Estimating Introduction & Overview

An estimate is a preliminary report that you show to an customer or prospect that tells them how much their project is going to cost.

An estimate budget report may be used as an internal document defining how many hours are to be spent and what outside expenses are necessary for a particular project or job.

Because estimating requires that you create a job first, you may go ahead and enter time and expenses for a project even before the estimated work becomes a real job. This is perfect for speculative projects that you begin working on before the client has formally approved the estimate. It also allows you to track the time it takes you to do the research and even the estimate itself. You can then opt to bill this time (as project management for example) if you choose.

Using a database system like Studio Manager allows you to save the estimates that you prepare. Over time, these estimates become a valuable resource for your firm. You can refer to (or even duplicate) previous estimates for the same customer or type of job. This shortcut can save you precious time.

If you itemize services and expenses, whether you show this detail to your customer or not, those figures appear on reports that include estimated amounts. This allows you to compare what you estimated with the actual hours and expenses that are entered.

The process of estimating actually teaches you how to estimate better in the future. Approved estimate data is transferred into Job Costs. Because of this, you can compare estimated to actual amounts while you are completing a project. You are the one who benefits from estimating each job as soon as possible (whether the customer requires one or not).

That way you ensure that estimate data appears on your Job Status reports. By regularly reviewing this report, which can be printed from either Jobs or from Job Costs, you learn where you are screwing up and when you are making a big, fat, juicy profit. If your goal is to break even, then it will help you to achieve that too.

Important: Estimating begins in Jobs.

Before you can start a new estimate, there must be a corresponding record in Jobs. Each estimate is linked to a particular job via the Job ID. You may create one original estimate and as many change orders as you want for each job. There is no excuse for you to put off estimating; it is so easy in Studio Manager.

Before you create a new estimate, you also want to know what type of estimate you need and which method of estimating will best suit your customer, you and the job itself.

All software requires that you learn some vocabulary. Here’s what everyone who uses Studio Manager needs to learn about estimates.

We have defined two different types of estimates: Original Estimate and Change Order. For each job, you may create one Original Estimate. That’s it. Original means first. All subsequent revisions, options or variations are called Change Orders. Regardless of the way you estimate, this structure applies, so it is important that you understand this terminology.

Original Estimate. The first estimate that you create for a job is always the original estimate. You can duplicate original estimates, if you want, to simplify the process of creating variations.

Change Order. After you have created an original estimate for a job, any subsequent estimate is automatically considered a change order. This is true whether the original is approved or not. You may create any number of change orders for a job.

When the manual refers to estimates without specifying a type, it is using the term in the generic sense, meaning that it applies to both types, original estimates and change orders.

Studio Manager offers you several alternatives when it comes to estimating because the needs of customers, sales/marketing staff, design/production staff and your personal preferences are going to vary. On top of all of this is the somewhat contradictory requirements of the estimate in a creative services business.

For internal purposes, accuracy and detail are of primary importance, so that staff have a fairly accurate budget to work from. For the customer or prospect, the most important considerations are that the estimate meet their needs: just enough detail to satisfy them, easy to read and understand, and of course, within their budget. Sales and marketing want the estimate to show value. For them, the estimate is a sales tool. The owner/manager however is more concerned about making a profit and growing your business.

The varying demands of estimating points to the need for more than one type of estimate. Very few Studio Manager users choose just one method. It is from feedback over the past 20 years that the types of estimates featured here were developed and perfected.

To understand Studio Manager estimating we suggest that you 1) refer to the table below, 2) read the introduction to each method and then, 3) study the detailed instructions for how to create and best use the alternative(s) that appeal to you.

Based on this table, you can see that there are four different methods built into Studio Manager for estimating. Of the four, two methods can be estimated with variations in side-by-side columns to show a 2, 3 or 4-column comparison of the options (for example: like varying print quantities or varying numbers of pages for a website or catalog).

The estimate that is most detailed, itemizes all the time and expenses that you believe will be necessary to complete the job. The easiest way to do this is by using a checklist that shows you all the possibilities (line items). The line items on the checklists (for services and expenses) that appear when you make a new estimate, is determined during the setup phase of Studio Manager. Billing Codes that you want to use in estimates are marked as such. Refer to the section on setting up estimates for more details. If you are authorized to modify Billing Codes, then you can edit those records. Only future estimates will reflect changes made there.

When you generate a flat fee estimate, your customer sees a single amount for creative services – all the time (labor) that you will exert, and itemizes expenses. For internal use, you may itemize services and only show the total for all your services on the estimate you print or send by email.

Perhaps you only need to show two amounts on your estimate: a creative services fee and an expense amount. Use totals from itemization or override the figures and type in your own (to show rounded amounts or to give yourself a higher or lower profit margin). Space is allowed for you to write, in paragraph form, a description that is as detailed or vague as you wish.

If you have already read about Component Jobs, then you know that you can organize complex jobs into more manageable sub-jobs or components. You may also generate an estimate for a component job that summarizes the component parts.

The most complex estimates are those which show the customer a multi-column form with different amounts depending upon some variable. Estimate Options are variations on either the Itemized or Flat Fee methods of estimating. Studio Manager includes forms for 2, 3 and 4-column options.

Given estimate options, there are actually ten estimate forms that can be produced using Studio Manager. Additional variations can be created by customizing.