Providing an accurate home improvement estimate is one of the most critical moments in the sales process. Your clients must trust that your estimate considers all the valid information and will expect the final price they pay to be very similar, if not identical, to your initial estimate. However, as we know, there is a reason that estimates are called “estimates.” It is impossible to predict future events, and thus, there may be incidents and revisions that, in turn, increase the total cost of a job. Still, as a contractor, you should do your best to prevent this situation from occurring.

Let’s look at a few key factors to consider when providing estimates to your clients.

Materials Pricing

Starting a project off with inaccurate material cost estimates will almost always negatively impact your profitability. One commonly used method many contractors use to calculate materials pricing is to refer to their purchase history and see what was paid for previous jobs. While this can be a fast and manageable estimation method, it may not be accurate if you’re referring to materials costs from one year ago or longer. Your vendors may have raised their prices by a non-negligible amount in that time.

For less commonly purchased items, it is advised to get a quote directly from your vendor, especially for those items that cost several hundred dollars or more. Be sure to ask how long the quote remains valid, and then communicate that information to your client.

Labor Costs

It should come as no surprise that poorly estimated labor costs quickly eat up your time and profit. Extra unplanned days on a job site dip into your revenue, and they may also delay the start of your next project. This consequence can swiftly turn into a nasty cycle since once you begin one project late, it can also affect every scheduled project in the future.

If a job requires you to tackle something you’ve never done before, it is advised that you ask for guidance from another professional who has a decent amount of experience in that area. Seeking out this guide will help improve your labor estimates since you won’t have to take a shot in the dark. Additionally, have your team do a walk-through of your client’s home to identify any potential issues that may increase the time spent on the job. If any taxing areas are found, make a game plan, and discuss how to address the situation before finalizing your estimate.

Human Error

As the saying goes, we are all only human. Mistakes can (and will) happen occasionally. A part may be misused, or a handful of supplies may be misplaced. However, if you fail to plan for human error, you will end up paying for it.

Account for mishaps in your estimate by referring to your past jobs. Draw a comparison between how much you budget for materials, labor, and other costs and what you actually ended up spending once the job was completed. Calculate the average percentage difference among a sample of your past jobs and use it as a guide moving forward to allow for human error.

Offer Financing

Looking over the cost of a home improvement estimate can be shocking for many clients. So even when your estimates are spot-on and your client recognizes the value you can provide them, they may still be hesitant to commit to the project. Offering simple financing options is an excellent way to make the whole process easier for your clients.

Medallion Bank offers standard installment loans that feature affordable monthly payments and competitive interest rates for your prime credit customers. Help your clients feel more at ease with their home improvement projects. If you are interested in partnering with us, contact us today.