The replacement is running, but the second tradie booked time elsewhere and the contactor came from van stock without a job entry. Air conditioning job costing fixes that leak by putting every direct cost against the work that caused it.
Do the maths last. First, build a record that follows the accepted scope through ordering, installation, commissioning and any return visit.
Define the cost boundary before opening the work order
Start with the accepted quote. It tells you what the customer bought, what you excluded and what completion looks like. That boundary controls the comparison between estimated and actual air conditioning job costs.
Keep the quote, work order and site visits distinct.
- The accepted quote holds the agreed scope, price, exclusions and customer approval.
- The work order holds labour, equipment, materials, direct expenses, variations and completion records.
- A site visit records one attendance by one or more tradies.
One job cost record covers one accepted scope. Its work order may contain several site visits when they all complete that scope. Removal on Monday, installation on Tuesday and commissioning on Wednesday can therefore stay in the same record.
Separately approved or unrelated work gets a linked job record with its own work order. Keep the original job reference on the linked record. You retain the service history without mixing two scopes and two sets of revenue.
Copy practical details into the work order before the crew starts. Record the property address, suburb, postcode and state or territory. Name the split, multi-split, ducted or reverse-cycle system being worked on. Add the access route, equipment schedule, exclusions, disposal responsibility, completion test and customer approval contact.
For replacement work, state who handles the existing supports, duct transitions, condensate route, controls, electrical connection, lifting, disposal, startup and commissioning. The air conditioning replacement quote process gives you a scope structure when those items have not been settled.
For refrigerant handling licences and refrigerant trading authorisations, check the national scheme with the Department of Climate Change, Energy, the Environment and Water (opens in a new tab). For electrical, plumbing, gas, building or contractor work, ask the licensing regulator for the state or territory where the property sits which licence covers the actual task. Write the answer on the job before assigning the work.
Set up air conditioning job costing with plain cost buckets
Keep the buckets boring. Tradies should know where an entry belongs without asking the office to interpret the chart of accounts.
Use these direct-cost buckets:
- Labour, split by work phase.
- Installed equipment and job-use equipment.
- Materials, including parts, refrigerant, fittings, controls and consumables.
- Direct expenses, including freight, disposal, subcontractors and external equipment hire.
Use variation and call-back as tags or linked-job classifications. Do not create another set of labour and material buckets for each one. Variation labour remains labour. A replacement contactor remains material. The tag tells you why the cost happened.
Keep general business overhead outside the direct job record unless that job caused a specific expense. Office wages, broad training and workshop rent belong in your pricing framework. Job-specific freight or a lift hired for one installation belongs to that installation.
Do not move missing labour or stock into overhead. Find the timesheet, stock issue or supplier document. Otherwise the job appears more profitable than it was. Once the direct costs are sound, use the job pricing guide to deal with overhead and markup.
Build air conditioning labour cost from the time the job caused
The customer labour charge is revenue. It is not your direct labour cost.
Build air conditioning labour cost from your own payroll records and the employer costs attached to that labour. Use a documented internal cost per paid hour agreed with your bookkeeper or accountant.
Direct labour cost = job hours × documented internal cost per paid hour.
Include job travel in those hours when the job caused the travel. Apply that rule consistently across service, replacement and maintenance work. Air conditioning job costing stops being useful when travel sits on some jobs and disappears from others.
Record the worker, date, work order, work phase and job-caused time. Your phases might include:
- Travel and access.
- Diagnosis and testing.
- Parts or equipment collection.
- Removal and disposal.
- Installation and connection.
- Startup and commissioning.
- Job paperwork and customer handover.
Use phases that match how you estimate. If the quote carries installation and commissioning as separate labour inputs, the actual record should do the same. You can then see which part missed rather than blaming the total crew time.
Capture short visits. A second tradie may help move the outdoor unit and leave before lunch. Their time still belongs to the work order. Post subcontractor invoices separately in direct expenses rather than putting them through the paid-hour formula.
