How to Make a Cost Estimate

by Peter Grant; Updated September 26, 2017

No matter what type of work you are contracting to perform, it is important to create an accurate cost estimate when you are bidding for the job. Whether you are contracting to do construction work, software development or some other type of job, a cost estimate helps set the employer's expectations concerning timelines and costs. The estimate should not only include your hourly contract rate but also the costs of materials and parts you will need to complete the job.

Step 1

Place your company's name, address and contact information at the top of the estimate.

Step 2

Create two sections, one labeled "Capital Expenditures" and the other labelled "Labor Costs."

Step 3

In the "Capital Expenditures" section, list the raw materials and/or parts that will be needed to do the job. Include the quantity and price of all materials.

Step 4

In the "Labor Costs" section, estimate the number of hours of labor that will be needed per day, then multiply that number by the employees' hourly pay rate. For example, if three of your employees will be working eight hours each day and they each cost $20 an hour, multiply 3 x 8 to find the number of hours of labor (24). Then, multiply $20 x 24 to get your total labor costs for the day ($480).

Step 5

Add up the dollar amounts in each section, and show the total "Capital Expenditures" and the total "Labor Costs." Add those two totals together to get the complete "Cost Estimate."

About the Author

Peter Grant has been a professional writer since 1998 and software engineer since 1995. He has contributed to academic papers, open-source software projects and technical documentation across several industries. Grant holds a master's degree in public policy from National University.