This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional.
Putting together a thorough project proposal is your chance to make a strong first impression to prospective clients and give them an idea of what to expect. However, delivering a project cost estimate that provides an all-encompassing and professional experience for your client can prove to be a time-consuming challenge. This is where an estimate template is helpful.
When building a project proposal, cost estimate templates are a great tool to ensure that all details are included with no missing pieces — for you and your client.
In this article, we’ll help you understand what cost estimates are, how creating a cost estimate template can help you save time, and what you should include in your cost estimate template to provide the most professional and efficient experience for your clients.
What is a cost estimate?
A cost estimate, or job estimate, is the outline of any resources you’ll need to complete a project for your prospective client within the defined scope of work, along with the expected project cost. This can include labor and hours, any facilities or vendors used, project deadlines and timelines, and materials or equipment needed. The cost estimate is a crucial step for your client to determine whether or not to move forward on the project, aligning it with their approved budget.
Create digital estimates
With Square Invoices, you can provide clients with a digital estimate they can approve from anywhere. Then easily convert to an invoice with one click.
Differences among an estimate, a quote, and an invoice
It’s important to understand the differences among an estimate, a quote, and an invoice. Occasionally, businesses and clients alike will interchange these terms, but there is actually a clear difference among the three.
An estimate is just that: an estimate. It’s a document that outlines what the business owner believes will be required for the upcoming project. It gives approximate costs for the materials needed and approximate labor hours that will be used. It’s not legally binding, but is essentially an offer to work with a potential client. This is the first step of the business partnership with your client.
A quote provides the exact cost of a project or job. Once the client approves the quote, you as the service professional are most likely unable to change that cost, especially without prior approval. Additionally, quotes are usually valid for a certain time period to allow you as the business owner the flexibility to alter the price of materials or labor if needed. This is provided after the estimate, as the second step of the business partnership with your client.
Lastly, an invoice is an actual bill for the services provided. Once you have been contracted by the client, you’ll send invoices on the dates or timeline previously discussed in the payment terms. Invoices can be sent to the client for the deposit, payments throughout the project, and final payment for project completion.
What are the benefits of creating a job estimate template?
Providing a job estimate to each client allows you as the business owner to set clear and correct expectations with your client from the beginning. Remember, your client will likely ask for job estimates from multiple contractors or service providers, so submitting a professional cost estimate in a timely manner could be essential for winning them over. This is your chance to stand out with your clients, and building a strong job estimate template ahead of time can help.
Creating a professionally branded job or cost estimate template allows you to simply plug in the client and project information and go. There’s no need for drafting one from scratch for every single proposal. With the help of Square, you can save time and be efficient. Square Invoices gives you the option to customize your own cost estimate template, making those estimates (and you) look professional.
Writing your first estimate
Prior to writing an estimate, you’ll want to be sure that you understand the entire scope of the job the client is asking for. Oftentimes, clients may not know the answers to every question regarding the project. It’s your job as the professional to walk them through the important questions, understand the problem they are hoping to solve, and listen to their needs and preferences for the completed project.
You’ll also want to clarify what they are hoping to see laid out in the estimate. Do they want to see a full itemized list of materials and types of labor charges associated? What updates would they prefer throughout the project and what do those timelines look like? By asking questions like these, it will show your prospective client that you are primarily concerned with their satisfaction and can help build a relationship with them before getting started.
Here are a few items you’ll want to include on every job estimate and examples of how to create your very own template.
What should you include in an estimate template?
Client and business contact information
The first, and probably most obvious, information you’ll want to include are the contact details pertaining to the project. Include customer information, with name, contact info, and billing address, along with your business and billing information. One way to stand out is to use this portion to professionally brand your estimate. Add your logo, and even your slogan if you have one, to the top of the estimate to tell them who you are and give them a feel of what they can expect from doing business with you.
Job name and message
Next, you’ll want to include the job name and ID so that you can easily refer back to the job estimate, and later the quote, when discussing it with your client, vendors, or contractors. A short message summarizing what is included in the estimate, and any other expectations discussed with the client prior, should be included here as well. Remember, it’s about setting clear expectations from the start.
Below you’ll see a job estimate template example from fictional Cutting Edge Web Design as they create and share a job estimate with the Myriana Hotel and Resort. The template example clearly outlines who the estimate is for and what they can expect to see within the proposal. There’s personality within the message, while still remaining professional, to build trust and understanding with the prospective client.
Project and pricing details
Here’s where the fun starts. You can show your expertise of the project by clearly itemizing the breakdown of the services or goods provided. Outline each portion of the project you’ll be completing, including the quantity of hours or services, the unit price for each, and the estimated total.
