How are estimated totals and estimated profit calculated?

updated

January 16, 2020

On your project's Estimate, the two key figures that you'll want to keep an eye on are listed in the bottom portion of the page: Estimated Profit and Estimate Total

Estimate Total

The "Estimate Total" is the best guess final price of the project, including your company's markup and costs.

The total encompasses your project's entire estimate, calculating the sum of all relevant cost lines from selections, specifications, change order extra charges, and/or "Other Line Items".

But, since the Estimate can include pricing details for selections that have not yet been made or selections that have already been declined, not every line will be counted in the total. Instead, only the lines associated with the current selections will be added. If the client hasn't yet made a selection, the original budget financials will be used for that item.

For a more comprehensive overview of which line items are included in the Estimate Total, please refer to this Knowledge Base article:

 

Estimated Profit

The "Estimated Profit" is included in your "Estimate Total", but while the "Estimate Total" is likely more pertinent to your clients or prospective clients, the "Estimated Profit" is the one that you will be most interested in at the end of the day.

All of your base costs are included in your various cost lines, but there will also be markup or margin that you will be building into your estimate through the advanced markup configuration tool.

You may be adding markup calculations to help you keep track of additional costs, such as sales tax or commissions, but you must always have at least one markup that is associated with your company's profit (more information on this).

In the Markup Configuration page ("Configure Markup, Margin, & Tax" button at the top of your estimate), you will be specifying whether each calculation should be treated as "Cost" or "Profit" for your company.

Any markups that are denoted as "Profit" will contribute to your project's "Estimated Profit". For more details on cost vs. profit markup, please see this Knowledge Base article:

Note: The same rules mentioned above, for knowing which lines contribute to the total, also apply here. As a result, your margin or markup for any declined selections won't be included in the "Estimated Profit" figure, and the markup associated with the "Original Budget" or "Allowance" will be used if there hasn't yet been a decision on a particular choice.

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