Xactimate for Restoration Companies: What Owners Need to Understand
The Restoration Directory Editorial Team · Published
Xactimate Is a Tool, Not the Scope of Work
The first mistake is starting the estimate before the loss has been properly scoped.
The software cannot independently know:
- Which rooms are affected
- How water migrated through the structure
- Which materials are wet or contaminated
- What assemblies are present
- Whether access is limited
- Which contents must be moved
- What demolition is actually necessary
- How much equipment is appropriate
- What specialty trades are required
- What hidden conditions will be discovered
- Whether local code, permits, or regulated materials affect the work
Those are field, technical, and project-management decisions.
A strong estimate begins with a strong job file. That means the estimate should be traceable to inspection findings, measurements, photographs, sketches, moisture data, project notes, authorizations, and other supporting information.
Our pillar guide, Restoration Job Documentation and Estimating, explains how those pieces should work together.
What Does an Xactimate Price List Represent?
Verisk’s published Pricing Research Methodology is important reading for any owner who uses Xactimate.
Verisk says its role is to report a market price using recent transactions, industry surveys, supplier information, contractor and service-provider data, and estimate-related data. It also states that published prices cannot be guaranteed to be appropriate for every individual contractor, repair, or structure.
That is a critical point.
A published price is a researched reference point. It is not proof that a restoration company can profitably perform every job at that number.
According to Verisk, price lists are generally published monthly and may be updated more often during rapid market changes. The methodology also allows users to inspect the components behind published prices and, where authorized, modify costs to reflect the job.
Owners should therefore understand both sides:
- Do not change prices simply because you dislike the number.
- Do not accept a published number blindly when the actual project conditions or company costs make it inappropriate.
Any departure from a published price should be supportable with real facts: supplier quotes, subcontractor bids, labor information, equipment cost, local conditions, project complexity, access constraints, or other relevant evidence.
What Is Inside a Line Item?
Xactimate line items are not just a sentence and a total.
Verisk’s platform documentation explains that price-list items can contain component information such as labor, materials, and equipment. The platform also includes activity distinctions such as installation, tear-out, detach/reset, labor minimums, productivity or yield data, and other estimating features.
That means an estimator needs to understand what a line item already contains before adding another charge.
For example, ask:
- Does this item already include a labor activity I am about to add again?
- Is material included?
- Is equipment included?
- Is disposal included or separate?
- Is the item based on installation, removal, or both?
- Does the assumed productivity resemble the actual project condition?
- Does the line item apply to restoration/service work or another environment?
The estimating problem is not solved by knowing a code. The estimator has to understand the assembly behind the code.
Scope Errors Are Often More Expensive Than Price Errors
Restoration owners frequently focus on whether a line-item price is a few dollars high or low. But an incomplete scope can create a much larger financial problem.
Missing work can include:
- Additional affected rooms
- Detach-and-reset operations
- Contents manipulation
- Protective measures
- Equipment setup or monitoring
- Difficult access
- Demolition required to reach wet materials
- Disposal
- Cleaning
- Surface preparation
- Specialty trade work
- Project management or job-related overhead when applicable
- Permits or testing
- Final cleaning
- Reinstallation steps
If the work is necessary but never makes it into the scope, a perfectly researched unit price still produces an under-estimated job.
This is why estimate review should begin with scope completeness, not only price comparison.
Documentation Should Explain the Estimate
A reviewer who did not visit the loss should be able to move between the estimate and the supporting file and understand why the work appears.
For an individual line item, the supporting evidence may include:
- Photograph
- Measurement
- Sketch
- Moisture reading
- Material identification
- Technician note
- Scope narrative
- Supplier quote
- Subcontractor proposal
- Code or permit requirement
- Daily work record
- Change-order documentation
A line item without context often looks optional. A line item connected to the actual property condition is much easier to evaluate.
Pricing Databases Do Not Replace Your Cost of Doing Business
This may be the most important owner-level lesson.
A restoration company needs to know what it costs that company to perform work.
That includes more than technician wages and materials. Real company economics can include:
- Payroll burden
- Workers compensation
- Health benefits
- Paid nonproductive time
- Vehicles
- Fuel
- Equipment ownership and maintenance
- Warehouse or office expense
- Software
- Phones and technology
- Insurance
- Training and certifications
- Sales and marketing
- Administrative staff
- Estimating staff
- Project management
- Bad debt
- Financing and collection costs
- Rework
- Warranty callbacks
- General business overhead
If an owner does not know those costs, the owner cannot tell whether an estimate is actually profitable.
The Restoration Industry Association’s Cost of Doing Business program exists specifically to help restorers benchmark expenses, margins, and operating performance. That is a separate management discipline from using estimating software.
General Overhead and Job-Related Overhead Are Not the Same Thing
Verisk’s current Overhead and Profit guidance separates overhead into categories.
General overhead includes company operating expenses that cannot be assigned to one specific project, such as office rent, administrative salaries, licenses, advertising, and office operations. Verisk states that general overhead is not included in its unit pricing and can be added to an Xactimate estimate along with an appropriate profit margin.
Job-related overhead includes expenses that are attributable to a particular project but are not necessarily one specific trade task. Verisk gives examples such as project managers, temporary facilities, temporary power, fencing, and security. Those project-specific costs should be handled as appropriate job items rather than simply treated as company-wide overhead.
That distinction helps owners avoid two opposite mistakes:
- Assuming every indirect project cost is already buried inside unit pricing.
- Adding the same cost twice under different labels.
The applicable estimate still depends on the project, contract, market, and customer relationship. There is no automatic universal O&P entitlement just because a job is an insurance loss.
Do Not Confuse Markup With Margin
Owners should also be careful with the language of profit.
A 20% markup does not equal a 20% gross margin. The calculation base is different.
