All Industries, Management, Business Tips

5 Keys to Better Commercial Services Job Costing

Joanne Bratton
January 31st, 2023
6 Min Read

As commercial service businesses in the trades continue to contend with rising materials costs and supply chain issues, controlling project costs is increasingly critical to a healthy bottom line.

Commercial service contractors who turn to field management software as a solution find they can perform job costing more efficiently and accurately. Job costing—the process of tracking the costs and revenue of jobs—protects project budgets and profit margins.

ServiceTitan Job Costing Software integrates with your company’s financial data to help commercial service business owners:

  • Manage job progress in real time

  • Make faster decisions to increase profitability

  • Improve cash flow

If your company seeks to automate job costing, or your job costing methods need some refinement, read on to learn from industry pros about how to improve job costing in your commercial services company.

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What is job costing?

Job costing is the process of tracking the accumulation of costs and revenue for a particular project. Job costing includes direct costs like labor and materials, and indirect costs like overhead expenses. Accurate job costing helps companies stay on budget and within a certain profit margin.

Job costing isn’t to be confused with process costing, which is used in the manufacturing industry. Job costing systems help commercial services contractors and construction businesses manage project financials so they can make informed decisions and forecasts for future projects.

Implement a digital pricebook

A digital pricebook eliminates guesswork, providing accurate estimates for your commercial jobs. ServiceTitan customers who use Pricebook Pro see a 13% increase in revenue, year over year, says Eyal Binshtock, Group Product Manager at ServiceTitan.

A digital pricebook stores the services and materials used for jobs in the HVAC, plumbing, drain, sewer, and electrical trades. Instead of manually creating estimates from scratch each time, a technician creates faster estimates with pre-populated services, materials and prices, even on the job site. This integrated, flat-rate solution saves time and ensures each estimate includes overhead costs and protects your profit margins.

Accurate job costing requires an up-to-date pricebook. The best solution for price setting and job costing is to determine your exact costs from your suppliers, then figure profit margins from there. If it’s difficult to find time to maintain your pricebook, ServiceTitan provides regular, seamless updates, enabling you to quickly update your pricebook.

Track project budget vs. actual costs

The job costing process involves tracking the actual costs of specific jobs to ensure they remain within budget. It helps you manage change orders and catch overruns in labor or material costs, so you can make prompt course corrections to keep projects on track.

“Accurate tracking will show holes in effectiveness, efficiency, higher-than-average material costs, or overages in labor,” says Vanessa Gonzales, co-owner and founder of Albuquerque Plumbing, Heating & Cooling Inc. and Senior Manager of Product Utilization at ServiceTitan.

Whether you own a large or small business, effective job costing relies on real-time data. With ServiceTitan Job Costing Software, project managers can instantly see where a job stands based on breakdowns of direct material costs, purchase orders, vendor invoices, equipment, labor burden, and payroll costs.

Customized fields in ServiceTitan show how much of your budget remains, as well as the dollar amount (or percentage) of any variance. 

“You can make it as detailed as you need, break it down by department, phase of the project, and where you stand on which phase has been billed,” Gonzales says. 

In construction projects, a centralized system for job cost reports enables construction companies to efficiently track multiple facets of a project.

“That’s where ServiceTitan is key,” says Brittany Grose, Director of Business Operations at Intown Plumbing in Dallas, which performs residential, commercial and new construction services. “Being able to track from the finance side, having our accounting people watching the money flow. And from the project management side, having them watch their parts. And it holds everybody accountable.”

Streamline timesheets and payroll

As anyone in commercial services knows, inefficient time tracking can wreak havoc on project budgets. When you accurately account for your team’s labor hours, you ensure your employees get paid correctly and keep tabs on the profitability of your projects.

ServiceTitan’s Contractor Payroll Software helps companies easily determine direct labor costs with real-time timesheet tracking and automated bonuses.

Gary Libkuman, Operations Manager at Benjamin Franklin Plumbing, Mister Sparky Electric, and One Hour Heating & Air Conditioning in Howell, Mich., uses ServiceTitan to calculate job costing in his multi-trade business.

When technicians clock in to do a particular job, that person’s time and labor automatically gets added in. Managers can easily add bonus pay by clicking on the payroll adjustments tab or building commissions into specific types of jobs.

NexLvl Services in Phoenix uses ServiceTitan’s configurable payroll element to stay efficient on jobs and increase profit.

“I build our payroll profile, we can pay the guys the same way every single time, and the software does it for us,” says Jarren Heward, Operations Manager at NexLvl Services, which has a 75-25 commercial-residential split. “That has helped immensely in tracking costs and making sure we’re hitting the profit margins we want to—per job and overall as a company.”

Improve progress billing management

Progress billing allows your commercial service company to bill customers in phases as you reach milestones in a project. Not only does it ensure you collect payments on time, but it also increases your company’s cash flow.

ServiceTitan Commercial Service Software integrates with trusted accounting software like QuickBooks, Intacct, and Ryvit’s integration platform, saving time and increasing the accuracy of your accounting system.

A seamless billing process improves your bookkeeping by eliminating manual spreadsheet errors and automating complicated tasks.

Using ServiceTitan, Lawton Group optimized its billing process from 10-14 days to 24 hours, says Shane Jaeger, President of Operations at the Texas-based Lawton Group.

“When we were on paper, we had to get invoices from other cities to Dallas, where our invoice clerk manually entered them into the system,” says Jaeger, whose operating companies include Benjamin Franklin Plumbing, Lawton Mechanical, Lawton Commercial Services, and Buckaroo Pest Protection. “Now with ServiceTitan Mobile and Pricebook, it’s seamless.”

Measure and analyze job profitability

Accurate job costing helps commercial service companies identify profitable (or unprofitable) jobs, a key to boosting gross profit.

Job costing also enables businesses to create accurate estimates and bids for future jobs and gives data-driven insight into how to manage projects more efficiently. Real-time data in financial statements means companies can instantaneously see results.

"We can see where we’re coming out on the job, rather than a month later," says Tyler Edelman, CFO of Edelman Inc., an electrical, HVAC, and plumbing company based in Champaign. Ill. 

Monitoring profitability remains at the core of any successful commercial service business. Better job costing maximizes the profitability—and the success—of your business.

Ready to find out more? Schedule a ServiceTitan demo to see how you can optimize job costing in your commercial service business.

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