Mistakes that sink new contractors
Almost every estimating disaster is one of seven mistakes. Learn them now so you never learn them the expensive way.
In this series
The seven
| The mistake | What it costs you | The fix |
|---|---|---|
| Pricing labor at the raw wage | Loses the whole burden, often 30–50% | Always use the burdened rate (chapter 6) |
| Confusing markup with margin | You keep far less profit than you think | Set margin first, back into markup (chapter 7) |
| Forgetting overhead in the markup | Your "profit" quietly pays your bills instead | Markup covers overhead and profit |
| Missing items in the takeoff | You eat every forgotten material | Work systematically, check off the plan (chapter 4) |
| No contingency or allowances | Every surprise comes out of profit | Price the unknowns on purpose (chapter 8) |
| Underbidding to win | You "win" a money-losing job | Bid your real number, walk from bad prices |
| No written scope in the proposal | Disputes and unpaid extras | Spell out included and excluded (chapter 9) |
What they have in common
Six of the seven are silent. Nothing goes wrong at bid time. You find out months later, when the job is finished and the money isn't there. That's what makes a checklist worth more than good instincts here, and why the The quick-reference pack ends with one.
See also
- Chapter 6 of 13
Estimating labor — the real cost
An employee who earns $25 an hour costs you far more than $25. That gap is labor burden, and forgetting it is a silent profit-killer.
- Chapter 7 of 13
Overhead and profit — markup vs. margin
Markup and margin are not the same percentage, and the difference is where new contractors quietly go broke. Set the margin first, then back into the markup.
