EP285: How to Stop Costly Estimating Mistakes for Contractors

Stop blaming production for unprofitable jobs; conduct thorough job costing to identify profit leaks, as many jobs are sold unprofitably from the start.

Do not guess on labor costs; use actual data, external references, and factor in non-productive time (e.g., drive time, material handling) by adding a 20% buffer.

Accurately calculate true labor burden, including benefits, PTO, and other indirect costs, ensuring the customer pays for these expenses, not you.

Meticulously track material costs by getting current pricing, accounting for waste (e.g., 10% for complex patterns), delivery/freight, and restock fees.

Include all 'costs of goods sold' (COGS) in your estimates, such as dumpster fees, permits, equipment rentals, consumable supplies, and even tool wear and tear, rather than treating them as overhead.

Never price based on competition; focus on your own numbers, unique value proposition, and reputation, as there's more than enough work available for quality contractors.

Avoid discounting a correctly estimated job; if you must offer a discount, negotiate for something valuable in return, such as a video testimonial or guaranteed review.