The first problem is usually not knowing the actual numbers. Most business owners feel like they’re spending more than they estimated, but they can’t pinpoint exactly where the gap is. Without tracking material costs at the job level, you’re comparing estimates to a vague sense that money disappeared. Real diagnosis requires real data.

Material prices change constantly. If you built your estimate using prices from six months ago, you might be 10-20% off before you buy a single item. Lumber, steel, copper, and petroleum-based products are especially volatile. Your estimate template might reflect what materials cost a year ago, not what you’ll actually pay today.

Waste isn’t factored in. Most trades need 10-15% extra material for cuts, mistakes, and unusable pieces. If you’re estimating exactly what the finished job requires, you’ll always come in over. A 12% waste factor sounds like padding the estimate, but it’s just accounting for how the work actually happens.

Small items add up faster than you expect. The screws, caulk, tape, connectors, and consumables don’t look like much individually. But $20 here and $15 there across a multi-day job can easily add $200-400 that wasn’t in your estimate because you only priced the major materials.

Delivery and freight get forgotten. If you’re having materials delivered to the job site, that cost needs to be in your estimate. Same with dump fees for hauling away debris. These aren’t material costs exactly, but they eat into your margin if you don’t price them.

Scope changes happen without price adjustments. The customer asks for a small addition mid-job. You agree because it seems minor. But the materials for that addition weren’t in your original estimate, and you didn’t quote the change. A few of these per job and your material costs are significantly over.

Rush orders cost more. When you run short on a job and need materials immediately, you pay premium prices at the closest supplier rather than your usual vendor with better pricing. Poor planning on material quantities leads to expensive fill-in runs that weren’t in the budget.

The fix starts with job costing that tracks every material purchase to the specific project it went to. When the job is done, compare what you actually spent to what you estimated. Do this for 10 or 20 completed jobs and patterns emerge. Maybe your drywall estimates are solid but your electrical material estimates are consistently 25% low. Maybe you’re always running over on jobs that take more than a week because scope creep compounds.

Update your estimate templates based on what you learn. If you’re consistently over on certain material categories, either your quantities are wrong or your unit prices are outdated. Build waste into your standard calculations. Add line items for the incidental materials you always forget.

Working with a Northwest Ohio bookkeeping service that understands trades work makes this easier. They can set up your system to capture costs at the job level and run reports showing estimate versus actual for every completed project. That’s how you stop guessing and start knowing exactly where your margins are going.