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# What is a calculated quotation?

Calculating a quotation means that you do not estimate the price of a job, you **build it up**. That happens in four steps:

1. **Map out all your costs.** For each quotation line you list what the work really costs you: material, Labor (hours × hourly cost), equipment and subcontracting.
2. **Apply margins.** On top of that cost price you put a margin — per line or per cost type, chosen deliberately instead of "roughly".
3. **Apply indirect costs.** Indirect costs (also called **general costs**) are an extra percentage you charge in order to recover costs that do not arise on site: your office, administrative staff, investments, and so on.
4. **Add the costs to be distributed.** Costs that do belong to the project but cannot be assigned to a single quotation line (site set-up, travel, and so on) are spread across the quotation lines, so that they are covered as well.

As a guideline for your indirect costs percentage — this mainly varies with the size of your organisation:

| Company size | Guideline for indirect costs |
| ---- |
| Up to 5 people | 8 to 10 % |
| 5 to 25 people | 10 to 15 % |
| 25+ people | 9 to 12 % |

| Tip: these are guideline values. You get your own percentage from your accounts: divide last year's general costs by your revenue.

A quotation in which that build-up sits behind every quotation line is what we call a **calculated quotation** in Robaws. The result is a selling price of which you know exactly how it is built up — and therefore also where you can come down in order to win a job, and where you cannot.

## Why calculate a quotation?

Quite a few construction companies still do not draw up calculated quotations today. The reasons are familiar:

* **Experience as a price list**: the owner or estimator *knows* that € X is a good price for that job. And often that is correct.
* **It always went well**: enough was earned, so the need to calculate in more detail never arose.
* **The knowledge sits in one head**: the build-up of the price does exist, but only in the head of that one person.

That approach worked for a long time. But the circumstances have changed:

* **Margins are under pressure.** Where the price used to contain some reserve, that buffer is often gone today.
* **A single bad project can eat up your annual profit.** If you only see at the final account that a site was loss-making, you are too late.
* **Material prices fluctuate heavily.** A price "from experience" is based on the material cost of back then — not on today's.
* **The knowledge has to be transferable.** If your estimator is out for a month, or you want to grow with extra estimators, the pricing logic has to sit in a system, not in someone's head.

## What a calculated quotation gives you

### 1. You see where your margin really is

In a calculated quotation you know the cost price, the margin and the selling price of every line. The "Overview" tab immediately shows you the breakdown per **cost type** (Labor, Material, Equipment, Subcontracting) and per **activity**. That way you see, before you send the quotation, where you earn, where you are cutting it fine — and where you are shooting yourself in the foot.

![Overview tab of a calculated quotation: analysis per cost type and activity](https://storage.crisp.chat/users/helpdesk/website/-/e/a/d/f/eadf6dec760ec000/waaromwerkenmetenl-1_m9l6tz.png)

### 2. You get a budget per project

If you win the job, your calculation automatically becomes the **budget of the project**: per activity (budget code) and per cost type you see predicted against actual. Hours from the work orders, incoming invoices and supply orders are set off against it — that is your [recalculation](https://support.robaws.com/en/article/project-recalculation-1sitd2t/). That way you already know during the works whether you are on schedule, instead of only months later.

![Recalculation on the project: budget per activity and cost type](https://storage.crisp.chat/users/helpdesk/website/-/e/a/d/f/eadf6dec760ec000/waaromwerkenmetenl-2_1ocvnll.png)

### 3. From material list to supply order in a few clicks

Because your substructure contains all the materials you need, you immediately have a complete material list. From it you create your [supply orders with your suppliers](https://support.robaws.com/en/article/supply-orders-general-explanation-1gxeocy/) directly — without typing everything out again, and without forgotten posts.

### 4. Faster and more consistent quoting

With [posts](https://support.robaws.com/en/article/creating-a-post-ry11o1/) you build up your knowledge once and reuse it in every quotation. Every estimator in your organisation then calculates with the same substructure — the price no longer depends on who happens to draw up the quotation.

### 5. A system that learns along with your organisation

A construction project is sensitive to dozens of variables: the weather, the location, how easy the site is to reach, and so on. They can all eat into your margin. And often you *could* have taken them into account — with hindsight.

An example: you lose a lot of time in a building because there is only one lift, which is also occupied a lot of the time. You see that loss in your recalculation. In Robaws you then capture that experience as a [parameter in your post](https://support.robaws.com/en/article/smart-calculation-with-parameters-in-your-posts-1sx7mvn/): a question "easy access to the floor?" that automatically adds extra hours when the answer is "no". For the next quotation for a similar building, your post asks that question — and the cost is included.

![An experience factor as a parameter in a post](https://storage.crisp.chat/users/helpdesk/website/-/e/a/d/f/eadf6dec760ec000/waaromwerkenmetenl-3_1yzdr8v.png)

That is how you build a **self-correcting, learning calculation system**: every bad experience becomes a rule that protects your margin, instead of an anecdote in the head of one person.

## How do you get started?

1. In Robaws you can draw up a quotation in two ways: **simple** (you only fill in the selling price) or **calculated**. When you create your quotation (template), choose **calculated** — a simple quotation cannot be converted afterwards. More about this in [the difference between a simple and a calculated quotation](https://support.robaws.com/en/article/what-is-the-difference-between-a-simple-and-a-calculated-quotation-18fbxoh/).
2. Start small: you do not have to calculate every line down to the last bolt. Start with your most important posts and refine as you go.
3. Follow the steps in [Drawing up a quotation: step by step](https://support.robaws.com/en/article/drawing-up-a-quotation-step-by-step-1lq8fnu/) and then build your first smart post with [parameters](https://support.robaws.com/en/article/smart-calculation-with-parameters-in-your-posts-1sx7mvn/).

| Tip: in doubt between simple and calculated? Choose calculated. Everything a simple quotation can do, a calculated one can do too.