Simple Explanation What is Cost Tracking
Cost Tracking is the process of recording and monitoring the actual costs or expenses associated with your assets, equipment, tools, machinery, projects, orders – basically, anything your business uses. This allows you to see the true costs (typically labor, materials, and outsourced services) and their amounts related to each item. It commonly involves the maintenance of machines, tools, buildings, or project-specific costs. Cost tracking helps you stay on budget.
- A process where you record your actual expenses for a specific item or activity.
- Then, you compare these actual costs to your planned budget.
Aptien Explains for Business Humans:
- Cost tracking is the regular recording and monitoring of costs and expenses to understand how much money you are spending and on what.
How Does Cost Tracking Work?
1. Set a Budget
- Before you start tracking costs, determine how much money you can or want to spend on a specific item or project.
- This is your budget (e.g., project budget, budget for maintaining a specific asset, or marketing campaign budget).
2. Enter & Log Expenses
- Systematically log every expense.
- Track these expenses in the "Costs and Consumption" tab (or similar section of your accounting software).
- Categorize costs based on your needs, typically into three basic types: labor, materials, and contracted services.
3. Monitor Actuals vs. Budget
- Once you record an expense, you have a real-time overview of budget performance.
- The difference between your planned spending and actual expenses is called a variance.
Cost Tracking
You can track and record anything related to a specific asset (like equipment or property) or a project/job, by assigning a financial value to it. You track this based on what makes sense for your business and what your existing systems allow. Either the cost is already a fixed financial amount (like a subcontractor invoice), or you calculate the financial amount by multiplying the unit price by the quantity (for example, the number of hours multiplied by the hourly rate). It always depends on the information you have available from your operations or your financial system.
What Types of Costs Are Most Commonly Tracked
Labor Costs
- You track labor costs by consumed time, most commonly in hours, days, or minutes.
- Actual costs are usually a multiple of the time unit and the unit labor rate.
- It depends on how you calculate the unit of time (typically, it's the sum of payroll costs).
Material Costs
- Costs for consumed material are also typically tracked by quantity, multiplied by the unit price.
- Material units are entered in pieces, liters, kilograms, or other physical units.
Subcontractor and Service Costs
- Subcontractor costs are most often expressed as the total financial volume of the subcontract or purchased services.
- Typically, this corresponds to the invoiced amount for contractors, subcontracts, and similar.
- You track and enter amounts from invoices.
Energy Consumption Costs
- Costs for consumed energy are less frequently tracked in practice because they are often indirect.
- When tracking energy consumption costs, you enter the unit and multiply by the unit price.
- However, you can also enter just the total financial amount for energy, if you know it.
Overhead Costs
- Sometimes it's also necessary to track other operating, overhead costs, which are typically indirect.
- If you know the amount or another unit and can allocate it to an asset, you enter it.
What is Cost and Usage Tracking?
Cost and Usage Tracking is the process of monitoring, recording, and analyzing how business assets — such as equipment, tools, vehicles, machines, buildings, or projects — are used and what they cost to operate over time. In small and mid-sized businesses (SMBs), this practice supports better operational decisions by capturing:
🔧 Maintenance activities and costs
- Labor hours spent on repairs or servicing
- Parts and materials usage
- Scheduled and unscheduled maintenance activities
⚡ Energy and resource consumption
- Electricity, gas, water, and fuel usage
- Heating or cooling costs for buildings
- Energy usage patterns of machines or systems
🚗 Operational usage metrics
- Miles driven (for vehicles)
- Engine hours (for heavy equipment)
- Machine runtime or cycles
- Tool wear or utilization rate
💵 Variable and operational costs
- Consumables and materials used during jobs
- Project-based costs tied to specific sites, clients, or tasks
- Utility bills, lease expenses, and usage-based service fees
📌 Where It’s Used. Cost Tracking Examples
Cost and Usage Tracking is commonly applied to:
- Work Equipment: Power tools, forklifts, manufacturing machines
- Vehicles & Fleets: Company cars, service trucks, delivery vans
- Facilities: Office buildings, single rooms, offices, rental units
- Construction or Service Projects: Job site expenses, subcontractor costs, materials used, tool time logs
- IT Equipment & Office Assets: Printers, HVAC, laptops (when tied to utility or usage tracking)
Why It Matters
Tracking both costs and usage helps SMBs:
- Control spending and reduce waste
- Schedule maintenance proactively to avoid breakdowns
- Understand total cost of ownership (TCO) for assets
- Improve budgeting and project profitability
- Make informed decisions about repairs, replacements, or upgrades
How to Record Costs (BETA Feature)
- See our detailed guide on how to track the actual costs of a specific asset, property, or project.
🛠️ How Cost and Usage Tracking Can be Done
In most SMBs, tracking is done using:
- Spreadsheets (manual tracking in smaller teams)
- CMMS (Computerized Maintenance Management Systems) or Asset management platforms, like Aptien
- IoT integrations (for engine hours, energy meters, GPS data, etc.)
- Mobile apps or logs (for field teams to enter usage or costs)