Estimating home repair and remodeling jobs is both an art and a science. Many formulas are available to help you price your services, but every job is unique. There’s bound to be a curveball, special consideration, or customer preference that makes estimating a remodeling job more complicated than plugging numbers into a calculator.
This quick guide will show you how to price home improvement jobs, so your small business can be profitable.
Why are accurate estimates so important?
It’s essential to give your customers accurate estimates as often as possible because:
- It shows your skill and knowledge. An accurate estimate reinforces that you know what you’re talking about and can be trusted to get the job done right.
- It shows your professionalism. Telling customers one price only to come back later with a much higher one makes you look unprofessional (or potentially dishonest). There’s a good chance they’ll tell their friends and family or leave you a bad review if this happens.
- It helps keep you profitable. You may be able to bear the cost of one or two low estimates, but over time, inaccurate pricing eats into your profits and may put your small business in jeopardy.
Now that you better understand why accurate estimates are important, let’s break down how to price home improvement jobs.
How to estimate home repair, improvement & remodeling jobs
Here are five steps to help general contractors and handymen provide accurate estimates.
1. Visit the site
Even if it’s a job you’ve done a million times, it’s still crucial to visit job sites before you start writing an estimate. There are typically multiple steps involved in home repair and remodeling jobs. The work necessary for a particular project may not be clear over the phone or by looking at photos.
Every room is different, and there may be unique factors that impact pricing. These might include utility placements, structural issues, or safety concerns that can only be assessed in person. At the very least, you’ll need to take measurements and your own reference photos.
2. Refer to past estimates
If you’ve been in business for a while, checking past estimates for similar jobs could help you build a new estimate. You could use this information to give customers a quick ballpark figure (while cautioning them that their job may involve more work). Past estimates might also help you decide if the job is worth your time and effort. If similar work wasn’t very profitable for your business, you might refer the customer to another contractor.
New contractors and repair people won’t have their own past estimates to refer to, but you might know someone who does. A trusted mentor may let you view their estimates for similar projects.
3. Calculate materials cost
The next step is to put together a list of materials necessary for the job. There are many apps designed for contractors to help estimate building materials such as concrete, wood, and brick.
Depending on the work to be done, you may decide to offer multiple estimates. Running the numbers using low-end, average, and high-end materials gives the customer options that fit multiple budgets. It also highlights your knowledge and customer service skills.
4. Calculate labor cost
Estimating home repair labor costs is often the trickiest part of writing an estimate. This is also an area where many contractors and handymen either sell themselves short or misestimate how long a job will take. Either way, you run the risk of pricing your services too low.
Home repair labor costs are more than just your hourly rate. If you’re using subcontractors to get the job done, you need to factor in their rate, as well as Workers’ Compensation insurance, benefits, mileage, and other costs you might be covering for them. You’ll also need to include the cost of specialized labor and overtime, if applicable.
5. Add your markup
This is another trouble area for many handymen and contractors. Markup is where you make most of your profit, so paying close attention to these calculations is crucial.
The markup on an estimate provides you with some wiggle room in case something goes wrong. Adding a little extra to your labor and material costs can help you account for unforeseen events, like project delays and increased material prices.
You’ll also want to consider other costs associated with running your business when calculating markup. Necessary expenses like business insurance, vehicle mileage, license and permit fees, and phone and internet are typically included in markup figures and added to your hourly labor rate.
Growing your business with better estimates
When you accurately estimate remodeling jobs, you create trust between you and a potential customer. Providing them with a price that’s as close as possible to the final bill is good customer service, which may lead to more jobs. It also helps build your success by charging the right amount to help your career thrive!
How to estimate home repair jobs checklist:
- Visit the site to assess the work to be done and take measurements.
- Refer to past estimates for similar work (if you have them).
- Calculate the cost of materials needed to complete the job.
- Calculate your labor costs, including the cost of hiring subcontractors (if necessary).
- Add markup to your labor and materials costs to account for general business expenses and unforeseen issues.
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