Restoration
Restoration Pricing Calculator
Prices restoration work, where on insurance jobs the carrier's price list governs.
Result
Overhead and margin are taken as shares of the selling price, which is why the cost is divided rather than multiplied. Adding 15% to cost does not produce a 15% margin. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditHow the calculation works
Direct cost divided by one minus overhead and margin together, so the price carries both. That applies to private-pay work. On insurance work the line items are typically priced from the carrier's published price list, which means the commercial variable is the scope documented rather than the rate charged.
What moves the number
- Whether the job is insurance or private pay.
- Scope documented, including drying days and equipment.
- Equipment on site and for how long.
- Moisture readings and documentation supporting the scope.
Where this one goes wrong
On insurance work the money is in the scope rather than the rate, which means documentation is the commercial skill: moisture readings, photographs, equipment logs and daily records are what support a line item being paid, and work performed without them is work that may not be reimbursed. Document as you go. Industry standards set out what drying and remediation should involve, which gives a defensible basis for a scope rather than a negotiation about opinions.
Before you quote
- Document moisture readings, equipment and daily progress.
- Scope to the industry standard, not to what was asked for.
- Price private-pay work from your own cost, not the carrier's list.
Where the rules come from
Questions
About this calculator
Can I set my own prices on insurance restoration work?
Generally not on the line items, since the carrier's published price list typically governs. That makes the scope documented the commercial variable rather than the rate, which is why documentation is the skill that determines profitability.
What documentation matters most?
Moisture readings, photographs, equipment logs and daily records. They are what support a line item being paid, and work performed without them is work that may not be reimbursed however necessary it was.
How should a drying scope be justified?
Against the industry standards for water damage restoration, which set out what drying and remediation should involve. That gives a defensible basis for the scope rather than a negotiation about opinions, which is a far stronger position.
The formula
price = direct cost / (1 - overhead% - margin%)
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How to use this calculator
- Labour cost ($). Burdened: wages plus tax, insurance and the vehicle, not the hourly wage.
- Materials cost ($). Enter your own figure; the page starts at $1,300.
- Other direct costs ($). Permits, disposal, equipment hire, subcontractors.
- Overhead rate (%). Overhead as a share of revenue. Work it out from last year's accounts.
- Target net margin (%). Enter your own figure; the page starts at 15%.
The result updates as you type, so you can try a figure, see what it does to price to quote, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Labour cost | $2,100 |
| Materials cost | $1,300 |
| Other direct costs | $0 |
| Overhead rate | 22% |
| Target net margin | 15% |
What comes out
| Result | Value |
|---|---|
| Price to quote main result | $5,397 |
| Direct cost | $3,400 |
| Overhead recovered | $1,187 |
| Net profit | $809.52 |
| Gross margin | 37.0% |
| Markup on direct cost | 58.7% |
Quote $5,397 to cover $3,400 of direct cost, recover $1,187 of overhead and leave $809.52 of net profit. That is a 58.7% markup on cost.
How sensitive the answer is
Holding everything else steady and changing only labour cost, this is what happens to price to quote. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Labour cost ($) | Price to quote |
|---|---|
| $1,050 | $3,730 |
| $1,575 | $4,563 |
| $2,100 example above | $5,397 |
| $3,150 | $7,063 |
| $4,200 | $8,730 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Labour cost ($)
- Burdened: wages plus tax, insurance and the vehicle, not the hourly wage.
- Materials cost ($)
- A money amount, starting at $1,300.
- Other direct costs ($)
- Permits, disposal, equipment hire, subcontractors.
- Overhead rate (%)
- Overhead as a share of revenue. Work it out from last year's accounts.
- Target net margin (%)
- A percentage, between 0 and 80, starting at 15%.
What the results tell you
| Result | What it is |
|---|---|
| Price to quote | The headline result. A money figure. |
| Direct cost | A money figure. |
| Overhead recovered | A money figure. |
| Net profit | A money figure. |
| Gross margin | A percentage. |
| Markup on direct cost | A percentage. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.