How to Write a Contractor Estimate, Step by Step

1. Define the scope

Walk the job and write down exactly what you will do. Clear scope is the foundation of every number that follows, and it protects you when questions come up later.

2. Measure and take off quantities

Measure in the units you buy and install in: square feet, linear feet, squares, cubic yards, hours. Add a reasonable waste factor where your trade normally needs one.

3. Price your costs from real sources

Use current supplier quotes, your recent invoices, and your own labor rates. Avoid guessing: an estimate is only as accurate as its unit costs.

• Materials and delivery
• Labor, including burden such as payroll taxes and insurance
• Equipment rental
• Subcontractors
• Permits, inspections, and disposal fees

4. Account for overhead and contingency

Decide whether to list overhead and contingency as line items or cover them in your markup. Either works, as long as you do it consistently.

5. Apply markup or margin

Choose a pricing method and a target. See Markup vs. Margin for the formulas.

6. Decide what the customer sees

Many contractors show section totals rather than every unit cost. Showing less detail protects your pricing; showing more can build trust on larger jobs. Choose per section.

7. Add terms, exclusions, and a schedule

Spell out what is not included, any allowances, payment milestones, and how long the price is valid.

8. Review before you send

Check quantities, confirm nothing is missing, and read the proposal as your customer will see it.