We would simply compare the job at hand to work we completed in the past and then guess how long we thought everything would take. Thus our estimate was born. Our technique was pretty much ‘guestimate to estimate’.
As my company grew and became more sophisticated, so did my estimating practices. I realized that guestimating sucks. It leads to uncertainty. It makes you wonder if you bid too low when you won a sale, or if you bid too high if you lost the sale.
It became clear that we needed an estimating process of sorts, and in order to establish the process we needed to lay out all the components that come into play when generating accurate estimates.
We found that accurate estimates boil down to these simple, but essential components:
- Production factors for crews and equipment
- Size and condition of the property
- Overhead costs to perform the job
- Scope of work
Here are some steps you can take to help you get these essential components.
Essential Component One: Production Factors
Aside from property measurements, your production factors are the foundation of any and all estimates. You’re going to use these again and again for every estimate you create, so it’s important that you take the time to figure out how long something takes, and how much material you’ll need.
If you’re preparing a lawn care estimate, you need to know how much material is necessary to effectively treat the property, and how long it will take you to apply the material.
There are few ways to determine material needs:
- Industry standards are usually accessible from equipment and material manufacturers, and these are probably even available online.
- Get them from the field by tracking your material usage and the properties you’ve used the materials on, and tracking your time, or your crews’ time in the field.
Once you’ve nailed these quantities down, I would recommend you familiarize yourself with some easy benchmark figures you can use for estimating purposes.
For example, determine how much fertilizer it takes to spray 1,000 square feet. This is an easy number to remember and when you’re preparing a proposal, you’ll notice if your numbers look a little off right away.
It won’t be a guessing game; remember guestimating sucks.
Essential Component Two: Property Measurements
Production factors are no good unless you’ve got property measurements to apply them to. I would recommend measuring anything you possibly can online- especially for lawn care estimates.
If you can measure the property online before you make your site visit, you’ll have more time while you’re at the property to inspect the conditions of the turf and look for diseases and undesirable conditions that can be remedied with a program.
If you can create a program, you can win a bigger sale and make the lawn look better, which probably leads to a happier customer. A win-win-win situation.
Essential Component Three: Overhead Costs
Your overhead costs should always be considered when preparing an estimate.
You not only need to cover cost of your time or your employee’s time for servicing a property, but you also need to consider fuel costs and drive time.
The geographic location of a property is a big factor when preparing an estimate in determining the time it will take you to service a property. I’m sure you have a sweet spot, an area where you like to work and want to increase your exposure. If you’re going to travel outside of that sweet spot, it better be for a big job, or multiple jobs in your usual book of business.
Be sure you consider the extra time spent behind the windshield when you’re bidding work outside of your sweet spot. It has to be worth it.
Essential Component Four: Scope of Work
Obviously your scope of work will vary from job to job, and will impact the way you prepare your proposal. But how much it varies really depends on what you agree to.
The same rationale about working within your sweet spot should be applied to the type of work you agree to perform. Agreeing to perform a service that isn’t in your wheelhouse or sweet spot can be cumbersome, and end up costing you too much time and perhaps money.
Essential Components Lead to Essential Profits
You don’t want to leave anything on the table when you’re estimating. Getting these essential components together will ensure you’ve got all your bases covered to produce accurate, profitable estimates.
Mike contributed this post to the Jobber blog.