Many contractors lose money on time and materials work without knowing it. The billing structure feels straightforward: charge for hours worked plus materials used. But what you bill often falls short of what jobs actually cost you.

The most common leak is unbilled labor. You track the hours your crew spends on site, but what about drive time? Setup and teardown? Time spent picking up materials? Running back for a forgotten tool? These hours cost you payroll dollars but often don’t make it onto the invoice. A crew that bills 6 hours might have cost you 8 or 9 hours of paid time.

Then there’s the difference between your billing rate and your true labor cost. If you pay a worker $25 an hour, your actual cost is closer to $32 or more once you add payroll taxes, workers comp, insurance, and any benefits. Bill at $50 per hour thinking you have a nice margin, and you might find it’s thinner than expected after overhead gets factored in.

Materials markup is another place contractors leave money behind. Some pass through material costs at cost, thinking they make their money on labor. But you spent time sourcing those materials, picking them up, keeping inventory organized, and managing the logistics. A 10% to 20% markup on materials is standard and justified.

The only way to know if you’re actually losing money is to track jobs properly. That means recording every hour including non-billable time, logging every material purchase to the specific job, and then comparing what you billed against what you spent. Project and job costing set up correctly will show you exactly which jobs made money and which ones didn’t.

Most contractors who think they’re profitable on T&M work haven’t done this math. They assume things are fine because they’re busy and cash is coming in. But being busy and being profitable are different things.

Start by calculating your true labor burden rate: what each worker actually costs you per hour including all the extras. Then look at your billing rate and make sure there’s real margin there. Track a few jobs closely, every hour and every dollar, and see what the numbers actually say. A Findlay bookkeeper can help you set up this tracking so you get reliable job-level profitability reports instead of guessing.

If you find jobs are barely breaking even or losing money, you have a few options: raise your rates, tighten your tracking so you bill for everything you should, or shift more work toward fixed-price contracts where you control the scope and can price accordingly.