Confident Estimating Process

Pricing a Landscape Lighting Job and Preparing the Quote

To consistently generate a fair profit on your jobs, you must adopt an accurate process for estimating costs and planning your profit margins. Pricing involves significant risk for a contractor. If your price is too high, you might not win the project. If it's too low, you risk losing money. Contractors who don’t have a reliable estimating method often find themselves puzzled at year-end when profits are minimal despite hard work.

Be Cautious with Shortcuts:
Some contractors are tempted to use “rules of thumb” or multipliers to simplify estimating. For instance, setting an installed cost per fixture might seem straightforward. However, this method is only effective for simple projects. It can lead to profit loss on larger or more complex jobs because these multipliers fail to account for the additional labor required.

Adopt a Confident Estimating Process:

A sound estimating process reviews and details all costs, adding factors for overhead and profit recovery. Following a structured procedure ensures you arrive at a fair price that wins jobs and sustains your business. Here are the steps to follow:

List All Materials Needed:
Make a comprehensive list of all the materials required for the project. Calculate the purchase costs for each item. 

Determine Labor Requirements:
Estimate the labor hours required for each task. Apply your hourly labor rate to these estimates.

Include Equipment and Subcontractor Costs:
Account for the costs of any equipment you need to rent or purchase. Include any subcontractor fees in your calculations. 

Apply Overhead and Profit Factors:
Add factors to recover your overhead costs. Ensure your pricing includes a margin for healthy profit. 

By following these steps, you can establish a fair and competitive price that secures the job and ensures your business's profitability.