Whether you’re a graphic designer, run a construction company, or are any other type of service provider, knowing how to write a good estimate your client understands is crucial.
Estimates give potential clients an idea of the costs and timeline for a specific job or project.
This article outlines the steps to calculate the most accurate estimate possible and present it professionally to your prospective client.
What is a job estimate?
Estimates are an essential sales tool for small businesses in the services industry. An estimate is a service provider’s educated guess on how much their services will cost based on their experience and skill.
Unlike a quote, an estimate is not a legally binding contract, nor does it require extensive detail. It approximates the total cost of materials, labour, and other expenses involved.
Creating a transparent and professional-looking estimate allows you to effectively communicate with clients, build trust, and set realistic expectations.
Understanding the project scope
The first step towards writing an estimate is to fully determine the job scope. This requires an in-depth discussion with the potential client to clarify what the project involves and what the client requires.
Gather comprehensive information about the project’s scale, possible challenges, purpose, goals, deliverables, expectations and deadlines. This foundational research is crucial for establishing a rough completion date and an approximate cost.
Building your new estimate
Once you grasp the scope of the project, the next phase is to itemise the total cost, considering both material and labour expenses. Remember to factor in your business profit; otherwise, you risk losing money.
- Material costs: The costs of materials and other physical objects required to complete the project. Conduct market research to ensure your business estimate accurately reflects current prices.
- Labour costs: Expenditure on the workforce required for the project, considering any additional help if the project’s scale demands it.
- Additional business expenses: Transportation, permits, taxes, and rental fees might seem minor, but they are critical as they accumulate and can impact the final cost if overlooked.
Setting expectations with an approximate timeline
Setting realistic timelines is crucial when preparing an estimate. Communicating these timelines is essential in managing the client’s expectations from the outset.
Start by providing a conservative idea of the project’s duration, factoring in common delays such as material supply issues, weather conditions, and potential revisions.
Preparing a timeline with milestones can be helpful for both you and your client, showing the project’s progression and establishing key dates for reviewing and approving stages of the work.
Refer to similar projects of the same scope to get a general idea of your rough timeline.
Presenting your professional estimate
Create a professional estimate with an estimate template or estimating software to make a strong impression on the potential customer. Use an organised layout that itemises prices and timelines in an easily digestible format.
Include payment terms and company contact info, such as a phone number and email, and ensure all communication is clear and jargon-free to avoid misunderstandings.
Some clients prefer a complete breakdown of all the details, while others only want the total costs.
The importance of precise business estimates
A clear and detailed estimate does more than outline potential project costs and timelines. This precision reflects your professionalism and dramatically enhances your likelihood of securing projects with potential customers.
Setting transparent expectations right from the outset builds trust and minimises future misunderstandings. Mastering the art of writing a precise estimate is critical to success for any small business owner or independent contractor.
BizEx custom software development can provide you with simplified estimate-creating tools, enabling you to reach more customers quickly and efficiently.
Discover our tailored business solutions, including our payroll and POS systems, today.