Having clear visibility into profit throughout a job’s entire lifecycle is critical to growing revenue and staying competitive in the landscape or lawn care industries. That’s why the best landscaping companies use job costing, the ability to track, identify and compare all estimated costs to actual revenue, to identify which jobs and people generate the most profit for your company.
We’ll check out job costing key benefits and provide job costing tips to help you win more profitable work and grow your landscape business.
What is Job Costing?
Job costing empowers you to track a job’s cost from beginning to end, so you can:
- Know the right price to charge
- Know how the job is progressing
- Know how much money you made against what you estimated
Job costing helps you clearly understand where your profit is coming from, so that you can improve estimate accuracy, eliminate financial waste, and make better business decisions about future jobs and services. Businesses also use job costing to better understand which people are performing, helping you build incentive programs that increase retention and highlight crews or crew members that require more training.
Key Benefits To Job Costing
Estimate With Accuracy: Landscape projects can be complex and require coordinating various resources, such as materials, labor, and equipment. If the costs of these resources are not carefully estimated and tracked, it’s easy for a project to go over budget quickly. This can lead to financial losses for the landscaping company and damage its reputation.
Job costing helps you compare your estimate against what you actually purchased or utilized. Knowing your numbers can help you identify variances and improve future estimating. Pinpoint your estimating weaknesses, so you can make more profit on the next job.
Win More Profitable Work: Not all work is profitable. In fact, some jobs end up operating at a loss by job completion. Job costing will quickly show where you can make the most money, and how to price for profit. When you know your numbers, you can submit more competitive bids and know you’ll still make money ensuring all profit margins and markups are met.
Finding the balance between competitive pricing, delivering quality work, and making a profit can help the company win more business.
Eliminate Financial Waste Through Responsible Resource Management: Job costing can help reduce financial waste by providing a clear and accurate picture of the costs associated with a project. By carefully estimating the cost of materials, labor, and other expenses, you can ensure that you’re not spending more money than necessary on materials or labor.
Find Your Niche and Make More Money: Better understand which type of work and jobs are the most profitable and align best with the type of customer and market you serve. The best landscape businesses use job costing to clearly understand which work and services make you the most money and determine how long they truly take you to complete. Find efficient and repeatable work to improve your revenue per person hour, and properly schedule your crew for an entire season without unexpected gaps between jobs or accidentally double booking.
Job Costing Tips
Avoid Quick Estimating
Quick estimating, or coming up with a job estimate without thoroughly analyzing the costs involved can lead to inaccuracies in the estimated project cost. Without taking the time to carefully calculate the cost of materials, labor, and other expenses, the estimate may be too low or too high, which can lead to problems down the line with sticker shock for the customer or less than expected money within the business’ cash flow.
Avoid quick estimating as it makes it difficult to track the project’s actual costs, manage the project effectively, and ensure it stays within budget. By taking the time to carefully analyze all of the costs involved in a landscaping project, you can avoid the pitfalls and provide their clients with high-quality work at a fair price.
Organized Crews = Better Job Costing
Who gives you your job costing information? Your crews.
Your foremen keep track of their own hours, so it’s critical to set them up for success. When jobsite planning, consider creating a digital job binder that includes all documents, maps and location information, and design specs. You can also include a labor summary, job details, materials lists and purchase orders, and safety information. This helps ensure that what was estimated is being executed onsite.
In addition, make sure your crew is meeting 3 times a day (before, lunch, and after work) to discuss daily goals, equipment and information to make sure jobs are finished on time and on budget.
If you have a complex system that no one trusts or uses, you have the worst of both worlds:
- Your crews waste time tracking inaccurate data
- You waste time entering inaccurate data
- You could miss extras/billing
- No one uses the data because it’s not accurate
- Or you use inaccurate data
To simplify, keep cost breakdowns centralized to functions in a larger area rather than those same functions multiplied across multiple areas.
Lessons learned:
- It’s better to have less information with more accuracy than a lot of information that’s not accurate.
- It’s easier to start simple and add detail later than it is to start with too much detail and try to simplify later.
To simplify, keep cost breakdowns centralized to functions in a larger area rather than those same functions multiplied across multiple areas.
Use Landscape Management Software
Accurate job costing is essential for ensuring the success of landscape projects, and it takes a team effort to get it done right and accurately. LMN’s new job costing feature makes it easier to carefully track and estimate costs through a robust platform that integrates created estimates, tracking actual job inputs and costs across materials, labor, vendor bills, and more.
Book a demo with our LMN Experts to learn how landscape management software can help you job cost efficiently and help your business earn more profit.
