How to estimate a remodeling job before you open the wall
To estimate a remodeling job, scope it trade by trade, collect written quotes from the subs you will hire, price your own crew's work in hours at a loaded rate, list owner selections as allowances, add general conditions and a contingency for hidden conditions, then divide the whole cost by one minus your target margin. Margin applies to the sub quotes too, since running them is the service you are selling. Removing a 14 foot bearing wall with a flush beam, as an example, comes to $16,865.32 in cost and prices at $26,350 with a 36 percent margin.
Step by step
- Write the scope by trade before you price a line. Go through the job in the order it will be built: protection and demo, structural, framing, plumbing, electrical, HVAC, insulation, drywall, flooring, trim, paint, cleanup. Under each heading write what is included in a sentence a homeowner could read. A heading with nothing under it is a decision you made, and a missing heading is how the duct inside the wall goes unpriced.
- Walk the job with your subs or send them real information. A sub's quote is only as good as what they saw. Bring the electrician and the HVAC sub to the walkthrough on anything involving a wall coming out, or send photos, the panel label, and a marked-up sketch. Ask for a written number with their exclusions before your estimate goes out, because a ballpark you padded is still a guess.
- Price self-performed work in hours by task. List each task your crew will do and assign hours from your own job records: protection and demo, shoring, setting the beam, framing, drywall, paint, trim, and punch. Add supervision as its own line, since someone is meeting inspectors and subs instead of swinging a hammer. Your loaded rate has to hold wages, payroll taxes, workers' comp, vehicles, and small tools, not just the number on the paycheck.
- Take off structural and rough materials from counts. An LVL beam is about $9.65 a foot per ply, so three plies of 16 footers is 48 feet, and the posts under it run $12.50 a foot in PSL. Count a joist hanger at $1.38 for every joist that lands on a flush beam. Do not forget the temporary walls, which are real studs at $4.20 that will not come back clean enough to return.
- Carry owner selections as allowances. Anything the homeowner chooses later (flooring, tile, fixtures, lighting, hardware) goes in as an allowance with a dollar figure and a unit, like hardwood at $5.85 a square foot for 40 square feet. The allowance protects both sides: they can see what the budget assumed, and you are not guessing at their taste. Record each selection as it is made and settle the difference on a change order.
- Add general conditions and a contingency. General conditions are the costs of running the job that belong to no single trade: permit, engineering, dumpster, dust walls, floor protection, and a portable toilet on longer jobs. Then add a contingency for what the existing house is hiding, usually 5 to 10 percent on a remodel and more on older homes or anywhere you open a wet wall. Show it on the estimate as a stated line so the homeowner knows the number already assumes a surprise or two.
- Divide the full cost by one minus your margin. Total everything, subs and contingency included, and divide. A full-service remodeler with an office, a project manager, and warranty work usually needs 33 to 40 percent gross margin to cover overhead and still net a profit, and at 36 percent you divide by 0.64. Putting a thin percentage on subs and full margin only on your own labor is the most common way remodelers end up busy and broke.
- Put change orders and payments in the contract. State how changes are priced, that changed work waits for a signature, and what the payment milestones are. Deposit rules are set by the states and vary: California, for one, limits a home improvement down payment to $1,000 or 10 percent of the contract, whichever is less. Check your own state's rule, tie the remaining payments to finished stages, and never let the payment schedule fall behind the work.
The remodeling pricing formula
Direct cost equals your materials, plus allowances, plus every sub quote, plus crew hours times a loaded rate, plus general conditions. Total cost equals direct cost plus contingency, and price equals total cost divided by (1 minus margin). The division has to include the subs: on $4,400 of sub quotes, dividing by 0.64 bills $6,875, while a 10 percent pass-through bills $4,840, and that $2,035 gap is overhead you still have to pay from somewhere.
