If you’ve ever quoted a custom job and then crossed your fingers hoping it was accurate, you’re not alone. Small and medium manufacturers know the dance well — estimate material, guess labor, add a little extra “just in case,” and hope it all works out. Sometimes it does. Often, it doesn’t.
We know how hard it is to quote jobs with confidence, especially when you’re juggling custom projects, tight deadlines, and a small team. And honestly? We’ve learned that most job costing is wrong — not because people aren’t smart, but because the process is built on shaky ground.
Let’s dig into why this happens, and more importantly, what you can do about it.
The Real Problem with Job Costing
There are a few consistent patterns we’ve seen across different companies — regardless of industry or product.
1. One Person Holds All the Know-How
In many shops, job costing lives in the head of a single person. They’ve been around the longest. They know the machines, the materials, the quirks of every product variation. And if they go on vacation or get sick? Everything slows down. New jobs wait. Quoting gets delayed.
2. Spreadsheets, Everywhere
It’s not uncommon to see entire quoting systems built on spreadsheets. One for materials. Another for labor. Another for subcontracting. Then a master sheet to pull everything together. The next job? Copy-paste it all to a new folder and start again. It works — until it doesn’t.
3. Every New Estimator Reinvents the Wheel
Without a defined process or consistent logic, every new person who takes over estimating brings their own approach. Quoting becomes a moving target. Prices swing. Profit margins fluctuate. And the job costing data? Forget about comparing it job to job.
The Consequences Are Bigger Than You Think
Getting job costing wrong can snowball into bigger issues:
- Underpricing jobs and losing money without realizing it.
- Overpricing and losing work to competitors.
- Production bottlenecks, when estimated hours don’t match real capacity.
- No learning curve, because estimates are never compared with actual results.
And here's a big one: many companies never actually track what happened. If the quote said 12 hours and it actually took 18, that difference often stays buried. Which means the next quote might be just as wrong.
What You Can Do Instead
The key to accurate costing isn’t magic — it’s tracking. Real data from the shop floor is what turns guesswork into informed decisions. But we get it: for small companies, tracking can be a pain. Especially when most ERPs charge by user and make it expensive just to let everyone log their time.
That’s one thing we decided to fix at Nengatu. Our pricing is based on simultaneous users, not per head, so everyone on the shop floor can use the system without piling up costs. That means better data — and better quotes — over time.
Here are a few ways to improve job costing in your operation:
Practical Tips for More Accurate Job Costing
Track Real Time
Have operators log their time per operation. Even if it's just an high-level time and quantity, it's enough to validate estimates and improve the next quote.
Record Materials and Scrap
Tracking actual materials used (not just what's on the BOM) helps you spot patterns — like how often extra material is needed, or where waste is creeping in.
Break Jobs Into Repeatable Steps
Even in custom work, the steps often repeat: cut, bend, weld, paint, assemble. If you know how long each step takes, based on real data, you can build solid formulas.
Use Simple Estimating Formulas
Instead of trying to estimate every job from scratch, build formulas based on factors like:
- Material type and thickness
- Cut length or weight
- Number of parts
- Setup vs run time
A laser cut might be estimated as: Setup time + (cut length × time per mm).
Apply this thinking across processes and you can quote faster, with more consistency.
Validate and Adjust
Compare your estimated vs actual hours and material costs regularly. Not once a year — but monthly or weekly if possible. Small tweaks over time make a big difference.
Understand Margin vs Markup
A lot of confusion (and lost profit) comes from misusing margin and markup. Margin helps you hit real profitability targets. For example:
- If you want a 30% margin, divide your cost by (1 - 0.3) = 0.7
- If your cost is $100, the price should be $143 (not just adding 30% as markup)
It’s a small shift in thinking, but it adds up — especially when your cost estimates are finally accurate.
Your Next Step? Get Tracking in Place
It’s tempting to keep relying on experience and gut feel, but the only way to improve job costing is to start tracking real data. And for that, you need a system that’s simple enough for everyone to use, without driving up costs or slowing down production.
At Nengatu, we designed our system for exactly that kind of company — small teams doing real work who need to move fast, quote accurately, and keep jobs profitable.
You don’t need to commit to a long rollout or spend months setting things up. Try Nengatu free for 45 days, get your team using it, and start tracking real numbers right away.
Because job costing doesn’t have to be perfect — it just has to be real. Let’s make job costing a little less wrong — together.