A professional contractor estimate includes your scope of work, itemized materials, labor costs, overhead, markup, and a clear total, delivered fast enough to beat your competition to the client’s inbox.
Speed and clarity win jobs. After 20 years in the field, the biggest lesson is this: the contractor who quotes first usually gets the call back. Homeowners are anxious. They want to know what the job costs and whether you know what you are doing. A sharp, detailed estimate answers both questions before you even pick up the phone to follow up.
This guide walks through exactly how to write an estimate that covers your costs, shows your professionalism, and gives homeowners the confidence to say yes.
Quick Answer
A strong contractor estimate contains five core sections: project information, scope of work, itemized cost breakdown (materials and labor separated), your markup and profit margin, and payment terms. Format it cleanly, include your license number, and send it within 24 hours of the walkthrough. Late quotes lose jobs. Messy quotes lose jobs. Slow quotes lose jobs.
Use the Labor Cost Calculator to make sure your fully loaded labor rate is accurate before you build any line item, and the Contractor Markup Calculator to verify your markup actually hits your target margin before you send the bid.
What Goes Into a Contractor Estimate?
Every estimate, whether it is a bathroom remodel or a full kitchen gut, should include these elements:
1. Header and Contact Info Your company name, logo, license number, phone, email, and address. The homeowner needs to know this is a legitimate business. Include the homeowner’s name and project address too.
2. Date and Estimate Number Date the estimate and give it a unique number. This helps you track which version the client signed and keeps your records clean for invoicing later.
3. Scope of Work A plain-language description of exactly what you will do and what you will not do. This protects you from scope creep. If the job is a master bath remodel, spell out that you are removing the old tile, installing new cement board, setting 12x24 porcelain tile, and installing a new vanity, mirror, and fixtures. If electrical panel upgrades are not included, say that explicitly.
The Scope of Work Generator can help you draft this section quickly and consistently across different project types.
4. Line Item Cost Breakdown This is the heart of the estimate. Every material and every labor task gets its own line. Do not lump everything into one number. Homeowners who see a single dollar figure with no explanation will question it. Itemized line items show you know your craft.
5. Subtotals, Markup, and Final Total Show your costs, apply your markup, and give a clear total. More on markup below.
6. Contingency A percentage set aside for unknowns, especially on remodel work. Hidden rot, bad plumbing, electrical surprises. Standard contingency runs 5-10%.
7. Payment Terms and Schedule When is the deposit due? What are the draw milestones? What is the final payment trigger? Spell it all out.
8. Signature Line and Expiration Date Give the estimate an expiration date, typically 30 days. Material prices move. Labor costs change. You are not locked in forever.
How to Break Down Labor vs. Materials
Separating labor and materials on your estimate is non-negotiable. Here is why it matters: materials have a paper trail (receipts, supplier invoices), and labor is your most variable cost. Keeping them separate protects your margin and makes change orders cleaner.
Materials: List every item you need to purchase. Tile, cement board, thinset, grout, fixtures, fasteners, lumber, drywall. Quantity times unit cost. Pull your supplier pricing on the day you write the estimate so your numbers are current.
Labor: Estimate hours per task and multiply by your fully-loaded labor rate. Fully loaded means wages plus payroll taxes, workers comp, liability insurance, and any tool costs associated with the task. Do not use bare wage rates when you are the one carrying the insurance.
Worked Example - Bathroom Tile Floor (120 sq ft)
| Item | Quantity | Unit Cost | Total |
|---|---|---|---|
| 12x24 Porcelain Tile | 140 sq ft (10% waste) | $3.50 | $490.00 |
| Cement Board | 10 sheets | $18.00 | $180.00 |
| Thinset Mortar | 4 bags | $22.00 | $88.00 |
| Grout | 3 bags | $18.00 | $54.00 |
| Tile Labor (demo + set) | 16 hours | $65.00 | $1,040.00 |
| Materials Subtotal | $812.00 | ||
| Labor Subtotal | $1,040.00 | ||
| Job Subtotal | $1,852.00 | ||
| Markup (25%) | $463.00 | ||
| Job Total | $2,315.00 |
How Do You Calculate Markup on a Contractor Estimate?
Markup and margin are not the same thing, and confusing them is one of the most common ways contractors undercharge. See Markup vs Margin for a full breakdown, but here is the short version:
Markup is applied to your cost to arrive at a price. Margin is what percentage of your price is profit.
A 25% markup on a $1,000 job gives you $1,250. Your margin is 20%, not 25%.
Contractor markup benchmarks:
- Specialty subcontractors (tile, cabinetry, electrical): 15-35%, typical 25%
- General contractors managing subs: 10-50%, typical 20%
Your markup needs to cover overhead (truck payment, insurance, software, office costs, advertising) and leave you with actual profit. If you are only marking up to cover your time and materials, you are not building a business, you are buying yourself a job.
Worked Example - Full Markup Calculation
| Line | Amount |
|---|---|
| Materials Cost | $4,200 |
| Labor Cost | $3,800 |
| Job Cost Subtotal | $8,000 |
| Overhead Allocation (12%) | $960 |
| Profit Markup (15%) | $1,344 |
| Final Estimate Total | $10,304 |
Round to $10,300 or $10,350 for a cleaner number if your market expects it.
