How to Make an Estimate

To make an estimate, break down material costs, labor, permits, and other project expenses into clear, detailed line items. This ensures clients see exactly what they’re paying for and builds trust from the start. A well-structured estimate sets expectations, prevents misunderstandings, and helps you protect your profit margins.

Gather Project Details from the Client

To make an accurate estimate, collect all necessary project details. This includes:

• The type of service requested (roof repair, landscaping, plumbing, etc.)
• Project location and accessibility
• Materials required
• Labor hours expected
• Special client requests (e.g., eco-friendly materials or urgent timelines)

Example for a roofing contractor: If a client wants a roof replacement, ask about the square footage of the roof, type of shingles preferred, and whether old roofing material needs removal.

Break Down the Work into Line Items

Instead of giving clients a lump sum, break the work into clear line items. This makes your estimate transparent and easier for clients to understand.

Example Roofing Estimate Breakdown

Providing this level of detail reassures the customer that your pricing is fair and based on actual costs.

Factor in Labor Costs

Labor is often the largest portion of a service estimate. To calculate:

1. Determine how many workers are needed.
2. Estimate the number of hours required for the job.
3. Multiply by your hourly rate (including overhead and profit margin).

Example: If three electricians are needed for 6 hours each at $65/hour, labor cost = 3 × 6 × $65 = $1,170.

Include Material and Equipment Costs

List all materials, rentals, and equipment that will be used. Include unit prices and totals. If there are possible price fluctuations (e.g., lumber or fuel), note that the estimate is valid for a specific period (such as 30 days).

Add Taxes, Permits, and Other Fees

Don’t forget to include:

• Local sales tax
• Permit fees
• Dumping or disposal fees
• Travel surcharges if the job site is far

Pro tip: Clients appreciate when you clearly list these instead of rolling them into “miscellaneous.”

Add Your Profit Margin

Service-based businesses need to stay profitable. After calculating direct costs, add a markup for profit. A common range is 10–30%, depending on industry and competition.

Example: If your total cost is $4,000 and you add a 20% profit margin, your estimate becomes $4,800.

Draft a Professional Estimate Document

Use professional estimating software or templates to present your estimate. A good estimate should include:

• Your business name, logo, and contact details
• Client’s name and project details
• Line-item costs
• Payment terms (e.g., 50% upfront, balance upon completion)
• Estimate validity period (e.g., valid for 30 days)
• Signature line for approval

Send the Estimate and Follow Up

Once your estimate is ready:

• Email it directly to the client in PDF format.
• Offer to review it with them on a call.
• Be ready to answer questions or adjust if needed.

Pro tip for contractors: Following up within 2–3 days increases the chances of winning the project.

Bonus Tip: Streamline Estimates with DepositFix

Instead of creating estimates manually every time, use a tool like DepositFix to automate the process. With DepositFix, contractors and service-based businesses can:

• Build professional estimates using reusable templates.
• Collect deposits or upfront payments directly from the estimate.
• Sync payments with your CRM for better tracking.
• Save time and standardize the pricing for common services.

This not only speeds up your sales cycle but also ensures accuracy and consistency across projects. Create free estimates with the DepositFix free estimate generator.