Have you ever had a customer insist, “I need an itemized estimate” or ask “Can I get a breakdown of these costs?”
To Itemize or not to itemize…
The contractor’s opinions on writing itemized estimates vary, and there are pros and cons to an itemized approach to estimating. If you are asking the question “Should I write an itemized quote for my customer”, after this read, you’ll have the right answer. Let’s take a look at some of the reasons behind the varying opinions.
Starting with the Pros:
1. Transparency & Clarity.
Writing an itemized quote for your customer is an easy way to build trust. If a homeowner or contractor sees a detailed breakdown of everything factoring into the final cost of the project, they know exactly what is included and aren’t left questioning how you landed on your final price. Providing an itemized estimate creates a clear list of labor hours, material costs, and additional costs affecting the project total. This level of transparency helps even the most price-conscious customer rest easy knowing all the details of their upcoming project.
2. Detailed understanding of job budget.
Itemizing an estimate not only has benefits for your customers and sales process but also creates a solid plan for internal budgeting and job costing. Understanding where your money as a contractor is being spent helps you identify potential leaks in profit margins. With material and labor costs all over the place, an itemized estimate ensures you won’t be blindsided by unforeseen price increases. An itemized breakdown allows you to calculate the projected profit on every item included in an estimate.
3. Easy to justify total job costs.
When writing estimates for customers, it is easy to just hand them a total cost for the job when most customers would prefer to know why it will cost that much. Itemized estimates eliminate that problem by laying it out for the client and reduce any concerns that they may have. Some customers are more likely to sign an estimate showing them what their $30,000 is being spent on.
And now the cons:
1. Shopping List for another contractor.
“I’m sorry but we went with ABC Contractor, they are offering a better price”
Most customers receive multiple bids for a project and are often looking for the best price. It is not uncommon for customers to show a competing construction company your quote and compare. Handing another contractor your itemized estimate is like handing them a shopping list and showing them exactly where they can underbid your proposal.
2. Time-consuming to create.
You tell me what sounds quicker to create…
A. “The total for your bathroom remodel will be $30,000”
B. “Your bathroom remodel will include 350 SQFT of tile at $3.40 per SQFT, 14 hours of labor to install the tile at $50 per hour, 4 electrical outlets, 2 light switches, etc…..”
You get the idea! Itemized estimates consist of listing out each item individually so that the customer can see exactly what they are paying for. This requires a lot of time and dedication to accurately estimate your customer’s project. Contractors can take hours looking up pricing, typing out each item, and formatting it in a way that is easy to digest for your client. Itemized estimates can be extremely time-intensive.
3. Longer approval process from customers.
“We can purchase tile at a lower price than that, can you take that off the estimate”
Listing out every item that will be needed for the project is not only time-consuming but can also be a long process. Customers are more likely to try to change small details on the estimate to knock down the price or maybe they just don’t find it necessary. Most customers don’t have the industry knowledge to understand wastage, overhead, and other small but important details of a project. This leads to a lot of back and forth and explanation to your customer on why each item is included.
Best of both worlds – Estimating with Projul.
There are pros and cons to creating an itemized estimate. The estimating tool in Projul aims to bring the best of both options to the table. Our experience as former contractors allows us to identify tools that help you sell more jobs, and create job-winning proposals. Let’s take a look at a few of the features that stick out when deciding how to format estimates.
1. Estimate templates
Estimate templates can be a total game-changer in your estimating process. Say goodbye to double-entering information you have typed a thousand times! Eliminate copy-and-pasting contract details, item descriptions, and more. Creating custom estimate templates reduces the time it takes to write an estimate, saving your hours, and allowing you to close a sale on-site instead of having to take it back to the office, even if you are sending an itemized breakdown!
2. Itemized Estimate breakdown with customizable display options
Projul allows for itemized breakdowns with customizable display options. What this means is that you can choose whether or not you want your clients to see the pricing of each item or if you want them to see the item at all. With these custom display options, you can build a detailed budget for your project, but not send a shopping list, or an overwhelming detailed breakdown to your customer. Create proposals that sell and look professional with these display options.
3. Fast, digital approvals
Projul has the ability to let customers digitally approve and sign estimates. In the event that your customer would like to make a change, Projul allows for digitally signed and templated change orders. This means that everything can be done quickly from any device to streamline approvals. No need for another signature platform or separate contracts either. Turn your estimates into signed contracts all in one go!
Summary: An estimate aims to provide reasonable, accurate cost estimates to your customer, and present them in a way that leads to more sales and closed leads. Using Projul helps you make more sales and increase revenue with a best-of-both-worlds approach to estimating. You can provide a detailed transparent breakdown that sets your job up for success, while removing some of the common “cons” of an itemized estimate. Learn more today!