To write an estimate, describe the job scope, list labor and materials with prices, add tax, total the expected cost, state what is excluded and how long the price is valid, and ask for approval and any deposit.
An estimate is often the first document a client sees from you, and it shapes everything after it: the deposit, the schedule, change orders and the final invoice. A clear estimate wins more jobs and prevents many billing arguments before they start. This guide covers what to include, step-by-step instructions, a filled-in example and a free template.
What is an estimate?
An estimate is a written, itemized prediction of what a job will cost, given before the work starts. It tells the client what you plan to do, what it should cost and what they need to do to approve it.
An estimate is usually understood as your best guess, not a fixed price. The final cost can change if the scope changes or you find something unexpected, such as rotted framing behind a wall. If you want to commit to an exact price, send a quote instead. Here's a quick comparison:
| Document | Price | Typical use |
|---|---|---|
| Estimate | Expected price, can change | Repairs, remodels, custom work where some unknowns remain |
| Quote | Fixed price for a set scope, for a set time | Well-defined jobs and product orders |
| Proposal | Scope, price, timeline and terms for approval | Larger projects, services, anything that needs sign-off |
Our guide to estimate vs quote explains the difference in more detail.
What should an estimate include?
A complete estimate includes your details, the client and job site, an estimate number and date, a scope of work, itemized prices, tax, the total, exclusions, how long it's valid, deposit and payment terms, and a place to accept.
| Part | What to write |
|---|---|
| Your business | Name, phone, email, license number if your trade needs one |
| Client and job site | Name, contact details, address of the work |
| Estimate number and date | A unique number such as EST-0031, and the date issued |
| Scope of work | A plain description of what you will do |
| Line items | Labor and materials, each with quantity, rate and amount |
| Tax | Sales tax, if it applies in your state |
| Estimated total | The expected price |
| Exclusions | What isn't included, such as permits or hauling |
| Valid until | How long the price holds, such as 30 days |
| Deposit and payment schedule | What's due on acceptance and when the rest is due |
| Acceptance | A signature line, or an online accept button |
How do you write an estimate step by step?
Write an estimate in 8 steps: visit or gather details, define the scope, price labor, price materials, add overhead and contingency, set terms, add exclusions and send it for approval.
- Gather the details. Visit the site, take measurements and photos, and ask what the client actually wants. Many estimating mistakes start with a missed detail.
- Define the scope. Write what you will do in plain words: "Remove old fence, install 120 linear feet of 6 ft cedar privacy fence with one walk gate."
- Price the labor. Estimate the hours for each task and multiply by your rate, or price each task as a flat fee.
- Price the materials. List materials with quantities and current prices. Add a markup if you normally charge one for sourcing and handling.
- Add overhead and a contingency. Cover permits, disposal, travel and equipment rental. For jobs with unknowns, a contingency line or allowance protects both sides.
- Set the terms. State the deposit, the payment schedule, how long the estimate is valid and what happens if the scope changes.
- List exclusions. Say what isn't included so there are no surprises later.
- Send it and follow up. Send the estimate the same day if you can, and check in after two or three days if you haven't heard back.
You can do all of this in the free estimate generator, or download a ready-made layout from the estimate templates.
What does a written estimate look like?
Here's a filled-in example for a fence installation. The business, client and prices are made up, but the rates are realistic for this kind of job.
| Field | Value |
|---|---|
| Estimate number | EST-0031 |
| From | Oakline Fence and Deck, (555) 010-5583, quotes@oaklinefence.example |
| Prepared for | Taylor Brooks, 902 Willow Rd, Tampa, FL 33602 |
| Date | June 3 |
| Valid until | July 3 (30 days) |
| Scope | Remove existing fence. Install 120 linear feet of 6 ft cedar privacy fence with one 4 ft walk gate along the back and side property lines. |
| Description | Qty | Rate | Amount |
|---|---|---|---|
| Remove and haul away existing fence | 1 | $450.00 | $450.00 |
| Cedar fence materials (linear feet) | 120 | $28.00 | $3,360.00 |
| Installation labor (linear feet) | 120 | $18.00 | $2,160.00 |
| 4 ft walk gate with hardware | 1 | $385.00 | $385.00 |
| Post concrete and fasteners | 1 | $240.00 | $240.00 |
| Estimated total | $6,595.00 |
Deposit: 30% ($1,978.50) due on acceptance to order materials and schedule the job. Balance due on completion.
