Improve Profits with Better Estimating: 8 Tips for Field Service Companies


Is your business as profitable as you want it to be? If not, why? 

Of course, there could be many reasons throughout your operations for profits not meeting expectations. But let us focus on the very beginning of your revenue cycle: how you are estimating repair calls and installations. 

If your estimates are accurately accounting for time, materials, parts, risks, contingencies, and a reasonable margin, you are starting out on the right track. Then, if other parts of the business also perform well, profitability will likely be close to your goals. 

Here are eight tips to refine your estimating process so they pave the way to the desired result: excellent profits. 

Tip 1:  Understand the correlation between good estimating skills and profitability.

 Regardless of your industry segment— HVAC, plumbing, electrical, landscapingpool and spa maintenancefacilities managementor other field services—estimates are the wellspring of revenue. Whether a service call or a new installation, once you dispatch a field service professional to a customer’s location, that is where your revenue cycle begins.  

Estimates for specific tasks should encompass all the variables that subtract from revenue to determine profitability. These include everything from travel time to picking up parts to unforeseen tasks that may arise 

How can you improve estimating skillsTo take the guesswork out of estimates, draw from the experience of past jobs. Learn the best estimation techniques for your operations and seek the enthusiastic buy-in of your estimators. 

Tip 2: Understand the source of your profits.

Which jobs categories have higher cost margins? All jobs are not the same, so estimating complexity varies widely. Estimates for residential plumbing, electrical, HVAC, and appliance repairs, for example, may be relatively straightforward. Typically, one person makes the call, diagnoses the problem, provides an immediate estimate, and performs the work all in the same day 

For jobs like these, estimates are often based on pre-established price lists. After diagnosing the problem, the technician uses the company’s pricing lists plus the retail cost of any additional parts to quote the repair or service cost. 

New installations for commercial business can be much more complex. Bidding on a commercial contract is a major project in and of itself. Completing the job may call for full crews working for days or weeks. For these types of jobs, you need an estimating expert. 

These variances in job size and scope are why approaches to estimating can significantly differ even within the same company, depending on the market segments being served (residential service, residential replacement, commercial service, commercial replacements and installations, and new home or commercial building construction). 

Jobs in your different residential and commercial markets should be estimated with different margins to account for project complexity, local availability of resources, schedule flexibility, and other variables and risk factors. 

Tip 3:  Be aware of the overlap—and differences—between the skillsets of good technicians and good estimators.

What attributes do technicians and estimators have in common? Most in both groups have industry knowledge, strong technical skills, plenty of field experience, and good verbal communication skills.  

Here some of the additional skills a good estimator should possess: 

  • Estimators for high-revenue contracts are strong in project management and time management.  
  • Good organization skills are necessary for estimators. Many field service technicians are well organized as wellHowever, those who are not can still be proficient in their work because dispatchers and customer service reps organize most of their daily tasks.  
  • Construction is the “major league” of estimating. Therefore, if you are bidding as the electrical subcontractor for a new restaurant, for example, you will want an estimator with extensive construction experience and blueprint reading skills.  
  • Attention to detail is a vital skill for estimators of complex jobs. The nature of their work requires them to be savvy in math and more analytical than most field technicians. Math and analytical skills enable estimators to: see the scope of work required, create a solid plan to accomplish it, seek out cost-saving opportunities, and present detailed information while applying lessons from past experiences to new situations.


Tip 4: Show your employees how estimating fits into your business’s big picture.

Gather everyone involved in installations and field service together. Explain that the company’s revenue –and by extension, its survival—is dependent on the accuracy of their estimates 

The revenue from estimated jobs must cover everything—facilities, furnishings, utilities, insurance, advertising, supplies, parts, and team members’ pay and benefits. Plus, there must be sufficient profits left after all these expenses to make it attractive for owners to assume the risks of running the business through good times and bad.  

Most people are at least a little resistant to change, so be prepared for some pushback if you are asking employees to change how estimates are currently done. Resistance will diminish when employees understand the value of new, better estimating techniques. 

Tip 5: Build upon the estimating skills of your best technicians. 

