Job costing software helps you easily calculate all of the costs associated with a project, such as labor and materials, and compare them against the revenue that the project generates. This helps you to determine your profits and losses on a per job basis, giving you insight into the overall health of your business.
Job Costing Software vs. Accounting Software
Also known as project accounting software, job costing software differs from larger accounting suites in that it focuses on your business’ individual projects rather than on your business as a whole. It helps you to track all of the inputs and costs that are specific to each project and balances them against its revenue. Using this information, you can better identify opportunities for efficiencies on a project-by-project basis.
This is different than a larger accounting program that looks at your business as a whole. These programs manage all of your business’ costs such as payroll, rent, utilities, taxes, and insurance and revenues such as sales from products, services, or other assets.
Job Costing Software vs. Project Management Software
On the other end of the spectrum, job costing software is similar to, but different than, project management software. While some project management software does include the ability to set basic budgets and track costs for individual projects, their primary purpose is task and resource management — not comprehensive project accounting.
Some job costing software includes a wider range of basic accounting features while others lean more towards project management.
When to Use Job Costing Software
If your business delivers a service that can vary from client to client, then it’s likely that it will benefit from job costing software.
Industries that produce physical goods, such as construction companies, or ones that deliver professional services, such as marketing agencies, all work with a number of variables that directly affect their profitability. Materials, labor, and fees are costs that will change depending on the job’s scope and impact the final amount that your business charges for the product.
Job costing software is used to track these costs and the revenue that the product or service they create generates from them. With this information you can calculate your profit margins on a job-by-job basis as well as the overall profits and losses from all of your jobs.
Bottom Line: Job Costing Software
Accounting software, project management software, professional service automation software, project-based enterprise resource planning (ERP) software, or even time tracking software and some manual calculations can all help you gain insight into your jobs. But a specific solution for job costing will track the amount of time, effort, and resources spent and allow you to easily break the data down to determine your total profitability.