Record why an unplanned collection happened. A planned equipment pickup and a second trip caused by missing van stock both cost the job. They point to different fixes.
Keep general meetings, company-wide training and idle time out of direct labour unless the job caused them. Do not change the rule when a difficult installation starts looking bad.
Move every unit, part and refrigerant entry onto the job
A supplier invoice tells you what the business bought. It does not tell you which property consumed it.
Start the equipment estimate from the accepted equipment schedule. Record the system description, model details, ordered quantity, supplier document, expected work order and installation status. Assign an installed unit using its documented job-specific supplier cost.
Update the status when the unit is installed, returned, damaged or moved to another job. Record model and serial details where your commissioning, warranty and service records require them. Do not leave equipment sitting against the first work order after the crew installs it somewhere else.
Issue van stock when it leaves the van. That includes contactors, fittings, controls, cable, pipe, drain components, filters, fasteners and consumables. Use one consistent stock-cost method supported by your purchase and inventory records, then record the item, quantity, date and work order while the use is still clear.
Treat refrigerant as job material. Multiply the recorded quantity used by its supported unit cost and post that amount to the work order. Connect the quantity to the equipment under your required service records. A cylinder purchase alone cannot tell you which jobs used its contents.
Return unused parts to stock against the same job. Record supplier returns, recoverable components and supported credits. If a supplier or manufacturer may provide a credit, leave it visible as pending until you hold the credit record. Do not reduce the job cost because somebody expects approval.
When a wrong or damaged component creates extra work, record the cause. Transit damage, an ordering error, installation damage and an early component failure need different fixes. The cost entry tells you the loss. The cause note tells you what to change.
Cost hired and company-owned equipment once
Post external hire to the job using the supplier document. State what work caused the hire. If one hire serves several jobs, use a documented allocation based on your own usage records.
Company-owned lifting gear, recovery machines, vacuum pumps and other equipment need a documented usage basis. Build the allocation from your actual ownership, maintenance, operating and usage records, then apply it consistently when the job uses the equipment.
Keep the internal equipment cost separate from any customer-facing equipment charge. One is cost. The other is revenue.
Check the pricing method before adding an internal allocation. If overhead already recovers the same ownership and operating costs, adding them to the job again counts the expense twice. Write down which costs sit in overhead and which are assigned when equipment is used.
Keep service, replacement and maintenance records separate
Different air conditioning work creates different cost trails. Do not force every call-out into the replacement template.
Close a service call when the approved task is finished
Record travel, diagnosis, parts, repair labour, testing and close-out notes. If the customer approves diagnosis but not repair, close the diagnostic scope. Do not leave the work order open while waiting for work that has not been sold.
If a repair is approved, decide whether it extends the current scope or needs a linked job record. Keep the approval with whichever record receives the repair revenue and costs.
Carry a replacement through commissioning
A replacement is not complete when the indoor and outdoor units are in position. Record removal, handling, supports, pipework, condensate, controls, electrical coordination, evacuation, startup, testing and commissioning when they form part of your scope.
Do not close the cost record while commissioning labour or material use is missing. That work is part of the installation result, even when a different tradie returns to complete it.
Protect the maintenance visit scope
Record the assets serviced, tasks completed, materials used, defects found and work left open. Keep extra repairs outside the maintenance visit scope unless the accepted agreement includes them.
For internal review, use one documented method to assign agreement revenue to planned visits. Apply the same method throughout the agreement. This is a management comparison, not tax advice.
When completed visit costs show that the asset list or promised work is wrong, use the air conditioning maintenance renewal review before changing the next agreement.
Stop changed work and write a variation
The replacement reaches site. The existing condensate route, controls, supports or electrical connection do not match the accepted scope. Stop.
Photograph the condition. Describe the added work, labour, materials, equipment, program effect and price. Write a variation and get the customer's approval before continuing.
