How do I know if a job is profitable?

A full diary is not proof that each job earns enough. A quote may cover the materials you can see while missing travel, preparation, rework or the share of rent and insurance needed to run the business.

Start with direct job costs

Take the amount charged before GST and subtract costs that belong directly to that job. For a Newcastle electrical contractor, imagine a quoted $2,000 job with $650 of materials, $600 of paid labour and $150 of travel and hire costs. That leaves $600 before shared overhead, tax and any financing costs.

The $600 is not take-home profit. If the business needs each similar job to contribute $300 toward vehicles, insurance, office time and other overhead, this job leaves an illustrative $300 before other items. The right overhead method depends on the business; an accountant can help choose one that is consistent.

Compare the estimate with actual work

Record hours and materials as the job happens. If an extra visit adds $180 in labour and $40 in materials, the direct contribution falls from $600 to $380. The job may still be worthwhile, but repeated overruns suggest the quote, scope or delivery process needs attention. Compare the estimate and result rather than deciding from the bank receipt alone.

Use the gross margin calculator for the direct-cost view. Then use the break-even calculator to see how many similar jobs would be needed to cover fixed costs over a period. The pricing guide explains why discounts and cost rises can change the result quickly.

Look for a pattern

Group jobs by type, customer and team. Which ones regularly take longer than quoted? Which customers ask for unpaid extras or pay slowly? A job that looks profitable on paper can still create a cash squeeze if you pay staff and suppliers long before the customer pays. Put large projects into a cash-flow forecast.

Review the monthly result in the business budget and read budget vs actual to identify the cause of a gap.

Important things to know

• Use the same GST basis for price and direct costs.
• A margin on one job is not the same as whole-business net profit.
• Include owner time, rework and shared overhead when judging whether the business model works.