Definition
An estimate is an internal or preliminary assessment of what a job will cost or what to charge. A bid (or quote) is a formal offer to the customer at a stated price (and terms). In practice the terms are often used interchangeably; the key is that both rely on labor, material, equipment, subs, and markup to arrive at a number.
Why It Matters
Accurate estimating is the foundation of profitability. Under-bidding loses money; over-bidding loses work. Estimates should tie to job cost structure (cost codes, labor rates, subs) so that when the job runs, you can compare actual to estimate and improve over time. Bids must be clear and defensible.
Field Example
A contractor estimates a deck: materials $4,000, labor 60 hrs × $42 = $2,520, subs $800, overhead 10%, margin 20%. Cost total $7,320; with margin, price $9,150. The bid to the customer: “Deck construction, $9,150.” Once won, the estimate becomes the budget for variance tracking.
Calculation / Formula (if applicable)
Estimate = Sum of (Labor + Materials + Equipment + Subs) + Overhead allocation + Margin (or Markup). Often built from quantity × unit cost per line item, then summed and marked up.
Software Application
Support building estimates from line items (description, quantity, unit, unit cost, extended amount). Allow labor, material, equipment, sub categories and cost codes. Apply markup or margin to get price. Convert estimate to job budget when the job is won. Compare estimate to actual (variance) by job.
Tooltip Version
An estimate is your internal calculation of job cost and price; a bid is the formal price you give the customer. Both should tie to your job cost structure so you can track estimate vs. actual.
Related Objects
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