Most machine shops find out a job lost money after it ships. By then, the stock is consumed, the hours are gone, and the only thing left is a lesson.
Job costing — tracking what a job actually cost vs. what you quoted — is one of the most powerful tools a shop can use. Here's how to set it up properly.
Why Most Shops Don't Do It
The answer is simple: it takes time they don't have. Pulling a job's actual hours, material usage, and outside service costs, then comparing them to the original quote, sounds like accounting work — not shop work.
But the shops that do it consistently are the ones that grow. Because job costing tells you which jobs to take more of and which to stop quoting the same way.
The Three Numbers You Need
For every completed job, you need:
1. Estimated cost — what you quoted the customer, broken down by labour, material, and outside services.
2. Actual labour hours — the real hours spent on the job, from first setup to final inspection.
3. Actual material cost — what you actually spent on stock, consumables, and outside services.
With these three numbers, you can calculate:
- Variance — actual hours vs. estimated hours
- Actual margin — what you actually made vs. what you planned to make
- Over/under budget status — did this job go sideways, and by how much?
Reading the Patterns
One job going over budget is an anomaly. Three of the same type going over budget is a pricing problem.
Look for patterns in your job costing data:
- Are TIG jobs consistently running longer than estimated?
- Are tight-tolerance parts always eating into margin?
- Is one machine running slower than your rate assumes?
These patterns show you exactly where to adjust your estimating. And adjusting your estimates is how you stop leaving money on the table.
The Variance You Should Worry About
Not all variance is equal. A job that ran 10% over on hours but hit a 28% margin is fine. A job that ran 5% over on hours but hit 8% margin is a problem.
Focus on margin, not just hours. The goal isn't to hit your hour estimate exactly — it's to make money.
Making It Easy
The hardest part of job costing isn't the math — it's capturing the data. Operators forget to log time. Material usage doesn't get recorded. Outside service invoices come in weeks later.
The shops that do job costing well have a system that makes capturing data easy — ideally something their team actually uses without being asked.
Quotara tracks estimated vs. actual hours on every work order, with a live margin calculation that updates as hours are logged. You can see at a glance which jobs are on track and which ones need attention — before they ship. See how it works.