Building the price underneath the lines
The lines on an estimate are what the client reads. The price is what keeps you in business. The two are built differently, so here is the same example worked from cost to price:
| Cost | Amount |
|---|---|
| Materials, at your cost | $960 |
| Labor, 16 hours at your loaded cost of $42 an hour (wage, payroll tax, insurance) | $672 |
| Equipment rental and disposal, at cost | $330 |
| Direct cost | $1,962 |
| Overhead, 20% (truck, tools, phone, office, software) | $392 |
| Profit, 15% of cost plus overhead | $353 |
| Price | $2,707 |
That comes back to the client as the lines above: labor at $75 an hour, materials with a 20 percent markup ($1,152), and equipment and disposal with a small one. They sum to $2,712, within a few dollars of the costed price, and each line is easy to explain. The gross margin (price minus direct cost) is about 28 percent. After overhead, the profit is about 13 percent of the price. Check any finished job with the job profit calculator to see whether your real margin matched the plan.
What makes an estimate hold up
- A specific scope. "Replace 40 ft of fence, 6 ft cedar, reuse sound posts" instead of "fence repair".
- Assumptions, so a surprise behind the wall is a planned change, not a broken promise.
- Exclusions, for anything the client might assume is included.
- A valid-until date, because material prices move.
- Deposit and payment terms, written before anyone starts work.
Questions tradespeople ask
Should I charge for an estimate?
Many trades give estimates free and charge for detailed design or takeoff work on large jobs, often credited back if the client hires them. Say which before the visit.
What is the difference between an estimate and a quote?
An estimate is your best price for the work as you understand it, and it can change if conditions differ. A quote is a fixed price for a defined scope. Label yours clearly.
How long should an estimate be valid?
Thirty days is the most common window. Put an actual date on the estimate rather than a number of days.
Missing a line you always need? Email support@vanreceipts.app and we will add it to the template.