As you may have noticed, people generally like to know what they’re paying for before they decide to order.
This is even more true for freelancers, who don’t have a company behind them, and therefore less perceived security and stability for the customer.
In those cases, it is important for freelancers to create estimates first in order to show potential clients what they should expect and for how much.
But what’s the best way to create one? What should you include and what should you leave out?
Today, we’ll look at all those questions and show you how you can create your own bulletproof freelance estimate.
Make a timeline for the job
Time is money, as we all know, and it is very important that you show how much time a job will take before you even begin to mention money.
Jot down how long the job will take that you’re going to do. Then, divide it into logical phases. Beyond that, you’ll need to break that down into further mini-steps.
Either that, or elaborate your phases with in-depth descriptions to make sure (for yourself and your client) that you’re not missing any steps.
Now you’ll have a good idea of the amount of hours that it will take to complete the job.
If you are working by yourself or you have subcontractors or employees, you’ll need to determine what the labor cost will be.
How many hours will the job take? How many on-site, and how many off-site? How much of your staff (or your own) hours are unbillable?
You need to take all of that into account when you determine the labor costs.
When you do this, you’ll have a basis for determining what you should pay for all your labor costs.
This one is often more connected to product businesses, but you should be working on determining what materials you’ll need.
This is usually including leather, chemicals, textiles, etc.
But it should also include whether you’ll need to use any equipment to create your products or deliver your services.
This is probably renting for high-priority and high-priced goods, but you may also need to buy it. If so, you need to add that in as materials and equipment and use it to calculate your overall costs.
Determine your profit margin
Now, you’ve got your base costs. You need to determine how much you actually want to make.
There is a standard 30% that can apply to many businesses. However, profit margins can range from 10% to more than 100%, depending on your industry.
If you’re in a competitive market or industry, of course you’ll need to have your profit margin at the lower end. You could even take a gamble and put your profit margins lower than 10% if you are certain you’ll make back your money once you are established.
Your perfect estimate
You now have all the parts to create your freelance estimate. Remember, however, it is also important to calculate your fixed costs, such as rent, utilities, etc., and add that into each job.
With these important aspects, you’ll have a bulletproof estimate to deliver to your potential (and definite) future clients.