Quick answer
To quote a job profitably, estimate materials at current prices, estimate labour in realistic hours at your full charge-out rate, add a share of overheads and a contingency, then add your profit margin. Write clear inclusions, exclusions and assumptions, set a validity period, and build the deposit, stage payments and variation process into the quote so the price you win is the price you're paid.
Key points
- Quote from current costs, not last year's price list.
- Labour estimates are where most quotes go wrong — base them on past jobs.
- Inclusions, exclusions and assumptions protect the margin you quoted.
- Put deposits, stage payments and a variation process in writing up front.
A quote is a promise. Get it right and the job pays for your time, your overheads and a profit. Get it wrong and you’ve committed to working for less than it costs you — sometimes for weeks. Most under-quoting isn’t recklessness; it’s small, repeated omissions that add up.
What goes into a profitable quote?
Build every quote from the same components, in the same order.
| Component | What to include | Common mistake |
|---|---|---|
| Materials | Current supplier prices, waste allowance, delivery | Using an old price list |
| Labour | Realistic hours × charge-out rate | Estimating the best case |
| Subcontractors | Written quotes from subbies | Guessing their price |
| Overheads | Share of vehicle, tools, insurance, admin | Leaving them out entirely |
| Contingency | Allowance for known risks | None on risky work |
| Margin | Your profit on top | Treating the charge-out rate as profit |
A good quote also sells. Customers compare clarity as much as price: a well-organised quote with a clear scope, timeline and payment schedule signals a business that will run the job properly, which often matters more to them than a small difference in the total.
How do you estimate labour accurately?
This is where quotes go wrong most often. Owners estimate how long a job should take when everything goes smoothly, then run over.
- Use your history. Track actual hours on past jobs and compare them with what you quoted. If you consistently run 15% over, your estimates need to grow by 15%.
- Count everything. Travel, set-up, pack-down, cleaning, collecting materials, site meetings and handover all take time.
- Use your full charge-out rate — the rate that recovers wages, super, leave, non-billable time and overheads — not the wage you pay. Our guide on pricing your services shows how to work it out.
What should the quote document say?
A quote protects your margin only if the scope is clear.
- Inclusions — exactly what you’ll supply and do.
- Exclusions — what you won’t (for example, making good, rubbish removal, council fees).
- Assumptions — access, site conditions, customer-supplied items, working hours.
- Validity — how long the price holds.
- Payment terms — deposit, stages, final payment and due dates.
- Variations — how changes are priced and approved.
business.gov.au’s guidance on preparing quotes is a useful checklist of what customers expect to see.
How should deposits and stages appear in a quote?
Put them in the quote itself, as dollar amounts, so the customer accepts them when they accept the price. For example: “Deposit $6,400 on acceptance; $9,600 on completion of rough-in; balance $16,000 on completion.” (Illustrative.) Our guide to deposits and progress payments explains how to size them so your cash arrives before your costs.
Won a job that’s bigger than your usual working capital can carry? Check what funding you might qualify for — there’s no credit check when you enquire.
How do you stop variations eating the margin?
Variations are where good quotes go bad. The customer asks for “just one small change”, you agree on site, and nobody writes it down.
- Put a variation clause in every quote.
- Price variations before doing them, in writing, even by text message.
- Invoice variations with the next stage payment rather than waiting for the end.
- Keep photos and notes of anything outside the original scope.
How do you know if your quoting is working?
Track three numbers:
- Win rate. Winning almost every quote usually means you’re too cheap.
- Quoted vs actual hours on completed jobs.
- Quoted vs actual margin by job type.
Review them quarterly. If one type of job consistently comes in under margin, either re-price it or stop quoting it. Our article on improving gross profit margin covers the wider picture.
What should you check before you send a quote?
Run through this list on every quote, however small:
- Materials priced from current supplier quotes, with a waste allowance
- Labour hours compared with similar past jobs, including travel and set-up
- Subcontractor prices confirmed in writing
- Overheads and margin added — not just costs plus a round-up
- Contingency or provisional sums for known risks
- Inclusions, exclusions and assumptions written out
- Deposit and stage payments shown in dollars
- Validity period and variation process stated
- Your ABN, and GST shown correctly
How do you price risk into a quote?
Some jobs carry more uncertainty than others: older buildings, tight deadlines, difficult access, new types of work, or customers with a history of changing their minds. Price that risk openly rather than hoping for the best. Options include a higher contingency, provisional sums for uncertain items, a day-rate component for investigation work, or declining the job. Our article on improving gross profit margin explains why a handful of under-priced risky jobs can drag down a whole year.
Win the job, then fund it properly
Bigger jobs are how businesses grow — and they’re also how cash flow gets stretched, because materials, labour and subcontractors need paying before the customer’s final payment arrives.
If you’re quoting larger work and want funding lined up behind it, talk to us. We consider trading businesses for cash-flow and line-of-credit facilities typically from $5,000 to $500,000, and property-secured loans from $20,000 to $5,000,000. There’s no credit check to enquire, your details aren’t circulated to other lenders, and a real person looks at your situation and calls you back. Give us accurate job and turnover figures so we can get it right first time.
Frequently asked questions
What's the difference between a quote and an estimate?
A quote is generally a fixed price for a defined scope. An estimate is an informed guess that may change. Be clear which one you're giving, and state what could change the price.
How long should a quote be valid for?
Long enough for a customer to decide, short enough that your costs don't move — often 14 to 30 days. If material prices are volatile, say so and keep validity short.
How much contingency should I add?
It depends on the risk. A job you've done many times needs little; renovation work behind walls or on older buildings needs more. Some businesses prefer to list risky items as provisional sums instead.
How do I handle variations?
State in the quote that changes to scope will be priced and approved in writing before the work proceeds. Then stick to it — verbal variations are the fastest way to lose margin.
Should I charge for quoting?
For complex jobs that need design work or significant time on site, many businesses charge a quoting or design fee that's credited back if the job goes ahead.