What you’ll leave with
An estimate you can check, line by line, and a plan for the cash you need.
The essentials
Start with the hours and materials, not the price you hope to charge.
Count the visits, quantities, travel, setup, supervision, and cleanup. Include the cost of employing the people, not just their hourly pay. Check the solicitation’s applicable labor requirements and use your own current costs; a teaching example is not a wage-rate guide.
Fixed price puts ordinary cost overruns on your side of the ledger.
Under a firm-fixed-price contract, the agreed price generally does not increase merely because your costs were higher than expected. Authorized changes and specific contract terms can be different. Price the defined work and understand the risk you are accepting.
Markup and margin answer different questions.
If a job costs $4,000 and you charge $5,000, the $1,000 difference is 25% of cost but 20% of revenue. Neither figure is a recommended target. The useful question is whether your estimate includes everything needed to finish the job.
Profit on paper does not pay this week’s payroll.
Check when you must pay staff and suppliers, when you may invoice, what supports acceptance, and what starts the payment clock. Do not assume every government invoice is paid 30 days after you send it. Contract type, terms, and a proper invoice matter.
What to do next
- 1
Turn the scope into quantities.
List hours by task, materials, visits, rentals, and supplier quotes. State the assumptions that would change your estimate, such as after-hours access or the condition of the existing floor.
- 2
Add the costs that do not appear on the job site.
Account for supervision, insurance, administration, and other business costs using a consistent method. Avoid counting the same expense twice. Identify genuine uncertainties rather than hiding an unexplained cushion in the total.
- 3
Check the estimate against the buyer’s price schedule.
Map your estimate to the required line items and units. Check base and option periods separately if they are requested. Have another person check quantities, formulas, and whether your price covers the promised scope.
- 4
Write down the cash you need before payment.
Put expected outflows and invoice milestones on a calendar. If the job requires spending you cannot fund, resolve that before submitting. A profitable estimate and an affordable cash gap are separate tests.
Worked example · Fictional business
A $5,000 cleaning job can leave less than it appears
Harbor Cleaning uses the following fictional estimate for a defined job. These are teaching figures, not market prices, wage rates, or a recommended profit percentage.
| Pricing component | Amount |
|---|---|
| Labor, including employment costs | $2,400 |
| Supplies | $600 |
| Equipment and travel | $400 |
| Supervision and allocated business costs | $600 |
| Total estimated cost | $4,000 |
| Proposed price | $5,000 |
| Difference before any omitted costs | $1,000 |
Check the assumption that could eat the difference.
The estimate assumes normal access. If waiting for escorts and extra cleaning supplies add $700, actual costs reach $4,700 and only $300 remains. The owner asks about access before making a commitment.
Check when the cash leaves.
Staff and suppliers may need payment before the company can invoice or receives payment. Harbor writes down the actual schedule and checks its available cash rather than relying on the $1,000 estimate.
The practical move: At $4,000 estimated cost, the margin is 20% of the $5,000 price. At $4,700 actual cost, it is 6%. Review the assumptions and payment terms before deciding the price is workable.
Common mistakes to avoid
- Treating a past award value as the right price for different quantities and terms.
- Counting wages but leaving out employment costs, travel, or supervision.
- Calling a markup percentage the same thing as a margin.
- Assuming a subcontractor or supplier will wait for payment just because your customer has not paid.
One useful next step
Use the pricing worksheet to cost one defined job. Then list the cash you would need before the first expected payment.
Get the pricing basis of estimateOfficial sources & further help
Reviewed September 9, 2026. Practical examples and worksheets are Bid Rigor’s own. Check current requirements with the buyer; agency-specific rules or deviations may apply.
- FAR 16.202-1 · firm-fixed-price contracts
Understand the contractor’s cost risk when the contract fixes the price for the agreed work.
- FAR 32.904 · payment due dates
Check payment timing against the applicable contract terms and acceptance requirements.
- FAR 32.905 · payment documentation
Review proper-invoice and performance documentation requirements for federal payment.
- GSA · responding to a solicitation
Review the relationship between requirements, evaluation and submission instructions.