How to make an estimate
- Add your business details once. Open Your business details. They are saved on this device and appear on every estimate, invoice and work order.
- Enter the customer and job address, an estimate number and the date.
- List the line items at your cost. Mark each one as materials, labor, subcontractor or other. The My Project list can fill these in for you.
- Choose markup or margin and your overhead and profit percentage.
- Set sales tax and any deposit, then download the PDF or print it.
How the estimate is calculated
Cost = sum of quantity × your cost per unit
Markup price = cost × (1 + markup)
Margin price = cost ÷ (1 − margin)
Sales tax = taxable amount × tax rate
Total = price + sales tax; deposit = total × deposit %
Worked example
A small reroof: $2,308 of materials and $2,200 of labor
- Cost = $2,308 + $2,200 = $4,508.
- 20% markup = $901.60, so the price is $5,409.60.
- 7% sales tax on materials = $2,308 × 0.07 = $161.56.
- Estimate total = $5,571.16.
The same 20% as a margin gives a price of $4,508 ÷ 0.80 = $5,635.00: $225.40 more, because margin is measured against the price, not the cost.
Markup and margin side by side
| Markup | Equals margin | Margin | Needs markup |
|---|---|---|---|
| 10% | 9.1% | 10% | 11.1% |
| 15% | 13.0% | 15% | 17.6% |
| 20% | 16.7% | 20% | 25.0% |
| 25% | 20.0% | 25% | 33.3% |
| 30% | 23.1% | 30% | 42.9% |
| 50% | 33.3% | 33.3% | 50.0% |
Common mistakes to avoid
- Confusing markup with margin. A 20% markup does not leave 20% of the price for overhead and profit.
- Forgetting overhead. Insurance, vehicles, tools, office time and unpaid estimating hours must be covered before profit.
- A vague scope. Say exactly what is and is not included; most disputes start there.
- No expiry date. Material prices move. Say how long the price is good for.
- Wrong tax treatment. Check how your state taxes construction materials and labor.
Frequently asked questions
What is the difference between markup and margin?
Markup is a percentage of your cost; margin is a percentage of the selling price. On a $4,508 cost, a 20% markup gives a $5,409.60 price, which is only a 16.7% margin. To keep 20% of the price, you need a 25% markup: $5,635.
What should a contractor estimate include?
Your business name and contact details, any license number your state requires, the customer and job address, a clear scope of work, itemized materials and labor, overhead and profit, sales tax, the total, how long the price is valid, what is not included, and a place for the customer to accept.
How much markup should a contractor charge?
It depends on your overhead, trade and market. Many residential contractors aim for a combined overhead and profit of 15 to 30% of cost. Work out your yearly overhead first, then add the profit you need; do not copy another company's number.
Do I charge sales tax on labor?
It depends on your state. Some states tax only materials, some tax the full contract, and some treat contractors as the final consumer of materials. Choose the option that matches your state and enter your combined state and local rate.
Can I turn my project list into an estimate?
Yes. Add materials from any calculator to My Project, open My Project and press Turn into an estimate. Every item becomes a line here, ready for your prices.
Is my data saved or uploaded?
No. Everything stays in your browser. Your business details are remembered on this device so you only type them once, and your last estimate is restored when you come back.