The decision you make when estimating a project can influence your overall profit. Just a slight mistake can cost you hundreds, if not thousands of dollars. Hence, it is important to take this process seriously. Here's how to make an estimate for more profit.
Step 1 - Access the project
First off, you have to understand the project and what it entails. In the course of this, you're going to ask questions like:
What do you need to do? What are the needed materials? Can you easily access the business area? What challenges can you face? Will negotiating with customers be challenging?
The contractor may need to visit the customer's home for assessment. If it's your first time handling such a project, then you may need to check the project physically.
Step 2 - Estimate the labor cost
Once you know what's needed, next is to calculate how much you'll charge to work on the project.
Quick tips
Overestimating is better than underestimating. Overestimating can make you lose the job to another contractor with a lower offer which is pretty bad. On the other hand, underestimating is time wasting and won't make much money. If you're not looking for just about any contract, we'd prefer spending more time on marketing than wasting time on unprofitable projects.
Step 3 - Determine the cost of material
This is where you'll determine your charges for a part of the work.
This works just like the job calculation process which goes like this;
Think of how you want each step of the project completed.
Think of the kind of materials you'll need
List out the materials and write their prices. You may check the price online.
Add the price of the material. Then apply markup.
The total price of your material calculation plus the markup is what you'll charge.
Step 4 -Add everything
Since you have the material and the work, just add them and estimate the price.
If you run your business independently, you should include your profit in your rate.
But if you have a team of multiple experts or you have employees, profits can be calculated in a different way. For instance, you can find the total cost of labor and material and apply 25% markup to order.
How to create a handyman estimates for new customers
Business handymen can provide estimates to customers in many ways. There's actually no one size fits all approach. It can be over the phone. It can be through calls or through texts.
You can send it as an email to customers. It totally comes down to who is receiving the estimates, the job requirement, and your relationship with the person.
In most cases, a verbal estimate is pretty fine since most projects are usually within the few hundred dollar range.
But, if you're doing a larger project like kitchen remodeling, a signed and more formal estimate will be fine.
Quick ways to write an estimate
Use an app
Of course, apps are the easiest way to create an estimate. This can be done within a few seconds. You can also submit the estimate from the app.
Use Excel
Excel sounds old, right? But it works. If you're only submitting a couple of estimates and don't have time to download an app, this works great.
Word processor
Microsoft Word or any word processor works fine. The Apple page is also impressive.
What is included in an estimate?
The content of a handyman estimate is more important than where it is created. Whether the estimate is created in text or more professionally written, the components remain the same.
Estimated price for the Handyman Service
Your estimated price may be a one time thing or just list it out. Figure out what works for you.
What should a written estimate contain?
Your company information (name, number, address email)
Customer info ( name, phone, and address)
Estimated date
Project description.
Cost
Should an estimate have the customer's signature?
If a signature is important to you, ask your customer to sign before you start. As mentioned earlier, most DIY projects are small so a formal contract is not really worth it.
Just make sure to have a conversation with your customer prior to, and during the project. This prevents potential problems with the project.
Customers don't usually need estimates
Customers will not even request for the project cost. The entire estimation process will be skipped and you can get to work.
The best times estimates are important is during large projects or when working with new customers or customers with trust issues.
Extra tips to increase DIY estimate profit
So since you now understand how to create estimates for handyman's job, the following tips can help increase profit and scale conversion.
Know how much to charge
The first step to a successful estimate is to know how much to charge. It's not about doing the guesswork. You want to understand the exact number.
When you do the math, you'll realize that you actually need to charge more than your current rate. That's because a lot of hidden expenses often show up which may turn into a loss in the long run.
Overestimating is better than underestimating
The only downside of overestimating is that you may lose the job to a competitor.
But, in most cases, you'll be accepted when you overestimate. It's better to lose a job because it is expensive than getting a low price gig, and ending up working too hard on a low pay.
Stick with your price but help customers save money
Always set a price with authority and don't change it. Avoid negotiations.
But try to help customers save money. Study customer's circumstances and recommend a money saving process that works for them.
While some customers want to save time, others are looking to cut costs.
Increase your estimate if unsure
If it's your first time quoting a project or you're not experienced with creating the right quote, then there's a big chance that you'll quote a lower price. It's normal.
So the solution is to just double your estimate by at least 50%.
This can save you a lot of money on your job.
Free DIY Estimation Template
We've sorted out some templates that make it easy to create and send DIY estimates.
You should give it a try if you want to grow your business.
Kindly click on the link below to download our DIY estimate template for free.