Removing a 14 foot bearing wall between a kitchen and living room in a 1962 ranch, with a flush beam and the hardwood patched and refinished. Structure: three plies of 16 foot LVL, 48 feet at $9.65, $463.20; two PSL posts, 16 feet at $12.50, $200; 22 joist hangers at $1.38, $30.36; 4 pounds of structural screws at $8.50, $34; 36 studs for temporary walls at $4.20, $151.20; 56 feet of 2x4 plate at $0.63, $35.28; two concrete pier footings at $78, $156. Structure is $1,070.04. Finishes: ten sheets of 1/2 inch drywall at $17, $170; two buckets of joint compound at $18.50, $37; paper tape $8.60; a hardwood allowance of 40 square feet at $5.85, $234; a 5 gallon bucket of paint at $168; ceiling paint on 520 square feet at $0.21, $109.20; primer on 320 square feet at $0.17, $54.40. Finishes are $781.20. Protection: 400 square feet of poly at $0.13, $52; three rolls of painter's tape at $6.60, $19.80; four drop cloths at $12.50, $50, for $121.80. Materials total $1,973.04. Subs: electrician $1,480, HVAC $760, and floor refinisher $2,160, for $4,400. Your crew works 118 hours at a $66 loaded rate, which is $7,788. General conditions: engineer $650, permit $380, dumpster $425, for $1,455. Direct cost is $15,616.04. An 8 percent contingency adds $1,249.28, for a total cost of $16,865.32. Divide by 0.64 for a 36 percent margin and the price is $26,352.06, so quote $26,350.
Cost factors remodelers price for
Age of the house
Older homes hide knob and tube wiring, ungrounded circuits, plaster on wood lath, and plumbing nobody stocks fittings for. Any home built before 1978 also falls under the EPA's Renovation, Repair and Painting rule: a paid job that disturbs more than 6 square feet of painted surface per room indoors, or 20 square feet outside, has to be done by a certified firm using lead-safe practices. Price the containment and cleanup into the job, and the training into overhead.
How much of the job is subcontracted
A job that is 70 percent subs carries less labor risk and more coordination risk. Your crew hours drop, but your schedule now depends on four other companies showing up in order. Keep the margin the same and spend the saved hours on supervision, which is a cost line and not free time.
Structural changes
Moving a bearing wall, cutting in a wide opening, or adding load from above brings an engineer, a stamped detail, plan review, and inspections that set your schedule. Loads have to be followed to the ground, so a new beam can mean a new footing in the crawlspace at about $78 for a concrete pier footing plus the digging. Carry engineering as its own line, and never size a beam from a span chart you found on your own.
Living conditions during the job
Occupied remodels cost more than vacant ones. Dust walls, floor protection, daily cleanup, limited work hours, kids, pets, and a kitchen that has to work at night all take time out of every day. Track it on a few jobs: many remodelers find occupied work runs a tenth or more over the same scope in an empty house.
What the permit triggers
Pulling a permit can obligate work outside your scope. Under the IRC, interior alterations that need a permit generally require smoke alarms to be brought to the standard for a new house, and local rules often add to that. Ask the building department what your scope triggers before you bid, then price those items or exclude them in writing.
Frequently asked questions
What markup should a remodeling contractor use?
Think in margin first, then convert. Remodelers with real overhead (office, insurance, vehicles, a project manager, warranty work) generally need a gross margin between 33 and 40 percent, which means dividing cost by 0.60 to 0.67. Stated as a markup on cost that is roughly 50 to 67 percent, which sounds high until you subtract overhead and see what is left as net profit.
Should I mark up subcontractors on a remodel?
Yes, at the same margin as the rest of the job. You find them, schedule them, answer to the client for their mistakes, and often pay them before you are paid. On a job with $4,400 of subs, a 10 percent pass-through earns $440 and a 36 percent margin earns $2,475, and the difference is what pays for the time you spend managing them.
How much contingency should I put in a remodel estimate?
Five to 10 percent of direct cost covers most remodels, and 15 is reasonable for a house older than 60 years, a job that opens plumbing walls, or anything structural. Show it as its own line and say in the contract whether unused contingency is credited back. A visible contingency earns more trust than a padded estimate, and it gives you a place to charge the first surprise without a fight.
Do I need lead-safe certification to remodel older homes?
If you are paid to disturb painted surfaces in housing built before 1978, generally yes. The EPA's RRP rule requires the firm to be certified and to use certified renovators, with minor repairs of 6 square feet or less per room indoors and 20 square feet or less outdoors exempt. Window replacement and demolition never count as minor repairs, and more than a dozen states run their own version of the program in place of the EPA's, so check which agency covers yours.
Can Staxen handle a multi-trade remodel estimate?
It handles the estimate, the changes, and the billing. Give Eddie the scope by trade, your sub quotes, allowances, and contingency by voice or text, and you get a priced line-item estimate the client can e-sign from a texted link with a deposit. Josie sends change orders for approval by text or email, and Ivy invoices by milestone and syncs with QuickBooks Online. Pricing is $59 per month per AI employee or $149 per month for all three, and the first 7 days in the app are free.