When working with estimates, you may notice a small difference between the Contract Price shown in your Take-Off Parameters (ToP) and the total Contract Price displayed in the top right of your screen. This article explains why this occurs and confirms which value you should reference.
Key Points
The difference is typically less than $10,000
The Contract Price in the top right is the authoritative value
This behaviour is normal and expected
Contract Price includes profit margin from your default Price Book
Profit Margin and Contract Price
Before calculating any percentage-based items, the system applies the default profit margin from your Price Book (configured in Setup > System Variables > Estimating). For example, with a 20% profit margin:
Base construction costs are calculated
20% profit margin is applied
Percentage-based items (like commissions) are then calculated using this increased value
This means that items like realtor commissions are factored into the Contract Price after your profit margin has been applied, ensuring they don't reduce your intended profit percentage.
Why Does This Happen?
The difference occurs because some items in your estimate are calculated as a percentage of the Contract Price itself. For example, realtor commissions might be calculated as 3% of the Contract Price.
To handle these interconnected calculations, our system follows these steps:
Calculates an initial Contract Price based on all materials and labour costs
Applies the profit margin from the default Price Book
Uses this initial price to calculate percentage-based items
Updates the total Contract Price with these new values
Repeats this process several times to arrive at the most accurate final figure
Technical Example
Let's say you have an estimate with the following:
Base construction costs: $300,000
Default profit margin: 20%
Realtor commission: 3% of Contract Price
Insurance: 0.5% of Contract Price
The system will:
Start with $300,000
Add 20% profit margin (now $360,000)
Calculate commissions and insurance based on $360,000
Add these to the total
Recalculate commissions and insurance based on the new total
Continue this process until reaching a stable value
Which Price Should I Use?
Always reference the Contract Price shown in the top right of your estimate screen. This represents the final, stabilised value after all calculations are complete and is the authoritative price for your estimate.
Frequently Asked Questions
Is this affecting my estimate's accuracy?
Is this affecting my estimate's accuracy?
No. The iterative calculation process ensures that your estimate is as accurate as possible while maintaining system performance.
Why not calculate it until the difference is zero?
Why not calculate it until the difference is zero?
While theoretically possible, this would require significantly more processing power and could slow down your experience. Our current approach balances accuracy with performance.
Are percentage-based fees eating into my profit margin?
Are percentage-based fees eating into my profit margin?
No. The system first applies your profit margin from the Price Book, then calculates percentage-based fees. This ensures that fees are calculated after your profit has been added, preserving your intended profit margin.
Need More Help?
If you have additional questions about Contract Price calculations or need assistance with your estimates, please contact our support team.