How to Write an Estimate for a Business

An estimate should include the cost of materials and labor.

Writing an estimate for a business can be a tricky task. If the estimate is too low, you may not be able to cover your costs. If the estimate is too high, you may discourage an otherwise interested customer. It is usually better to err on the side of a high estimate because it is preferable to lose a potential job than to be awarded one on which you lose money. In addition, if you manage to complete a job for less money than you estimated, the customer will be pleased.

Things You'll Need

• Materials costs
• calculator

Instructions

1. Cialculate the amount of time you will require to complete the job. Gather as much information as possible relevant to figuring this amount. Review time sheets for previous jobs similar to the current one in order to determine the typical amount of time necessary to perform the requested task. Examine the space where you will perform the work in order to determine whether it poses any special challenge that could add to the amount of time the job will take. For example, if you are providing an estimate for a plumbing job and the work will be done in a cramped, tight space, this will require you to budget for extra time. Multiply the number of hours the job will take by the your hourly charge for labor to determine your total estimated labor cost.

2. Calculate the cost of materials to complete the job. Use the retail value, even if you purchase materials wholesale. Examine the location where the work will occur in order to determine whether there are any special considerations. For example, if you own a construction company and you will be remodeling a bathroom, inspect the bathroom to obtain first hand information about whether you will have to replace damaged walls and tiles in addition to the specific improvements that the owner is requesting.

3. Adjust the total price of materials and labor to account for any factors that may add to your costs, such as whether the job includes a considerable amount of travel, or whether you will need to do research or construct prototypes in order to meet the client's need.

4. Add the standard profit margin to the cost of materials and labor. For example, the standard profit margin in the construction industry is eleven percent. You can find the standard profit margin for your industry by consulting a standard business reference book or downloading a job estimating template.

References

• Construction Estimating Institute
• BusinessLink.UK: The Difference Between a Quotation and an Estimate
• Bureau of Labor Statistics: Cost Estimators