The more you can expose field service technicians to advanced estimating situations, the better. You want to ratchet up their estimating skills. Their experience with equipment, projects, and customers at different sites is an invaluable base. Leverage this experience to prepare them for the next level. 

With a little training, seasoned technicians will bbetter prepared to quote bigger jobs, such as system upgrades—installing a second HVAC system in a large house, for exampleGetting them involved in high-revenue jobs will connect their drive and initiative to the success of the overall business 

Tip 6: Build a culture that engenders skill development.

Installers and field service technicians must continually refresh their expertise on new products, new equipmentand innovative technologies. Likewise, they should be fully engaged in refining your company’s estimating processes. 

On-the-job experience and training are the cornerstones of how estimators have learned in the past, but their skill development should not stop there. Look at ways to accelerate the acquisition of estimating skills through books, training courses, and internal eventsExamples: 

  • Many books are available from Amazon and other book sellers on how to make estimates for specific verticals, including HVAC, electrical, landscaping, and plumbing. 
  • Most online estimating courses are specific to construction. However, the American Society of Professional Estimators offers an in-depth course appropriate for any estimator: Oral and Written Communications. Topics covered include questioning skills, techniques for listening, delivering precise instructions, negotiation strategies, and many more. 
  • Spread the wisdom of your best estimatorsEnable them to take new or less experienced employees along on jobs offering good learning opportunities. In addition, your in-house experts can mentor their colleagues through internal workshops or “learning lunches.  
  • Use a team-building event to demonstrate the importance of collaboration in estimating, planning, and executing a project. For example, consider a game pitting two teams against each other in an estimating situation. During their competition, they encounter surprises—such as a key supplier’s cost increases, a no-show subcontractor, or a late shipment. The winner is the team whose estimate best accounts for all the variables.  


Tip 7:  Go mobile.

Equip your estimators with the mobile technology tools they need to do their jobs quickly and accurately. 

Mobile apps are dramatically changing all aspects of how work gets done, including the estimating function. Field service technicians can simply plug in a specific task—such as replacing a furnace’s induced draft assembly—and then add supplies and parts information to produce an estimate for the customer. 

Mobile technology is equally important for personnel involved in new installations. They deal with more complexity. They work with more information, more people, and more variables to prepare sound estimates. Consequently, they may need more robust mobile applications with greater estimating functionality. 

Remember: because estimates occur at the beginning of the revenue cycle, data captured in estimates can have widespread use throughout the company. Information in your mobile estimating app flows into purchasing, project management, budgeting, and billing functions. 

Likewise, field asset management, scheduling, and inventory systems are valuable sources of information for estimators. Tapping into asset histories, technician productivity, and other information captured in these systems will streamline an already complex estimating process, thus making estimators’ AND technicians’ jobs a bit easier. To learn how NextService can help you integrate estimating with other field service applications, contact us or check out our Value Insights brochure.  

Tip 8: Learn from every estimate.

According to Scott Ritchey, a consultant for HVAC businesses, Nearly 47% of contractors do not survive their fourth year in business. The reason, he states, is that “…most contractors know how to do a job, but they don’t know how to determine how much money they are making from the job. 

The key to understanding job profitability is to learn from experience. After every job, ask the following questions:   

  • Were quantities of parts and materials accurately estimated?  
  • Was overhead included?  
  • Were risk factors, such as delays beyond your control, adequately covered 
  • Were there any discrepancies in the cost and labor assumptions?  
  • How can future estimates for similar work be improved? 

Early on, you may find that many of your estimates are overly optimistic. They are built on assumptions that everything goes smoothly, but that is often not the realityDo not underestimate the value of your services or be afraid to charge for the full value of the expertise and quality you are providing the customer. 

Interested in learning more about how NextService can help you with Estimating, Scheduling, Dispatching, and more? Download the NextService Product Guide here.

The ‘Add $100’ Experiment

In Scott Ritchey’s book, Making More Money: 12 Profit Pillars for HVAC Contractor Success , the author summarized a conversation with a business owner attending his workshop. “He found it hard to trust my numbers, so I encouraged him to try an experiment. I told him to keep adding $100 to his HVAC replacement bid proposals until he lost a job for charging too much money.”

Months later, the business owner told Richey he added $100 to his bids 10 times before someone complained the price was too high.