As a business owner or independent professional, you must have heard clients asking for an estimate. Nowadays, it’s a common request, but it might leave you wondering how to make an estimate. Especially if you have recently launched a new business, you might even think what does an estimate look like? The chances of converting your bid into success rely on how well you prepare an estimate.
A professionally written estimate can help you secure profitable jobs faster. On the other hand, poorly written estimates might result in unnecessary back-and-forth with clients, something you never want to deal with. Nothing to worry about if you don’t know anything because we will guide you on how to write an estimate for a job from scratch. In this comprehensive guide, we will also emphasize the importance of creating an estimate and share expert-written tips that you might find useful. So, let’s delve deeper.
What is an Estimate?
An estimate is a formal document shared with prospective clients to help them know the estimated cost and completion time of the project. Basically, it is a guesstimate of the project cost, material cost, and labor requirement to finish the project work. An estimate helps clients get an idea of whether the project cost aligns with their budget. Therefore, an estimate should be prepared in such a way that it should offer a magnified view of the estimated project cost.
The clearer the estimate, the higher the chances of client approval, leading to securing the job. Notably, the cost mentioned in an estimate is likely to change following a detailed analysis and identification of the project scope. Once it is approved by the client, the business prepares a quote in which prices can’t be changed.
How to Write an Estimate?
Here are steps to write a perfect estimate without draining your time and energy. Let’s check them out.
1. Know Your Client’s Requirements
Firstly, learn about the client’s requirements and the budget plan before you start creating an estimate. Ask them about what they are expecting and what services they want during the initial conversation with clients. While creating an estimate involves some guesswork, however, visiting the job site can help you better analyze the project scope. Before moving forward, make sure you and your prospect are on the same page to avoid any unwanted surprises that may damage your relationship.
2. Consider Online Estimate Templates
At this stage, you must have a clear idea of how the client wants the work to be completed. Alright, download a readymade estimate template in any format from an online estimate generator. There’s no need to calculate the estimated cost on paper as you can use a readymade estimate template to make a professional estimate without manual calculations. This online estimation process is far better than making manual efforts to generate a hand-written estimate that may delay the client’s approval.
3. List Out the Estimated Cost
Since you already have an estimate template, all you need to do is enter the required details. Consider the materials and labor costs you identified after understanding the client’s requirements and add them to an estimate template. Also, mention the estimated cost of work that needs to be outsourced if required to finish the project. This way, listing out the cost of the project in an estimate will easily aid clients in identifying if it meets their budget.
4. Give a Rough Timeline
Apart from the project cost, the timeline is another thing that you must keep in mind while preparing an estimate. Your client will be pretty much interested to know how long it will take before giving their approval. So, you need to calculate the estimated time of work completion based on your past projects. If you are making an estimate for the first time, you can seek advice from industry experts or may have a word with contractors.
5. Add Terms & Conditions
Next, include important terms and conditions in the estimate to address potential disputes effectively. Instead of long paragraphs, you can write such terms using one-liners. For example, if you have a policy for late payments, then you need to clearly highlight it when you generate an estimate. This payment policy will help clients know how soon they need to clear their dues, ultimately reducing payment delays and false claims.
6. Present an Online Estimate
Once you have filled in the necessary details, review the estimate to make sure you haven’t missed out on anything. Later, you can send the estimate using online platforms instead of conducting physical meetings. As soon as you send the estimate, inform your clients that you have sent it and ask them to take a look. As a result, you don’t have to wait long and can expect faster approval.
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Types of Estimates
Basically, there are 3 estimate types that every business should know to stay on top of the estimation game.
1. Preliminary Estimate
This type of estimate is provided during the initial conversation with clients, and it only includes key information. Estimators prepare a preliminary estimate based on complete guesswork, sometimes even before identifying the scope of the work. Prices are likely to change in a preliminary estimate once you get in-depth insights into the project.
2. Detailed Estimate
A detailed estimate consists of a full breakdown of the project cost and is created after sending a preliminary estimate. This elaborated version of an estimate allows clients to know what factors are included in identifying the approximate cost of the project. With this detailed estimate, clients can decide whether to proceed with the offered prices.
