Every project your business takes on needs a project estimate.
Before hiring you for a project, every client is going to want to know how long the project will take, how long supplies and materials are going to cost, and the price of your labor.
But, project estimates aren’t just for your clients. They can help you, too, as they help you manage your time and budget. A well-written project estimate will boost your ROI and income in the long term.
Now, here’s the problem:
Writing project estimates is tedious, time-consuming, and sometimes complicated.
Want to know how to write an estimate the easy way? All it takes is learning how to do it right.
Follow along as we show you a stress-free process for writing a good estimate.
Here’s a brief glimpse of what we’ll be going over:
1. Identifying a Client’s Needs
2. Estimating Project Costs
3. Should You Charge for an Estimate?
4. What to Include in Your Project Estimate
5. Using a Project Estimate Template
6. Delivering the Estimate to Your Client
How to Identify Your Client’s Needs
Regardless of your industry, you know that “flat rates” for services never seem to pan out well. That’s because all clients have different ideas in mind, and you’ll have to adjust the pricing accordingly.
So, how do you write an estimate?
The first thing you need to do is to figure out what your clients are looking for.
Figuring Out How You Fit In
Your client already knows that they’re looking to hire a specialist, whether that’s a photographer, artist, real estate agent, architect, etc. And they know that you charge a certain amount of money for your time.
But there’s a lot of behind the scenes work that clients overlook. This makes it hard to give them a straight answer when they ask for an estimate.
Let’s say you’re a freelance photographer:
You’re not just there to snap photos of your client’s big day. You may also have to purchase new equipment, get a permit to work at the wedding venue, and maybe even hire a subcontractor to help you.
Not to mention, you also have to lug all of your equipment to the site and retouch the photos after the wedding.
To give your potential clients the most accurate estimate possible, you need to account for all of these tasks.
Therefore, when you meet with a potential customer, you have to ask a lot of questions to figure out what they need. The more information you have, the easier it’ll be to create an accurate estimate.
Questions to Ask During Your Initial Meeting With a Client
First things first:
Your client should do most of the talking during your first meeting.
After all, this is your chance to find out what your client is looking for and what your role will be in bringing their ideas to life.
You need to ask a lot of clarifying questions, such as:
- What is the job you want me to do for you?
- Where is the job site or venue?
- When would you like the project to be done?
- What is your budget for the entire project?
- Which packages or services are you most interested in?
- Are there any additional items or add-ons that are of interest to you?
It’s a good idea to take both mental and physical notes during your meeting. This will give you something to reference as you’re crunching the numbers later on.
A Few Things to Keep in Mind
Unless you can do the calculations on the spot, then you probably won’t leave with a signed contract and a project schedule in hand. Most clients will understand that you can only provide ballpark estimates for both.
To get a more accurate estimate, you should compare your client’s project with similar projects that you’ve completed in the past.
But no matter how badly you want the job, always be honest. If you know that you’re too busy to complete a project by a certain deadline or that your services cost more than the client can afford, tell them.
It’s okay to say, “Hey, I appreciate your interest in my services, but I don’t think I’m the right person for this job.” It’s better to be truthful than to risk your reputation to capture a lead.
Clients will be more than happy to pay less than predicted or have their project finished sooner than expected. The same cannot be said for the opposite.
How to Estimate Project Costs
An in-depth and detailed project estimate will prove to your clients that you’re trustworthy and transparent. They’ll be able to see exactly where their money is going and be more likely to hire you again in the future.
To create a truly professional estimate, you need to understand the types of costs they include.
Types of Costs
Project estimates take into account both indirect and direct costs.
Indirect costs are expenses that don’t relate to a specific project but help keep your business afloat. Examples of indirect costs include rent, new equipment, and salaries for your employees.
These costs are also known as overhead costs. They may be identified as administrative costs on a project estimate.
Direct costs relate to the specific project that you’re working on. This category includes material costs, travel expenses, and your hourly rate. It also the cost of any subcontractors you hire.
Direct costs will vary based on the package, project, and add-ons a client selects.
There’s one key reason you need to include direct and indirect costs:
Your client expects to be charged the hourly rate and for the necessary supplies. But as a small business owner, you need your overhead costs covered to turn a profit by the end of the year.
How to Estimate Labor Costs
The most important thing you can do when writing a work estimate is to figure out how long you expect a job to take. This will help you to calculate the total costs of labor.
- How much time you’ll need to prepare for the project
- How long it’s taken you to complete similar projects in the past
- How much time it will take to tie up loose ends when you’re done
You should multiply your hourly rate by how many hours you expect to spend on this project.
If you’re new to the industry and don’t know how long the job is likely to take, that’s okay. Do some research to determine what your local competitors are charging. Be sure to factor in your specific niche and experience.
And if you’re hiring an assistant to help you, make sure to factor in their pay, too.
