Are your estimates too low? Customers understand that an estimate is an estimate and the actual cost might be higher. But if you’re estimating too low on a regular basis you should really find out why.
Let’s take a good look at what’s going on. Run a report of “estimate vs actual” for individual jobs; if your software doesn’t provide that report than use a report of “budget vs actual”. Either way get a detailed list of each item in the estimate. Look at several jobs; I’ll bet you have a pattern.
- Is there an area where you’re not the expert? We see better details when we have expertise. Compensate in your less polished areas by making an extra effort at gathering the details.
- Are you underestimating the demand of a certain materials and therefore underestimating the price?
- What about custom orders or faster, more costly shipping?
- Don’t forget seasonal price adjustments and overhead expense.
- Do you need special equipment?
- Are your subcontractors estimating too low and passing that on to you? You may have to take a good look at the detailed estimates of your subcontractors to be sure they’re reliable.
Your thoroughness will not only increase your profit but will also increase the trust that your customers have in you. People WILL be talking about you on social media. Give them reason to brag! And be nice to your bookkeeper.
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