How to Write an Estimate

In general, people like to know how much money they will spend before making a purchase. The cost of service jobs is not as easily detectable as looking at price tags on products. Therefore, many customers will ask for an estimate before committing for a job to be completed. The estimate you give determines your future for gaining the job. An estimate too high will result in job loss. An estimate too low will result in profit loss. Properly knowing how to write an estimate is crucial to your business.

Steps

1. Create a time line of the job to be completed. This will help you form an estimate for the labor portion.
   
   • Write a description of each step of the job.
   • Make a schedule of the hours it will take to complete each step of the job and how many people will be required.
   • Decide if you can oversee all of the work yourself or if you will need to hire independent contractors to help.
2. Determine how much labor will cost you. Calculate how many people you will need to hire and how many approximate hours each one will work.
   
   • Consider any payments that will need to be made to other companies or independent contractors for work.
3. Find out what types of materials are needed for the job. Do you have all the necessary equipment?
   
   • Gain estimates on the cost of materials and rental equipment from calling or visiting supply stores.
   • Gather an estimated total for equipment and supplies used for the job.
4. Come to a decision on what percentage of profit you would like to make over the cost of labor and supplies.
   
   • Multiply this percentage by the subtotal of cost and labor. Add the portion back to the subtotal for a final total.
5. Create a written estimate breaking the total down into categories of labor and supplies.
   
   • Use an official letterhead at the top of your estimate giving the company name, owner name, address, email address and telephone number.
   • Write an expiration date on the estimate to let the potential customer know how long the estimate is valid. Keep in mind that the cost of equipment rental, hired labor and supplies all increase over time. Thirty days is a sufficient length of time.
   • Sign and date the estimate. Keep one copy for your records and give one to the customer.

Tips

• Use the higher end of the spectrum when calculating time and labor costs. This will help in the event an unforeseen circumstance arises.

Warnings

• Do not forget to ensure that the word "estimate" is written on your statement. Large, red writing is preferred. Inform the customer the actual final cost may be higher or lower than the given estimate.

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