To make the most of your time, read 7 Workflow Optimizations for Meeting Client Deadlines
How to Estimate Material and Supply Costs
If your client is paying for a physical (or digital) product, you should charge for the cost of materials and supplies.
Think about what that might mean:
- For photographers, that means photo prints and photo books.
- For interior designers, that means a thumb drive with files of floor plans.
- For painters, that means paint and tools.
Be sure to estimate this cost at market value so that your clients don’t feel that you’re charging unfairly. Buying in bulk is an excellent way to cut costs on materials on your end while making customers happy in the process.
Additional Costs to Include on Your Estimate
There are additional fees that you may need to tack on to the estimate subtotal. You want to be sure that you’re breaking more than even.
You want to profit, right?
Here are some additional costs to factor into your estimates:
- New equipment needed to fulfill the client’s needs
- Administrative fees
- Travel fees and mileage (Tip: Use a mileage tracker!)
- Hotel or lodging fees
- Permits needed
Just remember that there isn’t always a set price for these things.
So, it’s always better to be specific than vague. Instead of writing that you have to buy “Tools,” sketch out which tools and even what brand you are going to buy. This will show your customer that you’re not trying to hide anything.
Should You Charge for an Estimate?
This is a good question that a lot of independent contractors and freelancers ask.
The short answer that you can, but you may not want to.
If you’re spending a good amount of time researching the project and calculating the numbers, it makes sense to charge for your time.
But how much do you charge?
Well, you have to keep in mind that some of your customers offer free estimates. So if you’re going to charge, make sure your estimates are accurate enough to make them worth paying for.
If you choose to charge for an estimate, let clients know ahead of time so they’re not surprised by the bill.
A Full List of What to Include in Your Project Estimate
The breakdown of costs is the most important part of your project estimate.
After all, no client is going to hire you if they don’t know what you charge. Your estimate will allow them to compare your fees to some of your competitors.
But there are some other things that every written estimate (or typed estimate) should include:
- A professional letterhead with your company name, logo, address, and phone number
- A project scope describing what exactly the project will entail
- A projected schedule outlining the time frame for each task involved in the project
- An expiration date to give them a deadline to accept your offer
You should also include the word “estimate” in bold lettering at the top of the sheet so that they know the amount is subject to change.
When it comes to the cost breakdown, your itemized list should be as specific as possible to leave no room for questions.
For example, instead of just listing “Supplies” as one of the line items, you should write down the exact number of 8×10 prints they’re getting.
Clients should know precisely where their money is going.
Use a Project Estimate Template
There’s no better way to simplify this process than to use a pre-made project estimate template. Fortunately, there are thousands of free estimate templates online.
No longer do you have to write them by hand!
When it comes to software for writing job estimates, you have plenty of options.
If you’re familiar with Microsoft Excel, that works great.
Sites like SmartSheet have many project estimate templates that can be uploaded directly into Excel. Some are based on your industry (templates for construction projects, graphic design projects, etc.), while others are based on how you charge (hourly, per project, etc.).
Here is a sample estimate template that also factors in sales tax.
CRM systems like Bloom work well for writing estimates, too. Many CRMs have invoicing features that you can use to create cost estimates for potential clients.
Related: The Best Apps for Independent Contractors
Send the Completed Estimate to Your Client
When it comes to making and delivering project estimates, time is of the essence. Your clients are likely comparing prices amongst your competitors and may change their minds if you take too long.
So, send your estimate ASAP.
If you don’t hear back within a few days, reach out to them to make sure that they received the estimate and find out what they think.
What to Tell Your Client When You Send an Estimate
It’s important to remind your client that estimates aren’t bills.
After all, there’s always the chance that a project takes a little longer (or less time) than expected. And supply prices do change from time to time.
If that happens, the final invoice may be a little higher than estimated.
That’s why it’s so important to clarify both verbally and in writing that this is an estimate.
Make Sure the Estimate Is Signed and Dated
The last thing you want to do is to end up in legal trouble later on.
So, make sure to sign and date every estimate. Write the full date (MM/DD/YYYY) so there’s no question about when you wrote it.
As I said earlier, include an expiration date, too.
You want clients to know that the price listed on the project estimate will stand until a specific date. Clarify to the client that, past that date, the prices and your availability may be subject to change.
Hopefully, they’ll like the estimate on the first go-round and you can get to work!
Estimates don’t have to be the least enjoyable part of your job.
It might just be the perfect way to build positive relationships with your clients. It’s a great way to put your transparency on display, as your clients will know what their project will cost and when it’ll be done.
And creating these estimates is easier than ever, thanks to CRMs like Bloom.
You can now spend more of your time completing projects for your clients instead of developing project estimates.
Looking for a CRM system to help you with estimates and invoices?
Bloom could be the app you need!