# Where did the profit go? A remodel estimate versus actual costs

Reconcile a $30,000 remodel line by line, identify the costs that changed, and use the worksheet to improve the next estimate.

Illustrative job, not a customer case study. Dollar amounts are teaching assumptions, not local price benchmarks.

## The estimate and the final cost

This fictional bathroom project was sold for $30,000 against $21,000 of planned direct costs. The original gross profit was $9,000, or 30% of revenue. The team later approved $1,200 of additional revenue, but actual costs reached $26,200.

Direct cost	Estimated	Actual	Difference
Labor, including owner labor	$9,000	$11,400	+$2,400
Materials	$7,000	$8,100	+$1,100
Subcontractors	$4,000	$5,200	+$1,200
Disposal and permit costs	$1,000	$1,500	+$500
Total	$21,000	$26,200	+$5,200

## Follow the $4,000 profit reduction

Final revenue of $31,200 less $26,200 of costs leaves $5,000 of gross profit: a 16.0% margin. Approved extras recovered $1,200 of a $5,200 cost increase. The $4,000 difference explains the decline from the original $9,000 plan.

Separate causes before changing your prices. Labor could reflect missed work, lower productivity, rework, or a changed customer selection. Material variance could come from quantity, unit price, freight, or waste. Record an evidence-backed cause for each variance instead of calling everything an overrun.

## Change the next estimate, not just this spreadsheet

For the next comparable job, include protection and cleanup hours explicitly, confirm subcontractor exclusions before quoting, and put a selection deadline next to every allowance. Hidden conditions should trigger a documented review of price and schedule.

Review estimated and actual costs under the same categories. Keep approved change revenue, invoicing, and collected cash separate. A positive gross profit does not establish that the business covered overhead or that the customer has paid.

## Checklist

[ ] Reconcile committed bills as well as paid bills.
[ ] Include owner labor on the same basis in both columns.
[ ] Match each approved change to its incremental cost.
[ ] Record a cause and next-estimate action for each variance.

Notes: