Bid Preparation and Pricing Strategy

An estimate becomes a bid when overhead and profit are added. Overhead covers fixed business costs that exist regardless of any single job: office rent, vehicle payments, insurance premiums, accounting fees, and the owner's salary. These costs are typically expressed as a percentage of annual revenue—most small carpentry firms run between 12 and 22 percent overhead. The estimator divides annual overhead by projected annual revenue to find the overhead rate applied to each job.