Solution
How to Estimate Jobs When You Start a Contracting Business
Estimating is the skill that decides whether a new contracting business makes money. The process is the same on every job, and you can learn it step by step.
Step 1: Measure the work
Read the drawings and count or measure everything you will install: items by count, runs by length, surfaces by area. This is the takeoff. Write down what you measured and where, so you can check it later. The free calculators help with quick quantities.
Step 2: Price the materials
Use current prices from your suppliers, not last year's. Add waste where it applies, and include delivery and tax.
Step 3: Price the labor
Estimate hours for each task, then multiply by what an hour of labor really costs you. That is wages plus taxes, insurance and benefits, not just the hourly rate. Our labor burden calculator shows how to find it.
Step 4: Add overhead and profit
Overhead (the office, insurance, vehicles, software) and profit are not extras. A bid that leaves them out loses money even when you win it. Decide your markup before you bid, not after.
Step 5: Check the number
Compare the total with similar jobs, and ask whether anything is missing. Note what you bid, then compare it with what the job really cost. That feedback is how your estimates improve.
When a spreadsheet is not enough
Software keeps the takeoff, the catalog and the bid summary in one place. See affordable estimating software for small contractors, and consider the PoPs Estimating Course if you want to learn the craft by practicing on real drawings.
FAQ
What are the steps of an estimate?
Measure the work, price the materials, price the labor, add overhead and profit, then check the number.
Why do new contractors lose money on bids?
Usually from leaving out labor burden, overhead or profit, or from using old material prices.