What is the cost of outsourcing estimating versus employing an estimator?

Typically, outsourcing is more cost effective when the number of bids per month is less than 10.Usually the number of bids a month below 8-10 makes outsourcing more economical. On top of that, a full-time estimator may be more cost effective if your volume is consistent.

What is the salary of a full time construction estimator?

Including salary, benefits, software and training, the total expense can exceed $100,000 per year. The median salary alone is about $78,740 according to the U.S. Bureau of Labor Statistics.

Does a small contractor need an estimating service?

Yes; many small contractors outsource since they are paid on an estimate rather than a salary. Fees of $500 to $2,500 per bid are common.

What is hybrid estimating model?

An in-house estimator owns the price and bid decisions, takeoffs or specialty trades are outsourced. It enhances capacity without compromising control.

What is the number of bids an estimator can manage?

It varies by project size and trade, but many estimators are able to process multiple bids per month for medium-sized commercial projects. It can take a week or longer for each one of the more complex projects.

Potential risks of using outsourcing for estimating?

Increased indirect control, sharing of your pricing standards, and risk of confidentiality. These are mitigated by a well-defined scope and an NDA and by reviewing each estimate.

When is it appropriate for a contractor to get an in-house estimator?

If there's a lot of bidding and consistent bidding, the work is focused and concentrated in one trade, and estimating is related to client relations. Perform a break even analysis prior to that.

In-House vs. Outsourced Estimating for Small Contractors

Design Estimation TeamUpdated October 21, 20267 min read

In-House vs. Outsourced Estimating: A Cost-Benefit Analysis for Small Contractors

Quick AnswerFor most small contractors, outsourcing estimating is cheaper until you are bidding steadily at high volume. A full-time estimator typically costs about $115,862 a year once salary, benefits, software and training are added, which works out to roughly $1,207 per bid at eight bids a month. Outsourced estimates commonly cost $500 to $2,500 each, with no cost in slow months. In-house makes more sense when your bid volume is high and steady, your work is concentrated in one trade, and you need someone who knows your crews and clients.

Every growing contractor reaches the point where the owner can no longer do all the estimating. The question is what comes next: hire a full-time estimator, outsource to an estimating service, or mix the two. The right answer depends on your bid volume, your trades and how steady your work is. This cost-benefit analysis walks through the real numbers so you can decide. It is part of our guide to outsourcing construction estimating.

The True Cost of an In-House Estimator

Salary is the obvious cost, but it is only part of it. Here is a realistic annual cost for one mid-level estimator:

Cost item	Annual cost	Notes
Base salary	$78,740	Median pay for cost estimators reported by the U.S. Bureau of Labor Statistics
Payroll taxes and benefits (about 30%)	$23,622	Health insurance, payroll taxes, retirement, paid time off
Estimating and takeoff software	$6,000	Takeoff and estimating licenses; varies widely by platform
Plan rooms and cost data	$3,000	Bid lead services and cost databases
Training and certifications	$2,000	Software training, continuing education, professional dues
Computer, monitors and office space	$2,500	Annualized equipment and workspace
Total annual cost	$115,862

Illustrative estimate. Senior estimators, high-cost metros and building construction roles can cost considerably more.

There are hidden costs too: recruiting time, the months it takes a new hire to learn your pricing, the risk that they leave, and the bids you cannot submit when they are sick or on vacation.

The Cost of Outsourced Estimating

Outsourced estimating is a variable cost. Typical market prices run about $150 to $500 for a simple single-trade takeoff, $500 to $2,500 for a detailed estimate, and $2,500 to $5,000 or more for a full multi-trade estimate. Many providers also offer monthly retainers. See our full breakdown of what a construction estimating service should cost.

Break-Even Analysis: Cost per Bid

Bids per month	Bids per year	In-house cost per bid	Outsourced at $1,200 per bid (annual)	In-house annual cost
2	24	$4,828	$28,800	$115,862
4	48	$2,414	$57,600	$115,862
6	72	$1,609	$86,400	$115,862
8	96	$1,207	$115,200	$115,862
10	120	$966	$144,000	$115,862
15	180	$644	$216,000	$115,862

Assumes an average outsourced price of $1,200 per bid and an in-house cost of $115,862 per year. Change the inputs to match your own numbers.

At an average outsourced price of $1,200 per bid, the break-even point is about 8 bids per month. Below that, outsourcing costs less. Above it, an in-house estimator starts to pay for itself, as long as one person can actually produce that many quality bids. Run the same math with your own average estimate cost and bid volume.

