Want to know exactly how much money you're making on each job? Here's the system top service companies use to track and improve their profitability in real-time.

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True Cost Tracking

Start by capturing all your costs. Labor costs go beyond hourly wage. Include taxes, benefits, and insurance in your calculations -- this is called your burden rate. Track actual time spent on each job, including travel time and preparation. This gives you the true labor cost per job.

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Material costs need careful attention too. Track everything used on the job, even small items you might be tempted to overlook. Include fuel costs, equipment wear and tear, and any specialty tools or rentals needed. These "minor" expenses add up quickly and can impact your profitability.

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Job Metrics That Matter

Time tracking needs to be simple but thorough. Record start and end times, breaks, and any unexpected delays. This data helps you estimate future jobs better and see where you can be more efficient.

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Check resource usage too. Track how much material each job requires and note any variations. This information helps prevent waste and improves your estimating accuracy for future jobs.

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Revenue Analysis

Know your actual revenue per job, not just what you charged. Account for any discounts, adjustments, or additional services provided. Consider payment timing too. Early payment discounts or late payment issues affect your real profit margin.

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Look at each service package's profitability as a separate item. Some services might look profitable at first glance, but actually make less money when all costs are considered. Doing a detailed analysis helps you price services correctly and focus on your most profitable offerings. Pricing strategy failures are one of the top financial mistakes that sink service businesses.

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Compare to Estimates

Use your profitability data to improve your estimating process. Compare actual costs and time spent to your initial estimates. This feedback loop helps you quote more accurately and maintain healthy profit margins on future jobs.

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Did you lose money because something happened in the supply chain and supply costs went up? Did a new estimator miss a particular nuance in the pricing? Was this job using a couple new guys who were slower than the more experienced techs? Use these insights to train, equip, and empower your team so the next job is more profitable.

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Start Small

Start tracking one metric at a time if you're new to this. Begin with labor costs, then add materials, then overhead. Building your system gradually helps ensure accuracy and prevents overwhelm.

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Make data entry easy for your team. Use simple forms or mobile apps that can be updated in real-time. The easier you make it to track costs, the more likely your team is to do it.

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Find the Trends

Review your profit margins. Look for trends and patterns in your most profitable jobs. Are certain types of jobs consistently more profitable? Are some customers or services less profitable? This information should guide your business development efforts.

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Compare your margins to industry standards. If you're below average, look for improvement opportunities. If you're above average, analyze what you're doing right and how to maintain your edge.

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Real-Time Profit Watch

When you get really good at doing this retroactively, then you can start to watch for profit leaks during the job. Address efficiency issues or unexpected costs immediately. Sometimes small adjustments during service delivery can save significant money without affecting quality.

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Keep your team informed about profitability goals. When workers understand how their actions affect job profitability, they often find creative ways to improve. Share success stories and lessons learned from particularly profitable jobs.

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Remember that profitability tracking isn't about numbers - it's about making informed decisions that help your business grow sustainably. When you know your true costs and profits, you can focus on the most profitable services and build a stronger business.