Knowing what to charge clients for the work you do can make the difference between long-term success and eventual failure for your business. Many contractors look at estimating simply as a way to determine the cost of a project. In the traditional design-bid model of project delivery, this simplistic approach may work, assuming that the sell price generates enough gross profit to cover overhead and net-profit requirements. If your business model is design/build, however, and your current estimating system is limited to producing the project sell price, you're missing out.

Many contractors learn how to estimate using what I refer to as the "yellow-pad method." Using paper and pencil, they can create estimates on the fly anywhere at any time. As a business grows, however—and particularly when it grows to the point where the person who sells the job is no longer the same person who builds it—the yellow-pad estimate...

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