3. Bid Estimate
A bid estimate is generated considering the project cost offered by competitors to make a bid successful. Once the client explains their requirements, businesses prepare and submit bids to acquire new project work. Following the bidding process, the client decides to whom they want to assign the project work.
What to Include in the Estimate?
While you prepare a professional estimate, always remember to consider the necessary details as mentioned below.
1. Business Information
Add business information like office address, contact number, or email address for clients to reach out to you easily.
2. Prospect’s details
Mention your potential client’s details such as full name, home address, and phone number to clarify whom an estimate belongs to.
3. Estimated cost
Put all your guesswork into an estimate to describe the approximate project cost, including material and labor costs.
4. Project Timeline
Include how much time is estimated to complete the project work and if there is any requirement for outsourcing.
5. Terms & Conditions
Emphasize your working terms and conditions so that neither party has to deal with surprises.
6. Payment Notes
Specify the accepted payment methods alongside late payment charges as additional notes in an estimate.
7. Estimator’s Signature
Lastly, sign an estimate digitally or add a business stamp after taking a printout to authorize the document.
What’s the Best Example of an Estimate?
Below is a perfect example of an estimate that you might want to refer to when writing one from scratch. It showcases how an estimate is written professionally.
Why Is It Important to Create an Estimate?
Creating an estimate is important for various reasons. Especially if you are new to the business and curious to get your first clients, an estimate will be the first thing your prospect will look for. Here are a few more reasons:
Work Opportunities
Making an impressive estimate will help your prospects learn the project’s cost and timeline. Providing a clear and accurate estimate will allow clients to get deeper insights into how soon the project will be completed and the approximate cost, boosting the chances of approval. Therefore, presenting a beautiful and error-free estimate will aid you in securing new work.
Professionalism
Handing over an estimate to clients instead of making verbal commitments shows how professionally you handle the matter. Therefore, it’s no wonder why more businesses are adopting automation tools to make professional-looking estimates. Maintaining professionalism while dealing with clients can lead to better business credibility.
Client Satisfaction
Sending an estimate right after meeting prospects can increase overall satisfaction and build healthy relationships. It may take less time to convert your prospect into a client. Plus, when they are ready to trust your service, it may lead to positive word-of-mouth marketing.
Hassle-free Invoicing
Professional estimates don’t take too long to be converted into invoices. If you have made an estimate using a pre-designed template, you can receive approval in minutes as it is easier to read and understand. Thus, adopting an online estimation process results in smooth invoicing, helping you get paid for what you deliver.
Tips for Writing a Best Estimate
Writing a new estimate may seem easy, but you need to consider some effective tips if you want to seize the work opportunity in the first meeting. Here are some tips for estimators:
1. Analyze Market Trends
Always dive deeper into current market trends whenever you create an estimate. This will help you set up a competitive price for the work. You can check what competitors are offering while preparing an estimate because the prospect will obviously look for different options.
2. Generate Paperless Estimates
Avoid making estimates on paper, as this leads to frequent revisions. Instead, consider creating paperless estimates that not only delight clients but also result in faster approvals. Paperless estimates are also easy to store and are accessible remotely.
3. Leverage the Use of Automation Tools
Estimates can offer great readability when made using automation tools and software. You neither need to spend more time nor worry about minor errors. With automation software, you no longer need to create an estimate from scratch.
4. Maintain Accuracy
It doesn’t matter how you create an estimate; make sure you maintain accuracy. While paper-based estimates are prone to errors, using online estimates can help you improve your accuracy because you don’t need to perform manual calculations.
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Conclusion
Estimates play an important role in acquiring new project work, as they help clients understand the cost and completion time of a project. Without a proper estimate, you are likely to lose prospective clients to your competitors. Therefore, making a professional estimate matters the most when you want to secure new projects and fulfill your financial goals.
It is recommended that you adopt an online estimate generator like Moon Invoice to facilitate the estimation process and leave a lasting impression on clients in one go. Moon Invoice consists of elegantly designed estimate templates that can grab you a new project without any chances of back-and-forth. Try using Moon Invoice for 7 days for free.
Frequently Asked Questions
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
