How to write a professional estimate

Preliminary estimate

A preliminary estimate is a rough estimate that is given at the beginning of a project when only limited information is available. These types of estimates mostly rely on the information you have from previous experience and past projects. Their goal is to try and understand the total scope and budget of a project, and if it’s worth taking on.

For example, imagine a branding agency is asked to create a website, logo, and other marketing materials for an organic kombucha company. The branding agency will look at similar projects it has done in the past and will be able to give a rough estimate for the current project.

Preliminary estimates are not legally binding, and it’s common to negotiate and change terms within them.

Detailed estimate

The more you know about the project or service you need to provide, the easier it is to create a detailed estimate. In most cases, you first write a preliminary estimate, and then build off of it to create an elaborated version. The estimate helps the customer understand whether they can afford the project, look at other quotes, or whether they need additional financing.

A detailed estimate contains the following information:

• Information about rates used to calculate the cost
• Project specifications
• Costs of materials used (if applicable)
• Project timeline
• Labor costs (if applicable)

Bid estimate

This type of estimate is created with the intention of being compared to other company estimates, with the hope to ultimately win a project. Bids are common for larger commercial and government projects where the project scope is clear. The client will detail what they need and make these requirements publicly available. Businesses will then bid for these projects by specifying how much it will cost to complete them. The bidding process is over when the client chooses a winner. Bid estimates are calculated based on standard industry costs or past projects, and are more detailed than other types of estimates and quotes.

Step 1: Evaluate the project scope

One of the first things you’ll need to do is review the scope of the project. You can’t start writing your estimate without knowing and fully understanding what needs to be done and your potential client’s expectations.

During this stage, it’s important to determine:

• Rough project costs
• The type of services your client requires
• Do you need to outsource or subcontract some of the work?
• Does the prospective client want a complete breakdown of costs or just the total?
• The projected completion date
• Clients’ expectations for the outcome of the project

To understand the scope of the project and determine some of these points, you’ll need to get as much information from the client as possible. Depending on the service you’re offering, it might be a good idea to meet them face-to-face or online and start building a good working relationship.

Step 2: Provide a rough timeline

The estimate must include a rough timeline for the project. The timeline will give the potential client an idea of how long it might take and help them plan accordingly. Say, for example, you’re quoting a revamp of someone’s backyard and they want you to build them a pool, hot tub, and deck. It’s important for the client to know if the project will be done in time for their annual summer pool party.

Including a timeline in your estimate shows that you have extensive experience, are organized, and have a plan for how you’ll complete the project. This can reassure clients that you know what you’re talking about and give them confidence in choosing you for the job.

Step 3: Determine what needs to be outsourced

In some industries it’s very common to subcontract some of the work to save time and ultimately money. You’ll need to include which work will be subcontracted or outsourced and the estimated cost in your estimate.

For example, if you have a branding agency, you might need a graphic designer to help design a website. Therefore, you’ll need a freelancer to take on these specific tasks.

Step 4: Estimate the resources needed

One of the major steps to writing an estimate is piecing together all the resources and materials needed. This is where the bulk of your estimate work will be found because you need to consider material costs, understand labor costs, and price out any subcontractors.

Try and be realistic about the capabilities of your business. Don’t be afraid to outsource work to freelancers and subcontractors–it may save you time and money in the long run.

Keep in mind that costs can fluctuate, especially with supply chain shortages and harder-to-get materials that are simply more expensive. It’s important to shop around to get a good idea of the cost and the quantities of materials you’ll need to execute the project successfully.

It’s always a good idea to include buffers in the estimate process for unexpected costs or client demands. Let’s say you run a construction company and your client calls you up at the last minute and says they need the whole house repainted in one week. While the project was supposed to take you two weeks on your own, now it will take at least three. In order to get the job done on time you’ll need to hire subcontractors or additional staff to help. If you left some room for unexpected expenses, then you’ll be able to cover the subcontractor’s costs.

If your estimate was clear, it will be much easier to go over the quote with your client in a case like this. You can easily show them that the extra work was not initially in the estimate, and therefore you require extra money for the additional work.

Step 5: Check out the competition

It’s good to know what your competitors are offering. This research will keep you in check and help you get realistic figures in your estimate. It will also help you ensure you’re in the ballpark with your pricing and give you a better idea of how to market your services.

Step 6: Terms and conditions

A proper estimate should include your business’s terms and conditions, as they are critical for setting potential clients’ expectations. The terms and conditions should include potential scenarios that can cause friction and misunderstandings between you and your client and ways to resolve them. 

For example, you might want to include a clause that outlines how many add-ons or changes to the project are permitted and how they will be priced. This step can help you avoid misunderstandings and lawsuits further down the line.

Step 7: Make your estimate detailed

When creating your estimate, be as thorough and detailed as possible. Include things like all the costs involved and your contact details, company name, logo, and website.

Step 8: Submit your estimate quickly

Once you’ve gone through all the previous steps, you’re ready to submit the estimate. You should aim to send your potential client the estimate as quickly as possible.

If you’re slow at submitting the estimate, the customer may contact competing companies and search around for a lower quote. 

Be as communicative as possible, and make sure you let your potential client know if you need another few days to finalize the estimate. Once ready, send an estimate email to the prospective client with a document outlining all project costs. 

In the email, you’ll need to introduce yourself and your business. Then, give a brief summary of the attached estimate. Conclude with some benefits of working with your business and the next steps. Writing an estimate email can be confusing to some business owners, so the important part is to keep it professional, short, and to the point.

If you don’t hear back from the customer for a few days or weeks, try and schedule a follow-up call to discuss their thoughts. You may discover that they changed their mind about the scope of the project or the time frame doesn’t line up. Understanding the reason for the delay or lack of response is helpful when improving future estimates and your success in landing the job.