# How Part Costs are Calculated

Each part in Clear Estimates has a material cost, labor hours, labor rate, and description. The costs and hours will calculate to a total cost for a part based on the quantity of the part that you enter. Let’s take a simple example:

You need 100 Sq Ft of tile flooring. You find the type of tile that you want in our database, then enter 100 Sq Ft.

Now that line item is giving you a cost, but how did it get there? What goes into calculating that cost?

Material Costs: Each part will have a cost per unit (in this case, \$/sqft). When you enter a quantity (100 sqft), it will multiply the cost/sqft by the quantity.

If you have a material cost of \$5/sqft for tiling, it will calculate the material cost by \$5/sqft x 100 sqft = \$500 of material cost

Labor Costs: Labor is a bit trickier. Each part as what is called the “Hourly Multiplier” which is the hours to install one unit. So if you are doing tiling, the “Hourly Multiplier” might be something like 0.25 (or 15 minutes per square foot).

In this case (for 100 sq ft of tiling) the number of hours to complete the job would be 100 x .25 = 25 hours.

These hours are then multiplied by an hourly labor rate. This comes from the HLR editor (click here to watch a video on how to edit your labor rates). Let’s say in this case you had a labor rate of \$25/hour. The total labor cost of this part would be \$25 x 25 hours = \$625 for 100 sqft of tiling. This example may not be realistic, but it is just to demonstrate the calculations.

Total Cost: For the example above for 100 sqft of tiling, our total cost would be \$500 for materials + \$625 for labor = \$1,125 total cost.

It is important to note that this number will be marked up when you decide on your markup percentages. This means that you are not charging your customer \$1,125 for 100sqft of tiling. If you mark up your costs by 50%, you would have \$1,125 in costs + \$562.50 in markup = \$1,687.50 as the bid price.

Now that we understand how the calculations work, we can go in to any part and see the values that are going into the calculation (material costs, labor rates, hourly multiplier, etc.).

To view the details of any part, click on the blue “Edit” button to the right of the red “X” delete button for any part: Once you click that button for the part you want to edit, the window below will pop up. Here you can edit anything you want about the part: description, material cost, labor rate, hourly multiplier, quantity and the text that shows up on each report. Below you’ll see where each of the items we talked about in this article are:  