Estimating is where your profit is made or lost. You can be the best technician in your market, run a tight crew, and deliver flawless work, but if your estimates are off, your margins will suffer. The problem is that most contractors never received formal training on estimating. They learned by watching someone else do it, and that person probably learned the same way.
After working with thousands of home service contractors, we have identified the five most common estimating mistakes that quietly drain profits. The good news is that every one of them is fixable.
Mistake 1: Underestimating Your True Costs
This is the most common and most damaging mistake. Many contractors price jobs based on material cost plus a markup, but they forget about the dozens of overhead costs that eat into every dollar they earn.
Your true cost to complete a job includes far more than materials and labor hours. Think about truck costs, insurance, fuel, licensing fees, tool replacement, uniforms, office rent, software subscriptions, bookkeeping, taxes, warranty callbacks, and the time you spend on unpaid activities like driving between jobs and writing estimates.
If you have not calculated your fully loaded hourly rate, meaning the amount you need to charge per hour to cover all overhead and still make a profit, then you are guessing. And guessing almost always means undercharging.
The fix: Sit down and list every expense your business incurs over a year. Divide that total by the number of billable hours your team works. That gives you your break-even hourly rate. Now add your desired profit margin. That is your real rate. Use it as the foundation for every estimate you build.
Mistake 2: Only Offering One Price
When you give a customer a single number, you are forcing a binary decision: yes or no. That puts all the pressure on price. If a competitor comes in lower, even by a small amount, you lose the job because there is nothing else to compare.
Single-price estimates also leave money on the table. Many customers would happily pay more for a better solution, extended warranty, or premium materials, but they never get the chance because you only offered one option.
The fix: Present every estimate with three tiers: Good, Better, and Best. The Good option is the basic solution that solves the immediate problem. The Better option adds value through upgraded materials, longer warranties, or additional work. The Best option is the premium choice that covers everything and then some. Studies show that most customers will pick the middle option, which is typically your highest-margin tier.
Mistake 3: Taking Too Long to Send the Estimate
Speed matters more than most contractors realize. Every hour that passes between your site visit and the customer receiving your estimate, your close rate drops. By the time you get back to the office, type it up, and email it over, the customer may have already received and approved a competitor's quote.
The data is clear on this. Estimates sent within one hour of a site visit close at nearly double the rate of estimates sent the next day. After 48 hours, close rates drop below 20 percent. Yet many contractors routinely wait days before sending estimates because they are busy with other jobs.
The fix: Use mobile-first estimating tools that let you build and send estimates from the field. If you can send a professional estimate before you leave the customer's driveway, you will see an immediate improvement in your close rate. Tools like VidBid are specifically designed for this workflow, allowing you to record a video walkthrough, build tiered pricing, and deliver everything via text message in minutes.
Mistake 4: Not Tracking Your Win Rate
You cannot improve what you do not measure. Yet a surprising number of contractors have no idea what percentage of their estimates turn into signed jobs. They have a general feeling, maybe "about half," but no real data.
Without tracking your win rate, you cannot identify patterns. Are you losing more on certain job types? Is one technician closing at a much higher rate than another? Are estimates over a certain dollar amount always getting rejected? These are questions that data can answer, but only if you are collecting it.
The fix: Start tracking every estimate you send and every outcome: approved, rejected, or no response. Calculate your win rate monthly. Break it down by technician, job type, and estimate value. Once you see the patterns, you can make targeted improvements. A healthy win rate for most home service trades is between 40 and 60 percent. If you are below that, something in your process needs attention.
Mistake 5: Failing to Follow Up
Here is a statistic that should get your attention: 80 percent of sales require at least five follow-up contacts, but 44 percent of salespeople give up after just one. In the contracting world, many contractors never follow up at all. They send the estimate and hope for the best.
Not every customer who does not respond is a lost cause. Life gets busy. They meant to call you back but forgot. They had questions but did not want to bother you. They were waiting for payday. A simple follow-up call or text can bring these customers back to life.
The fix: Build a follow-up system into your process. Send a friendly text or call two days after delivering the estimate. If no response, follow up again at the one-week mark. Keep notes on what the customer said and reference those details in your follow-up. A personal touch goes a long way. "Hi Mrs. Johnson, just checking in on the water heater estimate I sent over. Did you have any questions about the three options I presented?" is far more effective than a generic reminder.
Putting It All Together
None of these fixes require massive changes to your business. They are incremental improvements to your estimating process that compound over time. Calculate your true costs, present tiered options, send estimates quickly, track your numbers, and follow up consistently. Contractors who master these five fundamentals routinely outperform their competitors on both revenue and profit margin.
Start with the one that feels most relevant to your business today. Fix it, measure the results, and then tackle the next one. Within a few months, you will wonder how you ever ran your business without these systems in place.
