How to work out if a job is actually profitable

You're flat out, and the bank balance still doesn't move

You've got a full diary. Jobs are booked back to back, the phone keeps going, and by most measures the business looks busy. But the money in the account doesn't match the effort going out. Some weeks you finish exhausted and there's barely more sitting there than when you started. The honest answer is you don't actually know which jobs are making you money and which ones are quietly eating it, because nobody ever sat down and did the sums properly. Most small business owners price on gut feel, check whether a job "felt" worth it, and move on to the next one. That's not a criticism. It's just not the same as knowing.

What "profitable" actually means for a job

A job is profitable if, after you account for every cost it caused, including the time you personally spent on it, there's real money left over. That last part is the one almost everyone skips. Materials and fuel feel like costs because you pay cash for them. Your own hours don't feel like a cost because no invoice arrives for them, so they get left out of the sum entirely. The job that "only cost me $40 in parts" might have quietly cost you two hours of unpaid labour on top of that.

The method: working it out properly

Here's a way through it, using a worked example so the steps have somewhere to land. Say there's a mobile mechanic, we'll call him Dave, purely as an example to show the arithmetic, not a real client. Dave does a standard callout: an oil change and basic check, flat fee of $150.

Step 1: List every cost the job actually causes

Not just materials. Parts, consumables, fuel, wear on the vehicle, any subcontractor or software fee tied to that job. For Dave's callout: parts and oil come to $40. His van does the round trip on about $16 worth of fuel and running cost.

Step 2: Work out your real hourly cost

This is the step that changes everything. Take the wage you'd want to pay yourself if someone else were doing this job, then add your overheads (insurance, tools, software, phone, a share of admin time) and spread that across the hours you can realistically bill in a month, not the hours in a working week. Dave wants $45 an hour as a base. His insurance, tools, phone plan and bookkeeping software add up to around $800 a month, and once he's honest about it, he only manages about 160 billable hours a month once travel, quotes and admin are stripped out. That's $5 an hour in overhead. So his real hourly cost, the number that has to be covered before anything counts as profit, is $50 an hour.

Step 3: Add up the actual time the job takes

Not the time on the tools. The whole thing: driving there, driving back, the job itself, and the texting, invoicing and scheduling admin around it. For Dave's callout that's 45 minutes on-site, 50 minutes of driving, and 10 minutes of admin. That's 105 minutes, or 1.75 hours, not the 45 minutes he'd probably guess if you asked him off the cuff.

Step 4: Turn that time into a cost

Multiply the real hours by the real hourly rate. 1.75 hours at $50 an hour is $87.50. That's the labour cost of the job, and it's the number that never shows up on a receipt.

Step 5: Add it all up and compare it to the price

Total cost is parts ($40) plus fuel ($16) plus labour ($87.50), which comes to $143.50. Dave charges $150. Profit on that job is $6.50.

If Dave had done the lazy version of this sum, price minus materials, he'd have looked at $150 minus $40 and told himself the job made $110. The real number is $6.50, and that's before anything goes wrong, like traffic, a part he didn't have in the van, or a customer who wants to chat for twenty minutes.

Step 6: Express it as profit per hour, not profit per job

A dollar figure per job doesn't tell you much on its own, because jobs take different amounts of time. Divide the profit by the total hours the job actually took. Dave's $6.50 over 1.75 hours is about $3.70 an hour of genuine profit, on top of the wage he already paid himself. That number is the one worth comparing across every type of job you do.

What good looks like, versus what most people produce

Most people who attempt this stop at price minus materials, get a number that looks healthy, and feel reassured without having actually learned anything. A proper version includes your own time at a real hourly cost, includes travel and admin as time rather than pretending they're free, and produces a profit-per-hour figure you can line up against every other job type you offer. Good versions also get written down somewhere you'll actually look at again, not worked out in your head on the drive home and forgotten by the next job.

Three mistakes that make the exercise pointless

The first is valuing your own time at zero, or leaving it out of the sum altogether because you're "not paying yourself anyway." Your time is the one resource every job uses, and if it's not in the sum, the sum is fiction.

The second is using an aspirational hourly rate rather than a realistic one. Working out your overhead cost per hour by assuming you bill 40 hours a week produces a number that flatters every job, because almost nobody actually bills 40 hours a week once travel, quoting and admin are accounted for. Use the number you actually hit most months, not the number on a good week.

The third is doing this once, for one job, and assuming it applies to everything you sell. A quick job with no travel and a long job with a lot of driving can have completely different profit-per-hour numbers even at the same price. The exercise only earns its keep once you've run it across the handful of job types that make up most of your work.

What to do with it once it's written down

This is the part most articles on this topic skip entirely, as if the arithmetic is the whole point. It isn't. The point is what you do with the answer.

Once you've got a profit-per-hour figure for each type of job you do, line them up next to each other. The ones sitting near the bottom are the ones worth a hard look, either the price needs to move, the job needs to take less time, or it's worth being pickier about which of those jobs you take on. The ones near the top are worth more of your diary, if you can steer more of that work in. This isn't a one-off exercise either. Costs move, your time gets more valuable as you get better at the work, and it's worth re-running the numbers every few months rather than pricing off a decision you made a year ago.

Doing this properly, across every job type you offer, takes an afternoon if you sit down and work through it job by job. If you'd rather have it done for you, a Pricing & Unit Economics built from your own numbers is $99.