Give the variation its own reference. Tag its revenue and costs with that reference, but keep the costs in the normal buckets. This lets you review the change without duplicating labour, equipment or materials.
Worked example: the Oak Street variation
This is the house electrical example, not an air conditioning rate card. All figures are sample currency units.
R. Chen at 14 Oak Street received Estimate E-1847 for a bathroom exhaust fan, ducted through the roof, and four LED downlights. The estimate range was 900–1,400. Accepted Quote Q-1847 was 1,105.
The ceiling was lined and the quote excluded chasing. Extra cable and chasing were approved on site as a 160 variation. Invoice INV-1847 was therefore 1,265.
The useful lesson is the stop point. The tradie found a condition outside the accepted scope, recorded the added work and obtained approval before finishing it.
Classify a call-back before booking the return
A customer reports that the system has stopped again. Do not label the visit free rework before anyone checks the cause.
Dispatch should record the reported symptom, original job reference, equipment and preliminary classification. The attending tradie then confirms the cause after inspection.
Keep defective work against the original job
If the return corrects your original workmanship, retain the labour, materials and direct expenses against the original job. The cost belongs in that result because the accepted scope was not completed correctly the first time.
Record the defect and correction. That gives the estimator or field manager something concrete to change.
Track failed equipment and pending credits
If a supplied unit or part failed, record the return visit against the original equipment history. Keep all labour and material costs visible even when a supplier or manufacturer may later provide a credit.
Mark the credit as pending. Post it only when a supporting record arrives. Otherwise job profit starts relying on money the business has not received.
Open a linked job for new or excluded work
Open a linked job record when the cause is a new fault, customer damage or work excluded from the accepted quote. Give it its own work order, scope, approval, revenue and direct costs.
Do not hide new paid work inside the old installation. Do not hide defective work inside a fresh profitable call-out. Classify the cause first.
Compare the quote with actual air conditioning job costs
Use the accepted quote as the baseline. Compare estimated and actual cost by bucket and, where useful, by work phase.
Check labour against labour. Check installed equipment against the equipment allowance. Check materials, hire, freight, disposal and subcontractors against their original inputs. Investigate the difference instead of looking only at the final total.
Use one GST basis throughout the comparison. Decide with your bookkeeper or accountant whether the internal review uses GST-inclusive or GST-exclusive figures. Apply that basis to the quote revenue, invoice revenue, supplier costs and credits.
Send current ABN, GST and BAS record questions to the Australian Taxation Office (opens in a new tab). Do not close the job while the tax basis is mixed or unclear.
Worked example: margin and markup at Oak Street
The Oak Street job cost was 850. Compare that cost with original Quote Q-1847 of 1,105.
Profit against the original quote was 1,105 − 850 = 255. Margin was 255 ÷ 1,105, which is about 23%. Markup was 255 ÷ 850, which is 30%.
Do not calculate profit using Invoice INV-1847 of 1,265 and the job cost of 850. The costs caused by the 160 variation are not given. Combining those figures would overstate the result.
Close the record only when the evidence is complete
Check that every tradie and subcontractor posted their time. Match ordered equipment to the installed system. Review van stock issues, refrigerant use, supplier documents, hire, freight, disposal and commissioning records.
Confirm that each variation has approval and that its revenue and costs carry the same reference. Leave unresolved call-backs, supplier returns and expected credits visible. An incomplete record is not a finished result.
Once the cost record supports the bill, use the air conditioning invoice process to show the accepted work, approved variations and amount due without turning internal cost details into customer line items.
If you want to organise the same records in one job system, see Yes Foreman for air conditioning businesses.
Audit finished jobs before changing prices
Take a small batch of recent service, replacement and maintenance records. Test each one against this air conditioning job costing method and find a missing labour entry, stock issue, equipment allocation, variation cost or call-back classification. Fix the capture step before changing your prices.