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Cost of goods sold (builder)

COGS for a builder is the cost directly attributable to a job: materials, subbie labour, plant, site costs. Revenue minus COGS is gross margin. What's in vs out.

By Chalkline. Last updated 25 May 2026. Verified 25 May 2026.

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Cost of goods sold (COGS) for a builder is the cost directly attributable to building a job, the money you spend because that specific job exists. It is the accounting category that sits between revenue and gross margin: revenue minus COGS is your gross margin on the job.

What goes in COGS

Direct job costs, the things you would not have spent without the job:

  • Materials (and freight on them).
  • Subcontractor labour (the subbies’ invoices).
  • Your own productive labour charged to the job (where you cost wages to jobs).
  • Plant and equipment hire for the job.
  • Site costs: skips, temporary fencing, site power, scaffold.
  • Job-specific fees: design, engineering, certification, where billed to the job.

What stays out (overhead)

Costs you carry whether or not a particular job is running are overhead, not COGS:

  • Office rent, admin, software, accounting.
  • Vehicles, tools, and insurances not charged to a job.
  • Marketing and sales.
  • The principal’s salary (unless costed to jobs as productive labour).

Why the split matters

  • Gross margin is the truth-teller. Revenue minus COGS shows whether each job is actually making money at the coalface, before overhead. A job can look busy and still lose money if COGS creeps over the quote.
  • It drives the chart of accounts. A builder’s accounts should separate COGS from overhead so the job-costing reports and the P&L show gross margin per job and overall.
  • It is not net profit. Gross margin still has to cover all the overhead before anything is profit. Pricing to “cover COGS plus a bit” without covering overhead is how builders go broke while busy.

For a builder

  • Code costs to the job. Materials, subbie invoices, and plant hire go to COGS against the job, not into a general expense bucket.
  • Watch COGS against the quote. The gap between quoted COGS and actual COGS is your margin slippage; catch it during the job, not at the end.
  • Keep overhead out of COGS. Mixing them hides whether your jobs or your overhead is the problem.

Also known as: COGS, cost of sales, direct job costs.

See also

Last updated: 2026-05-25. Verified: 2026-05-25. Quarterly review for currency.

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