When you create a bid for your next roofing job, you have an excellent opportunity to stand out from the crowd. Let’s not kid ourselves: The roofing business is highly competitive. And when numerous roofing companies are all fighting for the same roof job, you’re looking at competition in its purest form. The good news is that with a few easy steps, you can improve your next estimate and show your customers that you mean business. Instead of simply scrawling out an estimate on a piece of paper and tossing it in your customer’s general direction, you can take a much more professional, measured approach.
Not only does this lead to higher customer satisfaction levels, but it also results in higher profit margins. An accurate estimate prevents unwelcome surprises for both you and your best clients. Customers appreciate consistent pricing, and you can carry out your roofing jobs without going over budget. Streamlining your next estimate is a win-win – and it’s never been easier thanks to new business management software like VIIZR.
But how exactly do you use technology to your advantage as you create an estimate for your next roof job? What steps do you need to take as you create bids and compete effectively in your local area? Follow this general guide, and your next bid will be accurate, professional and eye-catching.
The initial roof bid process is important because it is often your first chance to make a positive impression. First impressions are everything in the roofing world, and customers may walk away as soon as they see signs of unprofessionalism, lateness, or inaccuracy.
This process is also important because it gives you a chance to stand out from the crowd. Aside from marketing, this is one of the only real opportunities to compete directly with other roofing companies in your area. If customers request roofing bids, they’re comparing you with other roofing companies. Nail those first impressions, and you’ll beat the competition every time. Fall short, and you’ll consistently lose customers to other roof companies.
This initial process also helps you show off your reliability. Overpromising can lead to disappointment, while providing realistic expectation cultivates a sense of trust. An estimate lets you set achievable goals, and it’s impossible to deliver results without these achievable goals in place.
Words like “quotes,” “estimates,” and “bids” are often used interchangeably. However, there are a few key differences between these concepts that you need to understand.
Bids are more complex because they involve explicit promises to deliver certain results. These promises can be legally-binding to a reasonable extent, which means that they take the form of a contract or agreement rather than a simple price breakdown. As a result, accuracy is important when it comes to bids.
The contractual, legally-binding nature of bids on roofs also leads to more detail. A wide range of potential outcomes and eventualities must be included in bids. For example, what happens when the roofing company fails to deliver on a specific promise? What kind of legal recourse can the client take? What happens if clients cancel the contract halfway through the completion of their roofs? What happens if they refuse to pay? Roofing companies must lay out clear legal terms and conditions, and they often hire lawyers to cover all their bases when creating a roofing bid.
Bids also involve competition between different companies that are all seeking the same contract. The same is not always true with roof quotes and estimates. A corporation or a government agency might make the requirements of their project publicly available, inviting a wide range of companies to submit their bids. For the most part, the scope of work is already clear when it comes to bids. For example, a client might ask for bids to replace their entire roof.
On the other hand, estimates are much less detailed and exact. When a customer asks for a roofing estimate, they may not have a clear idea of the scope of the project. For example, their roof might be leaking – but they might not know whether they need a simple repair or a complete roof replacement. As part of the estimating process, you might be required to determine the scope of the work yourself after inspecting the roof.
Estimates are defined as “educated guesses,” and these are not legally-binding agreements. When you provide a roof client with an estimate, you are giving them a rough, ballpark figure of how much the roof service might cost and when you’ll finish. Roofing companies often rely on estimates when there is no competition. With no need to compete, all you really need is a quick price breakdown on a roofing estimate.
With all that said, it is still important to maintain accuracy and set realistic goals when creating estimates. This document may not be legally-binding, but customers will still be disappointed when they face a final bill that is much higher than the initial estimate.
The definition of a quote is much more elusive, and you might get a different explanation depending on who you ask. Generally speaking, roof quotes are concrete prices for roof services. These “guaranteed prices” may be valid for a certain period of time, such as 30 days. In regard to their inflexibility, roof quotes are similar to bids. However, they lack the detail typically seen in bids, and they are much more straightforward in nature. Quotes are also similar to estimates because they may not involve competition with other companies.
Whether you choose to deliver roof quotes, estimates, or bids, you’ll need to follow the same basic steps. These steps involve a mixture of mathematics, customer service and technology.
The first stage is to calculate all the money you need to spend in order to complete the roof service. This is not only one of the most difficult aspects of estimating, but it is also one of the most important. If you fail to take into account all of your costs, your calculations for profits and final prices will be inaccurate. In some cases, this can cause roofing companies to lose money on each project instead of earning money – often without even realizing it.
There are many costs you need to consider when making these initial calculations, including:
Note that these costs can change drastically depending on the specific requirements of each roof. For example, one client may ask you to install solar panels on their new roof, creating a range of additional expenses. Don’t make the mistake of using the same basic template for each roof job without considering the unique costs at play.
You’ll need to add up all of your costs in order to make important calculations in the next few steps.
