How to estimate a kitchen or bath remodel

A profitable kitchen or bath estimate is built phase by phase: demolition, rough-in, inspections, drywall, finishes and punch list, each with its own labor, materials and subcontractor costs. Then you add allowances for items the customer hasn't picked yet, a contingency for what hides behind the walls, your overhead and your profit. Most remodelers who lose money on a job didn't leave out a phase. They left out overhead, contingency or the time it takes to manage the job.

This guide walks through a method you can reuse on every kitchen and bath, and how to present it so the customer understands what they are buying.

Why do remodeling estimates go wrong?

Before the method, it helps to know the usual failures:

Pricing from square footage alone. A "per square foot" kitchen price ignores the layout changes, appliance package and cabinet grade that actually drive cost.
Forgetting the owner's and project manager's time. Site visits, ordering, scheduling subs, meeting inspectors and answering texts all take hours.
Using markup and margin as if they were the same. Adding 30 percent to cost does not give you a 30 percent margin. Our guide on markup vs. margin explains the difference with worked numbers.
Vague allowances. "Tile allowance: $1,500" without saying what it covers leads to arguments when the customer picks a $14-per-square-foot tile.
No room for surprises. Rot under the toilet flange, knob-and-tube wiring, out-of-level floors. In older homes they are common, not rare.

Step 1: What should you capture at the site visit?

Measure everything and photograph everything. For a kitchen or bath, that includes:

Room dimensions, ceiling height, window and door locations
Existing plumbing locations and whether they move
Electrical panel capacity and existing circuits
Floor structure and condition, signs of water damage
Ventilation, especially in bathrooms
Access for materials and debris: stairs, hallways, driveway space for a dumpster
Where the household will live and cook during the work

Then ask the questions that shape the budget. What do they want to change? What do they love about the current room? What's the budget range they have in mind? A customer who wants a layout change has a very different project from one who wants new surfaces in the same layout.

Step 2: How do you break the job into phases?

Write the estimate in the order the work happens. A typical bathroom remodel:

Protection and demolition
Framing and structural repairs
Plumbing rough-in
Electrical rough-in
Rough inspections
Insulation, drywall or cement board, waterproofing
Tile
Cabinets, vanity and tops
Plumbing and electrical finish
Paint, accessories and mirrors
Final inspection, punch list and cleanup

For each phase, list the labor hours or crew days, the materials, and any subcontractor bids. Get written bids from subs, and note what each bid includes and excludes. A plumber's bid that excludes the fixtures is common, and it matters.

Step 3: How should you price labor on a remodel?

Price your own crew's labor from a fully loaded hourly cost: wages, payroll taxes, workers' comp, benefits and vehicles. Then estimate days per phase from your past jobs.

Don't forget the time that isn't swinging a hammer:

Daily setup and cleanup
Trips to the supplier
Waiting for inspections
Project management: scheduling, ordering, customer meetings

Many remodelers add a project management line to every job, rather than hoping it's covered somewhere else.

Step 4: How do allowances and selections work?

The customer often hasn't picked their tile, faucets, lighting or countertop when you price the job. Allowances solve that.

An allowance is a dollar amount in the estimate for a category, like "Tile, material only: $2,400." If the customer chooses something that costs more, the difference becomes a change to the contract. If it costs less, they get a credit.

To make allowances work:

State exactly what the allowance covers. Material only, or material and installation? Before or after tax? Per square foot or total?
Base allowances on realistic choices for the customer's budget, not the cheapest product you can find. Low allowances make your bid look cheaper and then cause conflict later.
Set selection deadlines. Late selections delay the schedule. Put the deadline in writing.

Step 5: How much contingency should you include?

Contingency covers the unknowns you can't see until the walls are open. How much depends on the house. A newer home with good access needs less than a 1920s house with signs of old water damage.

There are two common ways to handle it:

Built into your price, as a line you don't show the customer. Simple, but if nothing goes wrong, you keep it, which some customers may find unfair if they learn about it.
Shown as a line item, with a clear rule: unused contingency is credited back at the end, and anything beyond it becomes a change order.

Either way, write down the conditions that would trigger a change order, like rot, mold, code issues in existing work, or hidden structural problems.

Step 6: How do you add overhead and profit?

Overhead is what it costs to run the company, even when no job is in progress: office, insurance, vehicles, software, marketing, your salary. Profit is what's left after every cost, including overhead.

Estimate your yearly overhead as a percentage of your yearly revenue. If overhead is $180,000 on $1.2 million of revenue, it's 15 percent of revenue. Then decide your target net profit, say 10 percent.

That means your job costs need to be no more than 75 percent of the price. To get the price:

Price = job cost ÷ (1 − overhead % − profit %)

Worked example (illustration only):

Bathroom job costs: labor, materials, subs, permits, dumpster and contingency total $28,000
Overhead 15 percent, profit 10 percent
Price: $28,000 ÷ 0.75 = $37,333, rounded to $37,350

Adding 25 percent to $28,000 would give only $35,000. That $2,333 difference is the reason many remodelers feel busy but never seem to make money.

Step 7: What payment schedule should a remodel use?

Large remodels are usually billed in stages tied to progress, so your cash stays ahead of your costs:

A deposit at signing, to secure the schedule and order materials
A payment at a milestone such as rough-in complete
A payment when cabinets or tile are installed
A final payment at substantial completion, sometimes with a small amount held until the punch list is done

Some states limit how large a down payment a home-improvement contractor can collect, so check your state's rules before setting the deposit. Our guide to deposits for contractors goes deeper.

How should you present a remodeling estimate?

Show the scope phase by phase, in plain words
List allowances clearly, with what each covers
Note exclusions: appliances, furniture moving, painting outside the room, hidden conditions
Offer options where they make sense, like a standard and an upgraded cabinet line
State the payment schedule and how change orders work
Give an expiry date, because material prices change

FAQ

Should I charge for remodeling estimates? Many remodelers offer a free first meeting, then charge for detailed design and estimating, credited to the contract if the customer signs. It filters out shoppers and pays for real work.

What's a reasonable profit margin for a remodel? It depends on your overhead, your market and your risk. Calculate it from your own numbers rather than copying a percentage from someone else.

How do I handle customers who want to buy their own materials? Decide on a policy in advance. Many remodelers allow it with clear terms: no warranty on customer-supplied materials, and delays from wrong or damaged items are billed as changes.

Do I need a written contract for a remodel? Many states require a written contract for home-improvement work above a certain amount, with specific terms and notices. Check your state's requirements, and have an attorney review your contract template.

How ServFlo helps

On the Grow and Pro plans, ServFlo's projects give remodelers a phase schedule with crews and subcontractors, selections with allowances, change orders the customer signs online, and a budget compared with actual costs. Quotes can carry options and ask for a deposit on approval, and a job can be billed in progress invoices by milestone or percent complete, with retainage if you need it. See ServFlo for remodelers and quotes and invoices.

Remodeling estimates: how to build a profitable kitchen or bath quote