ESTIMATING AND PRICING — RECOGNIZING THE DIFFERENCE

“Conversely, when pricing is done correctly—and by that I mean charging for additional value when the situation warrants and using price as a profit-generating tool—it can be a real boon to a company’s financial performance.”

Cone points to an “intuitive element” in pricing that is not part of estimating. “Because estimating is a defined process based on repeatable scenarios, it has inherent stability and safety measures. If every job was sold at the estimated price, the company should, in theory, make a profit,” he notes. “Pricing, on the other hand, requires a judgment decision that, if not made wisely, erodes financial stability. Therefore, it’s a critical management function.”