Rule of Thumb Costing

Question 1

What is meant by the term rule of thumb costing?

Answer 1

Practice of estimating a price based on previous jobs with similar elements.

Question 2

Why is rule of thumb costing a popular method for estimates?

Answer 2

Allows you to provide an estimate to a customer quickly and efficiently.

Question 3

What 2 types of measurements are usually made to begin the process of rule of thumb costing?

Answer 3

Relies on linear measurements in some cases and on area measurements in others.

Question 4

If other shops are charging approximately the same price, how can you best compete?

Answer 4

May find it necessary to compete on warranty and service, since3 all of you competitors are charging a similar amount.

Question 5

Term used to describe the part of an estimate where the product deviates from the standard formula allowed in a rule of thumb estimate?

Answer 5

Up-Charge