How to Accurately Estimate Job Costs and Protect Your Profits

Estimating is where profits are made—or lost. Accuracy comes from process, not genius.

Break the Job Into Cost Codes

Divide work into standard codes: demo, framing, electrical rough, drywall, paint, finish, cleanup. Estimating gets easier when repeatable.

Use Production Rates

Define labor in hours per unit (e.g., sheets of drywall per hour). Multiply by wage + burden. It’s math you can trust—and improve with field feedback.

Quote Materials Properly

Get current pricing for key materials and include waste factors (10–15% typical). Link POs to job numbers to prevent leakage.

Don’t Forget Overhead and Profit

Overhead is not profit. Add overhead as a percentage (based on your real numbers), then add profit on top.

Build in Contingency and Escalation

For unknowns, include a contingency (5–10%) and price escalation language for long-duration jobs.

Clarify What’s Included

State inclusions/exclusions and assumptions. The clearer the scope, the fewer surprise costs.

Close the Loop With Job Costing

After each job, compare estimate vs. actual by code. Update your database. Your estimates will get sharper every month.

Estimating Checklist • Standard cost codes • Production rates set • Material quotes + waste • Overhead + profit separate • Contingency included • Post-job review complete