Five steps, in this order: quantities, labor hours, burdened rate, allowances, margin. Nothing gets skipped and nothing gets swapped. The order matters because the average residential remodeler keeps 6.3% net, per NAHB's 2026 Cost of Doing Business Study, which means a $7,600 job is carrying about $480 of profit. Four labor hours you forgot to write down, at a burdened $52, is $208 of that gone before the truck is loaded. Half the job's profit, in a line nobody wrote. Run the five steps standing in the room and the number holds up. Guess at the end of the walkthrough and you find out on Friday.
What are the five steps, in order?
Quantities, hours, rate, allowances, margin. Each one feeds the next, and each one has a place it usually fails.
- Quantities. Turn measurements into units you can buy and install — square feet, linear feet, each. Then add waste. Then round up to what the supplier actually sells.
- Labor hours. Multiply each quantity by a production rate you got from your own finished jobs.
- Rate. Put your burdened hourly cost on those hours. Not the wage.
- Allowances. Price what you could not see as its own named line.
- Margin. Divide, do not multiply.
The first step assumes you walked the job properly. If you have not built a capture standard for the walkthrough itself, start there — none of this arithmetic survives a measurement you did not take.
How do you turn measurements into quantities you can actually buy?
Measure the work, not the room, then add a waste factor, then round to the package. Three moves, and contractors skip the third one constantly.
Waste is not a fudge. Shaw's own hardwood installation instructions require a 5-10% waste factor added to the measured square footage depending on layout, with diagonal, herringbone and bordered installs taking more. That is the manufacturer telling you the number is wrong if you order exactly what you measured. Every material you buy has an equivalent, and most of them are in the install sheet you never read.
Then the package. You measured 340 square feet, you added 8% for a straight lay across two rooms with a closet and a doorway, and you need 367. Flooring comes in 20-square-foot cartons, so you are buying 19 cartons and paying for 380. The gap between 367 and 380 is thirteen square feet of hardwood that appears on your invoice and not on your estimate. Same story with drywall sheets, mortar bags, siding squares and paint gallons.
Where this goes wrong: measuring the room instead of the work. A bathroom floor is not the room's square footage once the vanity and the tub deck come out of it, and a repaint is wall area minus openings — except the openings still cost you cut-in time.
Where do you get labor hours if you do not have a price book?
From your own jobs. This is the step nobody teaches and the step that decides whether your estimate is arithmetic or a feeling.
A production rate is quantity over time. RSMeans builds every line the same way: a crew has a daily output, and labor-hours per unit is crew hours divided by that output. Their worked example is crew C-14H placing thirty 4' x 4' concrete pads a day at 48 crew labor-hours, which is 1.6 labor-hours per pad. The arithmetic is not the hard part. Getting a rate that describes your crew is.
So build it. Take three finished jobs of the same kind. Write down the quantity and the clock hours, crew size included, and divide. Forty man-hours across 680 square feet of tear-out and install is 17 square feet per man-hour, and that number already has your drive time and your setup buried in it, which is exactly what you want.
Take the position seriously: a rate you bought is worse than a rate you measured. Published daily outputs assume an eight-hour day in daylight and moderate temperatures, and they include mobilization and cleanup on a job where the crew owns the space. A 1960s ranch in Fort Myers with the homeowner working from the kitchen table is not that job.
Where this goes wrong: the fixed guess. Every contractor has one task he prices the same way every single time — usually demo, usually "one day." A 38-square-foot powder room and a 110-square-foot hall bath both get the day. One of them is paying for the other.
What rate goes on those hours?
Your burdened cost, which is your wage plus everything the wage drags behind it. BLS puts total compensation for construction industry workers at $51.96 an hour in June 2026, of which $36.13 is wages and $15.84 is benefits — 30.5% of what the hour costs is not the paycheck.
That is the floor, not your number. Yours depends on your workers' comp class code, your state and how many hours you can actually bill, and it is worked end to end in how to price labor as a contractor.
How much contingency belongs in a walkthrough price?
Enough to cover the wall you could not open, named as its own line. RSMeans puts it plainly: on alteration work, 20% is not too much, and 5% to 10% is right where plans are incomplete. A remodel priced off a walkthrough is both of those at once.
Carry it visibly. A contingency folded into your unit prices reads as an expensive contractor; the same money on a line that says "slab prep allowance, $500, returned if it reads dry and flat" reads as somebody who has pulled a floor up before.
What does the whole thing look like on one job?
A 1962 ranch in Fort Myers, 340 square feet of engineered hardwood going down over slab in the living and dining rooms, new base, one receptacle relocated.
| Step | Arithmetic | Amount |
|---|---|---|
| Flooring | 340 sf + 8% waste = 367 sf → 19 cartons @ 20 sf = 380 sf @ $5.40 | $2,052 |
| Underlayment, fasteners, base, transitions | measured takeoff | $640 |
| Disposal | one trailer load | $180 |
| Labor | 32 man-hours from your own logged rates @ $50 burdened | $1,600 |
| Electrician | quoted sub | $385 |
| Job cost | $4,857 | |
| Slab prep allowance | named line, moisture and flatness unknown until the old floor is up | $500 |
| Cost carried | $5,357 | |
| Price at 30% gross margin | 5,357 ÷ 0.70 | $7,653 |
The hours in that table are stipulated, not sourced — they are the number you would have from your own log, and the whole point of the previous section is that nobody can hand them to you. The 30% target comes from somewhere real though: NAHB's average remodeler gross margin was 29.9% in 2024.
Two things in the last row. Dividing by 0.70 gives $7,653. Multiplying by 1.30 gives $6,964, which is $689 less and is not a 30% margin at all — that is the markup and margin error, and it is the single most expensive piece of arithmetic in this trade.
Then the round-down. The estimate says $7,653 and the mouth says "call it $7,500." At a 6.3% net margin there is roughly $480 of profit in that job, so the $153 you gave away to make the number end in a zero is close to a third of what you were keeping. Nobody negotiated it off you. You did it in the truck.
What do you do with the number after the job is finished?
Feed the actuals back, because that is where next quarter's production rates come from. It is also the step contractors are already hunting for: on Google Trends, US interest in "job costing" runs roughly three to four times "labor burden" and far above "material takeoff" over the past twelve months, and "construction job costing" is up 120% as a rising query. Those are relative index values rather than volumes, so read the ranking and not the numbers.
The ranking says something useful anyway. Far more people are looking backward at what a job cost than forward at how to quantify one. Those are the same problem in two directions, and the backward half is worthless unless the hours get written down by task rather than dumped into one line on a timesheet.
What this misses
Production rates move by a factor of two. Same task, different crew, different house, genuinely double. A rate from your own three jobs is better than a published one, and it is still a starting point rather than a promise.
The $50 burdened rate in the table is illustrative. Workers' comp for carpentry in Florida and carpentry in New York are not close, and a one-person shop with no payroll is a different calculation entirely.
A 30% gross margin is an average, not a target. Service work supports more, big-ticket cabinetry supports less, and a market with four competitors quoting the same street sets its own ceiling.
None of this prices structural or permitted work. A walkthrough decides how much of the job you are willing to price firm. It does not replace drawings or an engineer's stamp.
The arithmetic is not difficult. It is that all of it has to happen while somebody is standing in front of you waiting for a number, which is why most of it ends up being done from memory in the driveway. BidWalk captures the lines as you walk and talk and does the five steps behind them, so the estimate is finished when the walkthrough is.
