to that job, whether you paid by invoice or in cash.
Variance
The gap between what you estimated a job would cost and what it actually cost. A large or repeated variance is a sign your quoting needs adjusting.
VAT (value added tax)
A UK tax that VAT-registered traders charge on their work and reclaim on their purchases. Clean per-job records make VAT reporting simpler.
Put the terms to work
VanReceipts turns these ideas into a live profit figure for every job. Scan a receipt from the van, and the job costing keeps itself.
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