Knowing how to write an estimate is mostly about being honest on paper about what you do not yet know. An estimate that reads like a firm price will be treated as one, whatever the heading says.
When an estimate is the right document
Send one when the final figure genuinely depends on what you find. Repairs, surveys, anything behind a wall or under a floor, anything where the diagnosis comes after the price.
If the scope is settled and you would stand behind the number, send a quote instead. The comparison is set out in quote or estimate.
The four things that make it safe
- A figure or a range. Vague is worse than approximate.
- The assumptions it rests on. What you have priced for.
- A tolerance. How far it can move before you come back.
- What triggers a new number. Who decides, and how they are told.
Leave out the last two and you have written a quote with a different word at the top.
Assumptions, written plainly
This is the section that earns its place. A few lines, in the language a customer uses:
- Assumes existing wiring is serviceable and to current standard.
- Assumes access through the side gate, no scaffold required.
- Assumes the floor comes up without damage to the joists.
- Priced on materials available at the date above.
Each one is a thing that, if untrue, changes the price. You are not hedging. You are telling them what the number depends on.
Setting a tolerance
Give a percentage and a promise. Something like:
The final figure will not exceed this estimate by more than 10% without your written approval.
That is a sentence the customer can rely on and you can live with. It converts an open-ended fear into a bounded one, which is usually what stops people committing.
Pick a number you can actually hold. A 5% tolerance on demolition work is a promise you will break.
Ranges
A range works well when the variation is genuine and explainable.
Bathroom re-fit, 14 Riverside Drive
Estimated range 320,000 to 385,000
The lower figure assumes existing pipework is reusable.
The upper figure allows for full re-pipe and boxing in.
We will know which within the first day.Two numbers and two sentences. The customer knows what decides it and roughly when.
If your sheet needs a single figure, put the higher one in the rate and describe the range in the line description, so the total stays honest.
Language that gets you into trouble
Some phrases read as commitments even on an estimate:
- “Fixed price” anywhere on the document.
- “All inclusive” without an exclusions list.
- “No hidden costs”, which customers read as “no further costs”.
Say “estimated”, say “subject to”, and put the date on it.
Following up
An estimate is not a bill and it is not an offer to be accepted in the way a quote is. When you know more, send a quote for the settled scope, or go straight to the invoice if the work is done and the customer approved as you went.
Reference the estimate number on whatever follows. It is how the customer reconciles the figure they first saw with the one they are paying.
Keeping the record
Keep the estimate, the approvals and the final bill together. If a customer questions the difference, the answer is three documents in sequence rather than a recollection.
Pricing the parts you cannot see
Two approaches, and mixing them is where people go wrong.
Contingency inside the figure. You add a margin for the unknown and quote one number. Simpler for the customer, but if the unknown does not materialise you have overcharged, and if it exceeds your margin you are back asking anyway.
Contingency named separately. You price what you can see, then state what the likely additions are and roughly what each costs. More honest and more work to write.
For repair and renovation work the second reads better, because the customer can see you have thought about it rather than padded it.
Timing
An estimate goes stale faster than a quote, because the assumptions behind it decay. Put a date on it and keep the window short, particularly where materials move. The reasoning is the same as for quotes and is set out in how long a quote should last.
Next
For the layout, see an estimate template you can reuse. For handling the gap between estimate and bill, see when the final bill differs. Or open the estimate generator.