Contractor software is good at answering:
Did this job make money?
What it usually does not answer is:
For every hour of work we actually produced, how much did the company keep after paying for everything?
That number is:
And the number right before it is:
The formulas are simple. The hard part is getting the right numbers into them.
Why Most Software Stops at Job Profit
Most contractor software is built around the job:
That works well for answering whether a job made money.
But company profit includes much more:
- office and management salaries
- non-production labor
- payroll burden
- vehicles
- insurance
- advertising
- software
- rent
- other company expenses
Those costs usually live in payroll, accounting, banking and other systems. The production hours may live somewhere else entirely.
So the problem is not calculating the number. The problem is bringing the company and production data together.
The Hour Is Also Different in Every Trade
A "production hour" is not the same everywhere.
An HVAC company may call it a billable technician hour. A landscaper may use field labor hours. A pool company may measure technician time on routes. A painting company may separate painting production from training, meetings, shop time, weather and other non-production hours.
Generic accounting software does not know those differences.
The software has to understand how the business actually works.
The Products Getting Closest Are Specialized
The software products getting closest to these numbers tend to have something in common.
Platforms such as LMN and SynkedUP are built around landscaping. Pool Founder is built around pool-service companies. SingleOps focuses on tree care and landscaping.
Because they understand a specific trade, they can calculate things like overhead per labor hour, margin per man-hour and profit per labor hour.
Other products such as Level, Dapt and SIGNLD take another approach. Instead of owning the whole workflow, they connect payroll, accounting, time tracking and job systems and configure them around the individual company.
So there appear to be two ways to get close:
- Understand one industry very deeply.
- Configure the software around one company's workflow.
That Explains Why the Number Is Missing
To produce a trustworthy Net Profit per Production Hour, software has to know both:
- What did the company actually spend?
- Which hours actually produced the work?
Most software knows one side or the other.
That is why a contractor can have excellent estimating, payroll, accounting and job-costing software and still not see this simple answer:
We made $___ for every production hour the company generated.
The formula was never the difficult part.
The difficult part is building a workflow that keeps the dollars and the production hours connected.
Read: Why True Overhead per Production Hour may be the missing number in your job costing →