This is newsletter #41 in the series. If you have missed prior newsletters, and are enjoying the series, we encourage you to purchase the complete Electrical Estimating Program. Click on the coupon at the bottom of this page.

Estimated Prime Cost.
This is simply a term used to identify the subtotaled cost of labor, material, and direct costs. The term allows us to clearly identify the number to which overhead is to be applied. Various electrical estimating software programs may use terms such as Raw Costs, Job Subtotal, or simply Subtotal. Whatever term is used, the function of that term remains the same. Calculating your estimated prime cost is just the simple matter of adding up the labor, material, and direct job costs.

Estimated Cost.
Let's determine our break-even cost or what we estimated it will cost to do the job. All you need to do is add the cost of labor, material, direct job expenses, and overhead together.

The argument I hear at this point in my estimating classes is, If I consider all of these factors and account for them in the estimate, I will never get a job! But let's slow down and remember what we are trying to accomplish”we are looking to determine our cost (the estimate). Once you know what you think it will cost you to cover all of your job costs (your break-even cost), you are welcome to make any business decision you want, but hopefully you will not sell the job for less than you think it will cost you to complete it”just so you win the job. Remember we have not even added profit yet!

For more information on this topic, get a copy of Mike Holt's Electrical Estimating video program and textbook.