Many contractors look only at base salaries when evaluating the cost of their estimating department. While base salary is the largest component, it represents only a portion of the total expense required to keep an estimator on your payroll.
To make informed decisions about your bidding budget, you must calculate the fully burdened cost of your in-house staff.
The Burden Rate of a Full-Time Employee
Employing an estimator involves overhead expenses that do not appear in their base pay rate. A realistic burden calculation includes:
- Payroll Taxes: Social Security, Medicare, and unemployment taxes (typically 8% to 10% of base salary).
- Insurance: General liability and workers' compensation premiums.
- Benefits Package: Health insurance, retirement matching, and paid time off (typically 15% to 20% of base salary).
- Software Subscriptions: Professional takeoff and estimating licenses (PlanSwift, Bluebeam, or similar tools) cost between $1,500 and $3,000 per user annually.
- Workplace Hardware: Dual monitors, high-performance computers, office furniture, and IT support.
- Space Overhead: Office footprint, heating, cooling, and internet utilities.
When you add these costs, an estimator with a base salary of $80,000 actually costs your company between $105,000 and $120,000 per year.
Analyzing Cost per Bid
To evaluate the efficiency of your department, divide your total estimating cost by the number of bids submitted annually.
For example, if your burdened estimating cost is $110,000 per year, and your team submits 120 bids annually, your cost per bid is approximately $916.
During slow seasons or when project delays occur, this cost per bid rises significantly because your fixed overhead remains the same even when bid volume drops.
The Outsourced Cost Structure
Outsourcing quantity takeoffs converts these fixed overhead expenses into variable, project-specific costs:
- No Overhead Burden: The outsourcing partner provides their own software, office space, hardware, and benefits.
- Variable Billing: You pay a fixed fee per project only when you have drawings to measure.
- No Unused Capacity: Your estimating expenses align directly with your active bidding pipeline.
Final Thoughts
Before expanding your in-house team, take the time to calculate the fully burdened cost of a new hire. For many growing contractors, outsourcing the quantity takeoff phase is a reliable way to scale bid capacity without increasing fixed monthly overhead.