Should You Include a Contingency in Your Estimate?
Yes, almost always, especially on remodel work. Remodels are full of surprises: rotted subfloor under that old vinyl, galvanized pipe that has to be replaced before you can close the wall, a load-bearing wall where the plans said there was none.
A 5-10% contingency line added to your estimate covers your exposure without leaving you in an awkward conversation with a homeowner mid-project. Be transparent. Label it “project contingency” with a brief note explaining it accounts for unforeseen conditions. Most homeowners who have done remodel work before understand this completely.
For new construction where scope is more predictable, you may drop contingency to 3-5%.
What Do Homeowners Expect to See in an Estimate?
Based on experience and the questions homeowners ask after receiving a quote, here is what they are actually looking for:
Clarity. They want to understand what they are paying for. Line items build trust. A single lump-sum number with no detail raises suspicion.
Your credentials. License number, insurance, and contact info. They are going to look you up. Make it easy.
A timeline. Even a rough start date and project duration estimate helps homeowners plan their lives around the work.
Payment schedule. Nobody wants to hand a stranger a large check with no structure. A clear deposit, draw, and final payment schedule feels professional and reduces friction.
What is NOT included. Exclusions protect you and help homeowners understand why the quote does not cover something they assumed it would. Spell out what is out of scope.
Using a solid template keeps all of this consistent. The Contractor Estimate Template and Construction Estimate Template both include these sections in a format homeowners recognize and respond well to.
Pro Tips for Writing Estimates That Win Jobs
- Send within 24 hours. Every hour you wait, a competitor is sending their quote. Homeowners often go with the first professional-looking estimate they receive.
- Use a template. Consistent formatting makes you look established and saves you time on every bid.
- Price to win, but price to profit. Do not cut markup just to win the job. Win jobs by being fast, professional, and clear.
- Photograph the job site before you quote. Reference photos help you catch details you might miss and protect you in disputes.
- Include your review process. Offer to walk through the estimate with the homeowner on a call. This builds trust and gives you a chance to close.
- Separate your allowances. If the homeowner has not picked fixtures yet, use a budget allowance line. Note that the allowance is for budgeting purposes and will be adjusted to actual selection cost.
- Never leave out permit costs. If the job requires permits, estimate the cost and include it as a pass-through line. Homeowners are not surprised by permit costs but they are furious when they show up unannounced.
Common Mistakes Contractors Make on Estimates
Underestimating labor. Material costs are easy to look up. Labor is where most contractors leave money on the table. Track your hours on every job and compare against your estimates. Your historical data is your best pricing tool.
Forgetting overhead. Your hourly labor rate is not your wage. It includes every cost of running the business. If you have not calculated a fully-loaded overhead rate, you are likely underpricing.
No expiration date. Material prices move. Lumber, copper, tile, all of it fluctuates. A quote without an expiration date is an open-ended liability.
Vague scope. “Demo and replace bathroom tile” leaves too much room for disagreement. Be specific about what you are demoing, what you are installing, what the homeowner is supplying versus what you are supplying.
Single lump-sum pricing. Some contractors prefer this approach to hide their margin. In practice, it often backfires. Homeowners trust itemized estimates more and are less likely to negotiate a number they understand.
FAQ: How to Write an Estimate
How long should a contractor estimate be? Length depends on project size. A small repair might fit on one page. A full kitchen remodel might run three to five pages with detailed line items. Do not pad it with filler, but do not leave out detail to keep it short. Cover every cost.
Should I show my markup on the estimate? No. Show the cost to the client, not your internal cost breakdown. Your markup is your business. What the client sees is the price for the work, not a breakdown of your overhead and profit. Some clients will ask. You can explain that your pricing includes materials, labor, overhead, and profit without disclosing specific percentages.
What is a fair deposit to ask for on a remodel estimate? Typically 25-33% upfront, with additional draws at project milestones, and a final payment on completion. For larger projects, structure draws around completion of major phases. Never finance a client’s project out of your own pocket.
How do I handle estimates when material prices change between quote and job start? Two options: include a material price escalation clause in your terms, or set a short expiration date on the estimate (15-30 days) and requote if the project does not start in time. Be upfront about this with the homeowner from the start.
Can I use software to write estimates faster? Yes. Estimating software cuts quote time dramatically. Try EstimationPro free to generate detailed estimates from photos, notes, and audio walkthroughs in a fraction of the time it takes to build a spreadsheet manually.
Pulling It All Together
Writing a professional estimate is a skill that pays off every single time you do it right. The contractors who win consistently are not always the cheapest. They are the ones who show up first, look professional, and make the homeowner feel confident. A clean, detailed, fast estimate does all three.
Start with a solid template, separate your labor and materials, apply a markup that actually covers your overhead and profit, include a contingency for remodel work, and get it to the homeowner within 24 hours of your walkthrough. Then follow up.
Before you write the estimate, make sure your scope of work is locked down. Our guide on writing a construction scope of work walks through exactly what to include so your estimate and your contract stay aligned. For tips on improving your win rate once the estimate is written, see our guide on construction bidding tips. And if you are building estimates for homeowners who want a PDF they can review, our walkthrough on construction estimate templates for homeowners covers the format and sections they expect to see.
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