Once you know your total costs, it’s time to set your profit percent margin. Also known as the “markup,” this value represents the total amount of money you’ll take home when the roof service is complete. Depending on your unique goals and requirements, the profit margin on a typical roof service can be anywhere from 6% to 20%. You might want to figure out the profit margins of other roofing companies in your area if possible. In addition, you can find various discussions on this subject online.
Once you have your total costs and your target profit margin, you’re ready to calculate your final price using a simple formula:
Price = Expenses x Markup
You can substitute in your value for expenses (also known as overhead cost) and markup to find out the price you need to charge to earn the target profit margin.
For example, you might have calculated expenses of $4500 for a potential roofing service.
You might also be aiming for a 35% profit margin.
To find your final pricing scheme, all you need to do is plug these values into the formula:
Price = 4500 x 1.33
Price = $6075
You can also rearrange this formula to solve for expenses or markup.
For example, here is the formula for markup:
Markup = Price ÷ Expenses
This formula is useful if you know exactly what price you want to charge. For example, you might know that in order to compete with other roofing companies, you need to set your price at $5800. Assuming that you still have expenses of $4500, our formula would look like this:
Markup = 5800 ÷ 4500
Markup = 1.29
We are left with a profit margin of 29%, and this calculation can help us determine whether to continue or simply walk away and find more profitable work.
We can also use a similar formula to solve for expenses:
Expenses = Price ÷ Markup
This formula is useful when budgeting roofing services, as it tells roofers exactly how much they can spend in order to achieve a specific price/markup combination.
For example, you might have set a price of $6000 while aiming for a markup of 35%. Using this formula, you can determine exactly how much you can spend in order to meet these goals:
Expenses = 6000 ÷ 1.35
Expenses = $4444.44
If we go over this value while sticking to the same price, our profit margins will suffer.
Once you have calculated your price, profit margins and expenses, it’s time to start writing your estimate. The best estimates are filled with details. If you give your roofing customers more information, you lower the chances of payment disputes and miscommunications.
A typical roofing estimate might include the following details:
As previously noted, bids are much more detailed compared to estimates. When creating bids, you might want to include additional information:
The most efficient way to calculate the cost of a roofing project is by measuring the roof. First, calculate the area of the home in square feet. Next, divide this number by 100. This will leave you with the number of “squares” you need to cover. A single bundle of shingles typically covers 1 square.
While this simple calculation tells you how many bundles of shingles you need for a flat roof, most residential roofs are pitched. This means that you need to factor in the slope for a more accurate calculation. The slope can be represented by a ratio of rise over run, such as 5:10 – or a “rise” of 5 feet over a “run” of 10 feet. You can use this value to determine how many additional shingles you need to account for the slope. Always round up to account for mistakes or minor miscalculations. Roofers typically purchase about 10% extra shingles to be on the safe side.
There are a number of additional factors you might need to consider as you calculate these costs. These factors are subtle, and roofers often forget about them:
When competing with other roofing companies for the same clients, you should avoid undercutting them. Pricing wars between companies only serve to drive up the cost of doing business, lowering profit margins for everyone in the industry. While it might be tempting to offer a rock-bottom price for your roofing services, this strategy is not sustainable. Instead, consider setting an average price – aiming for a middle ground between other companies in your area.
The best way to compete is not by lowering prices, but by making your estimates clean, professional and organized. VIIZR helps you accomplish this goal with user-friendly software. You can create PDF estimates in a matter of moments, capturing leads before they walk away and impressing them with positive first impressions.
The estimating process is an excellent opportunity to show off your customer service skills. Educate your customers about your roof services. Explain how you arrived at a certain price bid, and go through the various steps of roofing services. Customers appreciate this transparency, and education helps them move forward with confidence.
You should also carefully manage expectations during this phase. Avoid overpromising, even when other roofing companies are making outlandish claims about their services. Customers appreciate honesty, especially when you explain why certain goals are not possible. Let other roofing companies make unreasonable promises, as this will only cause their customers to walk away.
According to Indeed, the average wage for a roofer in the United States is about $22 per hour. This equates to an annual salary of about $35,000, not including overtime. Of course, wages depend on a number of factors, such as experience levels, geographic location and more.
Although tools like VIIZR help you create estimates in mere moments, it’s important to visit the property and visually inspect the roof before you finalize your price breakdowns. Although the customer might provide you with a roof measurement, these could be incorrect. In addition, you might need to inspect the roof in order to determine whether the customer needs a repair or a complete replacement. Different homes have different roof features.
Once you have made your calculations, it’s time to create and deliver your bid. The best way to do this is with software specifically designed for the trades industry, such as VIIZR. This tool includes a powerful estimating feature that improves organization, speed and presentation.
If you’re ready to make life easier, reduce paperwork and create professional estimates, VIIZR has your back. Try our free trial today with zero obligations.