To eliminate the need for additional back-and-forth conversation, further delaying the client from accepting your proposal, you can provide different package options for the project and what is included with each one. This allows the client some flexibility, whether time or budget is needed, to choose the package that best fits their needs.
In addition, be sure to include all relevant tax and service charges and any discounts or promotions if applicable. The estimate is just that, an estimate. Be as accurate as you can be, while still understanding that costs could change before you deliver the quote to the client.
In the next screenshot, you can see an example of a job estimate package that includes the service breakdown, itemized pricing, discounts, and charges.
Payment schedule details
Once the project is accepted, the client will want to be prepared with deposit and payment deadlines.
Will you require an initial deposit? Will the balance be split into milestones paid over the course of the project?
Including this in the job estimate not only sets you up for success with on-time payments, but it allows the client to be ready with payment in hand upon hiring your business.
As the business owner, you also don’t want to be waiting on an estimate to be accepted for too long. A lengthy wait period could result in a fluctuation in the costs of materials or changes in the project management process that neither you nor the client were prepared for when the estimate was first drafted. Because of this, be sure to include a due date for when the estimate must be accepted and when the first payment will need to be submitted so that you can begin the project work.
Below you can see the detailed breakdown of the two different packages Cutting Edge Web Design is offering, with estimated totals, deposit and due date, balance and due date, and applied discount. Each package provides details of what is included and allows Myriana Hotel and Resort to make the best decision for their needs and budget.
You’ll also want to provide your client with as much information as you can up front. Any custom contract agreements that were discussed prior, relevant scoring documents, and any design files or examples of past work should all be included.
Tips for creating the best project cost estimate
Because it’s the prospect’s first impression of you, use your estimate like a sales opportunity. Be professional, thorough, and honest while standing out from your competitors. Here are some tips for how to do an estimate that will win you new business:
- Conduct a detailed task analysis to make your estimate process more efficient. The more experience you gain with each new project, the more efficient you’ll be at creating your project estimates. You’ll learn which tasks are necessary, which tasks are repetitive, and which tasks may not be beneficial to each project.
- Evaluate any risk factors accurately to avoid unexpected expenses. Again, each unique project experience will help you better estimate unexpected expenses due to resource price increases or additional service hours needed in future projects. However, it’s important to reduce any possible risks and factor in potential expenses ahead of time.
- Research your competition. Understand your competitive advantage and communicate that clearly within your estimate.
- If pricing isn’t your competitive advantage, find ways to include a bonus offering with your project estimate. If there is something you excel at compared to your competitors that you can add on without losing too much profit, see if that addition will be beneficial for the prospect.
- Understand the client’s problem and provide alternative options. While you’ll want to give an estimate that will provide the best solution, try offering alternatives the client could select to either meet the budget or deadline needed. For example, you can provide costs for alternative materials or offer a different vendor that can get a task done faster.
Writing the estimate
- Always hone in on the benefits you provide to clients and never undersell yourself. Many people find it challenging to sell themselves, but be confident in the ways you can provide expert solutions that will indeed help your client.
- Break down all the details to make an accurate estimate. Not only can those details ensure you are providing the correct estimate for your prices and service hours, but they’ll give the customer a greater sense of trust knowing what is involved in each step of the project.
- Make your estimate easy to read by formatting it properly and spacing out all the details. Remember, your project estimate is often your first impression with your client. Organization and clarity on your estimate can help establish trust that your work will be organized as well.
- Clearly spell out any inclusions and exclusions in your estimate. To avoid any headaches in the middle or at the end of the project, clearly define what is and what isn’t included in your estimate.
- Clarify all your terms and conditions to prevent any misunderstandings. The same way you’ll want to provide inclusions and exclusions, clearly outlining terms and conditions can ensure everyone is satisfied at the project’s conclusion.
- Before sending it, always double-check your project cost estimate for accurate information. A missing or extra zero can make an enormous difference for you or your client. Proofread and check all numbers before sending off your project’s estimate to your client.
Optimizing your process
- Make a note of lessons learned from past projects to help you create future estimates. Every business owner will make mistakes. It’s how you learn from them that will set you apart and set you up for success in the future.
- Optimize your estimate creation process by using Square Invoices. Be more efficient and get back some of your time by utilizing Square Invoices to organize and create estimate templates and quickly make changes.
- Use a digital estimate template that includes your branding. As we mentioned before, this not only will help your client recognize your business name, but it can make you appear more professional.
It’s important to know that a job estimate template is used as a sales tool. It’s not about being the cheapest option out there. This is your chance to show potential clients what it will be like to work with you and why you’re their best choice. Use these tips to put your best foot forward.