General Estimate Template
A general estimate is a document that indicates the estimated cost of a job. The estimate assists a potential customer in deciding whether or not to proceed with the purchase of a service.
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Estimate vs. Quote
Before booking a job, most professional service providers provide an estimate and/or a quote to indicate what the work is likely to cost. This document considers and combines the estimated costs of labor, supplies, subcontractors, and overhead. Estimates often get confused with quotes. An estimate is an approximation of what a job will cost; there is an understanding that the scope or costs could change. A quote, however, is a precise and binding document.
Industries That Use General Estimates
- Labor (e.g. construction)
- Consultancy (e.g. UX researchers)
- Creative (e.g. photographers)
Reasons to Use Estimates
A good reason to use estimates is creating them forces you, as the contractor, to carefully consider all components of a potential job. The process involves thinking about how much time something will take, which materials are required, and whether subcontractors should be involved. This thought exercise enables you to envision the scope of work and to manage your schedule. Another good reason to use estimates is they tend to give customers a reason to trust your professionalism and experience.
Terms to Know
- Rough order of magnitude (ROM): This is a particularly rough cost estimate, meaning it is subject to change considerably.
- G & A (General & Administrative Costs): These are the costs of operating a business, including rent and payroll. G & A is another term for overhead.
- Markup: This is a cost folded into an estimate that’s intended to cover your overhead. A markup comprises the difference between the cost of the service and the estimated price.
Should You Add a Markup?
The short answer is yes. This might be included in your hourly wage or integrated into the cost of materials, but it’s something you should consider including in order to cover the myriad costs of running a business. These expenses include gas, car insurance, health insurance, and electricity, among others.
What to Include in a General Estimate
- Contractor’s contact information (e.g. address, phone number, email address)
- Client’s contact information
- Estimate number
- Date
- Expiration date (if applicable)
- Job description
- Estimated cost
- Markup
- Applicable taxes