For a simple example, if direct cost is $100 and the company adds a 20% markup, the selling price is $120. The $20 gross profit is 16.7% of the $120 selling price, not 20%.
That math becomes important when a company builds pricing assumptions, discounts an estimate, or evaluates job profitability. Restoration companies should work with their accountant or financial advisor to establish the accounting framework they use for direct costs, cost of goods sold, overhead, and profit.
What About Custom or Unsupported Items?
Verisk’s pricing methodology acknowledges that not every task can have a reliable published market price. Unique structures, uncommon work, project complexity, or custom items may require the estimator to create or modify costs.
When using a custom price or miscellaneous item, build the file so another person can understand it.
Useful support can include:
- Vendor quote
- Subcontractor bid
- Labor calculation
- Equipment calculation
- Material invoice
- Written scope
- Quantity calculation
- Explanation of why the standard item does not fit
The principle is simple: custom does not mean arbitrary.
Price Lists Change, but So Do Job Conditions
Price-list updates matter, particularly after disasters or supply disruptions. Verisk notes that pricing may be published more frequently when markets move quickly.
But repricing an estimate does not automatically correct every job-specific problem.
A current price list cannot account for every circumstance such as:
- Limited material availability
- Island or remote-market freight
- Difficult site access
- Emergency overtime
- Specialized equipment
- Historic or custom finishes
- Small-job inefficiency
- Unusual containment
- Local permit conditions
- Specialty subcontractor availability
Use the price list as part of the estimate, not as a substitute for estimating the actual work.
Restoration Owners Should Audit Estimate-to-Actual Results
One of the best ways to improve estimating is to compare the estimate with what the job actually consumed.
For completed jobs, review:
- Estimated labor hours vs. actual labor hours
- Estimated equipment vs. actual equipment days
- Estimated material vs. actual material
- Estimated subcontractor costs vs. invoices
- Estimated disposal vs. actual disposal
- Estimated contents labor vs. actual
- Estimated project-management time vs. actual
- Supplements added after work began
- Items regularly missed by estimators
- Gross profit by service line
- Rework or callback cost
Patterns will emerge.
If a company repeatedly underestimates one phase of work, the answer may be training, a better inspection process, a checklist, a new macro, stronger documentation, or different pricing support. The answer is not always “the price list is wrong.”
Xactimate and TPA Work
TPA and managed-repair assignments can add another layer of estimating rules. A network may require certain line-item practices, documentation, program forms, pricing conventions, response times, or review procedures.
Those requirements come from the controlling program documents and agreements, not from the existence of Xactimate itself.
If a reviewer says a scope or pricing change is contractually required, the restoration company should understand which program provision applies. Our Restoration TPA Networks guide explains the broader managed-repair model.
Build an Estimating SOP Around Decisions, Not Just Codes
A scalable restoration estimating SOP should answer:
- How do we inspect and scope a loss?
- What documentation is required before estimating?
- How do we measure affected assemblies?
- How do we choose the correct line item and activity?
- How do we verify what the line item contains?
- When do we need custom pricing or supporting quotes?
- Who reviews estimates before submission?
- How are revisions and supplements documented?
- How do we compare estimates with actual job costs?
- How are estimating errors used for training?
That system creates consistency without pretending that every loss is identical.
How The Restoration Directory Helps Restoration Companies
The Restoration Directory is designed to help property owners find restoration companies and to give restoration professionals a credible place to present accurate information about their companies, services, markets, and qualifications.
We also publish owner-focused resources on estimating, TPAs, documentation, marketing, profitability, and other topics that directly affect restoration businesses.
A directory listing does not replace strong estimating or operational systems. It is one part of building a restoration company that is easier for property owners to understand and find.
Restoration owners can review resources for restoration companies and make sure their Directory listing accurately reflects the business they operate.
Frequently Asked Questions
Does Xactimate set the price a restoration company must charge?
No. Verisk describes its published pricing as researched market-price information and expressly notes that a published price cannot be guaranteed to fit every contractor, repair, or structure. The actual price charged is a business and contractual matter between the parties, subject to applicable agreements and law.
Are Xactimate prices updated every month?
Verisk states that price lists for each market are generally published monthly and may be published as often as biweekly during demand surges that cause more rapid price movement.
Does an Xactimate line item include labor and material?
Many price-list items contain component information for labor, material, and equipment, but estimators should inspect the specific item rather than assume every component is included the same way.
Is general contractor overhead included in Xactimate unit prices?
Verisk’s Overhead and Profit guidance states that general overhead is not included in its unit pricing and describes how general overhead and profit can be added to estimates. Whether particular O&P is appropriate on a given project depends on the job and applicable agreement; it should not be treated as an automatic universal rule.
Can a restoration company modify Xactimate pricing?
Xactimate provides tools that allow authorized users to inspect and modify pricing. When a published price does not fit the project, changes should be based on supportable job or market information rather than arbitrary adjustments.
Why can an approved estimate still be unprofitable?
Because estimate approval does not change the company’s actual costs. Poor labor efficiency, untracked overhead, missed scope, rework, excess equipment cost, bad debt, program fees, and other expenses can make a job unprofitable even if the estimate was accepted.
Sources and Further Reading
Disclaimer
This article provides general business and estimating information, not legal, accounting, tax, insurance-coverage, or contractual advice. Xactimate and Verisk are trademarks/products of their respective owners; The Restoration Directory is independent and is not affiliated with or endorsed by Verisk. Pricing, program requirements, contracts, costs, and laws vary. Restoration companies should establish prices independently based on their own costs, market, contracts, professional obligations, and applicable law.
Help Your Restoration Company Stand Out in AI Search
Create a free listing or explore Directory Certified to build a more complete company profile designed to help AI platforms better understand your services, experience, credentials, and service area.