Not included: Permit fees, property survey, removal of buried concrete or large roots, and staining or sealing.
Changes: Any change to the scope will be priced on a written change order before the work is done.
How do you price an estimate accurately?
Price each part of the job separately, then add the costs people forget. A simple formula: labor hours times your rate, plus materials and markup, plus overhead, plus a contingency for unknowns.
The costs most often left out:
- Travel time and fuel to remote job sites
- Disposal and dump fees
- Equipment rental
- Permits and inspections
- Cleanup time at the end of the job
- Price changes on materials between the estimate and the purchase
Track your actual hours and costs on finished jobs and compare them with what you estimated. Over time, your estimates get much closer.
How long should an estimate be valid?
A common window is 15 to 30 days. A shorter window protects you when material prices change. Write the date on the estimate ("Valid until July 3") rather than "valid for 30 days," so there's no question about when it ends.
Should you ask for a deposit on an estimate?
Yes, for any job with materials, custom work or a reserved start date. State the deposit amount and what it covers right on the estimate, then send the deposit invoice when the client accepts. Our guide on how to ask for a deposit has typical amounts and word-for-word scripts.
Some states limit how much a home improvement contractor can collect upfront, so check your state's rules before setting a number.
What happens if the job changes after the estimate is accepted?
Write a change order before you do the extra work. It should describe the change, the added or reduced cost and any schedule change, and the client should approve it in writing. Then add it to the final invoice as its own line. The free change order template gives you a layout to copy.
How do you bill a large job from an estimate?
Split it into progress payments tied to milestones, and put the schedule in the estimate. For example: 30% on acceptance, 40% when framing is done and 30% at the final walkthrough. Each milestone becomes its own invoice. See our guide to progress billing for both milestone and percent-complete methods.
How do you turn an estimate into an invoice?
When the job is done, copy the accepted line items onto an invoice, add any approved change orders, subtract the deposit and progress payments, and send it. Doing this by hand is where errors creep in, so it helps to use a tool that carries the lines over for you.
In Invoicefy, estimates are sent as proposals. Your client opens a private link to view the proposal, accept it and download a PDF. Once it's accepted, you convert it into an invoice in one click with every line item carried over, add the deposit, and send it. Proposals and invoices are unlimited on the free Starter plan, and the contractor invoice guide shows what the final bill should look like.
Frequently asked questions
Is an estimate legally binding?
An estimate is usually treated as an expected price, not a fixed one, but once a client accepts it, it can become part of your agreement. Some states have rules on how far a final bill can exceed a written estimate for certain work. For legal questions, talk to an attorney in your state.
Should I charge for an estimate?
Many trades give free estimates for standard jobs. For complex projects that need design work, detailed measurements or engineering, some businesses charge a fee and credit it toward the job if the client hires them.
What is the difference between an estimate and an invoice?
An estimate is sent before the work and shows what the job should cost. An invoice is sent after or during the work and asks for payment of what's owed.
How detailed should an estimate be?
Detailed enough that the client knows exactly what's included and what isn't. Break out labor and materials, list exclusions, and describe the scope in plain words. More detail means fewer disputes later.
What if the final cost is higher than the estimate?
Tell the client as soon as you know, explain why, and get the change approved in writing with a change order before doing the extra work. Surprises on the final invoice are a common cause of disputes.
Written by The Invoicefy team
We build Invoicefy, the free invoicing app for contractors, freelancers and small service businesses, and we write these guides from what we see our users run into every day.