Direct Costs/COGS
Direct costs are tied to an individual job. Examples would be “We used ‘X’ amount of this on the Johnson job,” (soil, mulch, pavers, man hours etc.). Direct costs are typically where companies begin their job costing journey.
Types of Direct Costs
| Labor | Work that produces products/services (crew hours) |
| Materials | Plants, Fertilizer, Mulch, Sod, Pavers, Etc. |
| Equipment | Rented Equipment costs for a specific job |
| Misc. Expenses | Gas, lunch, etc. |
Track Direct Costs
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Create Items
Labor Create a line item in the Labor category with Unit of Measure set to Man Hours and cost set to the average hourly cost.
Tip: Use Production Rates to calculate estimated man hours for your sales reps.Equipment Create a line item for all large equipment you use. Typically, the cost will be measured per hour. Expenses
Add expense items for Miscellaneous Materials, Gas, or any other last minute purchases. Materials Create a line item for all materials you use. Use the sub-category on an item to differentiate materials by division.
Tip: Use Production Rates to calculate material quantity for your sales reps.
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Create Item Groups
Item Groups allow you to track labor and materials without showing these prices to your customer. For services that don't change job to job, preload labor and materials. Otherwise, add the labor line item to your item group settings, and materials can be added by the sales rep.
Determine what information is shown on proposals, invoices, and work orders visible to customers and crew with Billable vs. Actual. -
Create Labor Resources
Your crew can track time on a job directly from the My Day Page.
Tip: If using labor resources, make sure your labor settings are selected to Yes for reporting. If not using labor resources, you can manually adjust man hours on your labor line item.
Overhead Costs
Overhead costs are things you need but can’t assign to a specific job. Examples would be your rent on your facility, phones, merchant processing fees, and any non-billable labor (manager’s salaries, etc.).
Types of Overhead
| Production Overhead | Costs associated with running a production process, such as machinery maintenance, rent, utilities, and depreciation. |
| Administrative Overhead | Costs associated with running a business such as employee salaries, office supplies, insurance, and professional services. |
| Selling Overhead | Costs associated with marketing and selling products such as advertising, promotions, and commissions. |
| Financial Overhead |
Costs associated with managing finances such as merchant fees, accounting, auditing, and taxes. |
Calculate Overhead
| How to Calculate |
In SingleOps |
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| Percent Increase | (Total annual overhead $$ / Total Annual Sales) x 100 = % Overhead Rate Example: A business with annual sales of $1,200,000 and annual overhead costs totaling $300,000. ($300,000/ ($1,200,000) x 100 = |
1. Bulk Update Prices/Costs |
| Direct Labor Increase |
Total annual overhead $$ / number of hours on job sites = Hourly Overhead Rate $300,000 / 7,500 = |
Use this article to create Loaded Labor Rates and use suggested formulas to adjust the rate of a Labor Resource. |
Update Pricing
When considering pricing you'll need Direct Costs, Overhead Costs and Profit Goals. Then, you can use the table below to determine Profit Margin or Markup to set prices.
Update Item Costs and Prices
Margin v Markup
| Gross Profit Margin ($) | Total Revenue - Total Direct Costs $100 - $40 = $60 |
| Gross Profit Margin (%) | Gross Profit / Total Revenue $60 / $100 = 60% |
| Net Profit Margin ($) | Total Revenue - (Total Direct Costs + Overhead Costs) ( $40 + $35 ) = $75 $100 - ( $75 ) = $25 |
| Net Profit Margin (%) | Net Profit / Total Revenue $25 / $100 = 25% |
| Price | Cost / ( 1 - Net Profit Margin % ) $75 / (1 - 0.25) = $100 |
| Markup ($) | Unit Price - Unit Cost $100 - $75 = $25 |
| Markup (%) | ( Revenue - Costs ) / Costs $100 - $75 = $25 ( $25 ) / $75 = 33.3% |
Track Margins & Profits
Now that all costs are being accounted for in SingleOps, you can easily track your profits in SingleOps reporting.
Job Costing Video
*Note: Some of the content in this video may reflect a previous version of SingleOps. For a more accurate guide, please refer to the steps listed above.
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