Beyond Cost: Comparing the Two Models

Factor	In-house estimator	Outsourced service
Cost structure	Fixed, paid every month	Variable, paid per estimate or retainer
Capacity	One person’s hours; busy seasons create backlogs	Scales up for busy periods and down for slow ones
Knowledge of your company	Knows your crews, production rates, clients and history	Needs your rates and preferences up front; learns over time
Speed	Depends on current workload	Often 24 to 72 hours
Trade coverage	Usually strongest in one or two trades	Access to specialists in MEP, steel, sitework and more
Continuity	Risk of turnover, sick days and vacations	Team coverage; no single point of failure
Control	Direct, daily oversight	Managed through scope, standards and review
Confidentiality	Information stays in-house	Requires an NDA and file security process

When In-House Estimating Makes Sense

You consistently bid more than about eight to ten projects a month.
Your work is concentrated in one trade or building type.
Estimating is tied closely to client relationships, negotiated work or preconstruction services.
You need someone in the office to manage buyout, change orders and project handoff.
You have the workload to keep an estimator busy through slow seasons.

When Outsourcing Makes Sense

Your bid volume is uneven or seasonal.
You are below the break-even volume for a full-time hire.
You bid multiple trades and need specialist knowledge you do not have in-house.
The owner is doing takeoffs after hours and needs that time back.
You need extra capacity during a busy period without a long-term commitment.
You want a third-party check on large bids or subcontractor pricing.

The Hybrid Model: Often the Best of Both

Many contractors keep one in-house estimator or chief estimator who owns pricing, strategy and client contact, and outsource quantity takeoffs or specific trades. The in-house person reviews every outsourced estimate, applies company pricing and makes the final bid decisions. This keeps control and company knowledge in-house while adding capacity only when it is needed.

Task	Keep in-house	Outsource
Bid strategy and go / no-go decisions	Yes
Final pricing and markups	Yes
Client and subcontractor relationships	Yes
Quantity takeoffs		Yes
Specialty trades you do not self-perform		Yes
Overflow during busy seasons		Yes
Third-party check on large bids		Yes

How to Decide: A Simple Checklist

Count your bids: how many did you submit per month over the last year, and how much did it vary?
Calculate your in-house cost: use the cost table above with your local salary and software costs.
Get outsourced quotes: ask two or three providers to quote a typical project.
Run the break-even: divide annual in-house cost by your average outsourced price to find your break-even bid count.
Test a provider: send one known project before committing.
Check the risks: vet providers using our red flags checklist and read the service agreement closely.

Add Estimating Capacity Without Adding Payroll

This changes the way estimating capacity is calculated.Changes the estimating capacity calculation.
Design Estimation serves as an extension to the already established contractors’ estimating teams, complete estimates for contractors who don’t have an estimator, and takeoffs and specialty trades for contractors who do. Estimates are created with your labor rates and markups, and are typically provided within 24 to 48 hours. Get a quote for our estimating services or send plans for a quote.

Conclusion

Basically, the choice between in-house or outsourced is based on volume and uniformity. A full-time estimator can be a profit for someone if he or she keeps bidding steadily on the orders received for about 8 projects per month in one trade. Outsourcing is typically less expensive and more flexible if your volume is less in size, uneven, or distributed among trades. The hybrid approach is most popular for growing contractors: retain local control over pricing / strategy, and contract the measuring.

This is one of our series on outsourcing construction estimating: costs, risks and what to look out for. Begin there to get the whole story.

Part of Our Complete Guide

This article is part of our complete guide to construction cost estimation, which covers the full process step by step.

FAQ

Frequently Asked Questions

Quick answers to the questions contractors ask us most.

What is the cost of outsourcing estimating versus employing an estimator?

Typically, outsourcing is more cost effective when the number of bids per month is less than 10.Usually the number of bids a month below 8-10 makes outsourcing more economical. On top of that, a full-time estimator may be more cost effective if your volume is consistent.
What is the salary of a full time construction estimator?

Including salary, benefits, software and training, the total expense can exceed $100,000 per year. The median salary alone is about $78,740 according to the U.S. Bureau of Labor Statistics.
Does a small contractor need an estimating service?

Yes; many small contractors outsource since they are paid on an estimate rather than a salary. Fees of $500 to $2,500 per bid are common.
What is hybrid estimating model?

An in-house estimator owns the price and bid decisions, takeoffs or specialty trades are outsourced. It enhances capacity without compromising control.
What is the number of bids an estimator can manage?

It varies by project size and trade, but many estimators are able to process multiple bids per month for medium-sized commercial projects. It can take a week or longer for each one of the more complex projects.
Potential risks of using outsourcing for estimating?

Increased indirect control, sharing of your pricing standards, and risk of confidentiality. These are mitigated by a well-defined scope and an NDA and by reviewing each estimate.
When is it appropriate for a contractor to get an in-house estimator?

If there’s a lot of bidding and consistent bidding, the work is focused and concentrated in one trade, and estimating is related to client relations. Perform a break even analysis prior to that.