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How to write a contractor estimate

A good estimate wins the job and protects you once the work starts. Here is what to put in it, how to price it, and the mistakes that cost contractors money.

What every estimate should include

1. Your business details: name, phone, email, and license number if your state requires one on paperwork.
2. The customer and the job site: name, address, and a short description of the project.
3. A scope of work: what you will do, in plain words. “Remove and replace 12 ft of deck boards” beats “deck repair”.
4. Itemized pricing: labor and materials as separate lines so the customer sees where the money goes.
5. Exclusions: what is not covered, like permits, disposal, painting or repairs to hidden damage.
6. Timeline: a start date or window and how long the job should take.
7. Payment terms: deposit, progress payments, and when the balance is due.
8. A valid-until date: prices change, so say how long yours holds.
9. A place to approve: a signature or an approve button so there is a record the customer agreed.

How to price a job

There is no single formula, but most contractors work from the same building blocks:

• Materials: your actual cost, plus a markup that covers sourcing, pickup, waste and returns.
• Labor: hours times your rate, whether you price by the hour or by the job. Include travel and setup time you would otherwise forget.
• Overhead: insurance, tools, fuel, software and your own time on the phone and on paperwork.
• Profit: a margin on top, so a job that runs a bit long still pays you.

After each job, compare what you quoted with what the job really cost. That is how your next estimate gets more accurate. (InvoiceAJob's job profit view shows what each job earned after expenses.)

Terms that prevent arguments

Change orders

Write that anything outside the scope is quoted and approved before it is done. Most disputes start with “I thought that was included.”

Deposits

A deposit confirms the customer is serious and covers early material costs. State the amount and when it is due. Check your state's rules, because some limit how large a deposit can be.

Hidden conditions

If you cannot see what is behind a wall or under a floor, say the price assumes normal conditions and that surprises will be priced separately.

Estimate, quote or bid?

People use these words loosely. In general, an estimate is your best calculation of the cost and may change if the job changes. A quote or bid is usually a firm price for a defined scope. Whatever you call it, put your assumptions in writing so the customer knows what the number depends on.

Common mistakes

• Vague scope that lets the job grow without the price growing.
• One lump sum with no breakdown, which invites haggling.
• Forgetting to say how long the price is good for.
• Waiting days to send it. Fast, clear estimates tend to win.
• No written approval before you buy materials.

Try it now

Use the free estimate template to build one in a minute, or read how to bill the job afterward with the free invoice template.