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Allowances

An allowance is a budgeted dollar amount included in an estimate for a product or service the customer will choose later. Rather than specifying every material upfront, you set a placeholder budget — the allowance — and finalize the actual product after the contract is signed.

Allowances are standard practice in construction. A kitchen remodel estimate might include a $3,500 countertop allowance. The customer signs the contract knowing $3,500 is budgeted for countertops, then selects the specific material during the design phase. If their choice costs more or less than $3,500, the difference is tracked and handled through the change order process.

Why Use Allowances?​

Allowances solve a fundamental problem: customers want a contract price before every product detail is decided. With allowances you can:

  • Close the sale faster — Sign the contract without waiting for every finish selection
  • Set clear expectations — Customers know exactly how much budget is included for each category
  • Track variances — The system automatically calculates over/under amounts as selections are made
  • Streamline change orders — Reconcile all allowance differences into a single change order when ready

Allowances vs Contingencies​

An allowance is not a contingency. The distinction matters:

  • Allowance — The scope is defined but the specific product is not yet chosen. You know the project needs countertops; you just don't know which material the customer will pick. The work will happen.
  • Contingency — A budget buffer for work that might happen. Unforeseen conditions, potential scope changes, or unknowns that may or may not materialize.

Only create an allowance when the scope of work is clear and the item is definitely part of the project. If you don't have a defined scope for the item — if you're unsure whether the work will be needed at all — that's a contingency, not an allowance.

warning

Do not use allowances as a catch-all budget buffer. An allowance should always represent a specific, scoped item where only the product choice is pending. Using allowances for undefined scope creates confusion during selections, inaccurate reconciliation, and misaligned customer expectations.

Which Items Support Allowances?​

Only Material and Subcontractor line items can be flagged as allowances. Labor, equipment, and other item types do not support the allowance flag because they are not customer-selected products.

  • Material allowance — The customer will choose the specific product. For example, a $3,500 countertop allowance where the customer picks the stone slab later.
  • Subcontractor allowance — The scope requires a sub, but the final cost depends on the customer's choices or hasn't been bid yet. For example, a $5,000 allowance for a tile installer where the final cost depends on which tile pattern and layout the customer selects — a simple subway tile layout costs less to install than a complex herringbone pattern with accent borders.

Within an assembly (a group of related line items), multiple items can be marked as allowances. For example, a "Master Bathroom" assembly might have separate allowances for tile (material), fixtures (material), and tile installation (subcontractor) — each tracked individually.

Setting Up Allowances​

Flagging Items as Allowances​

To mark an item as an allowance within an estimate:

  1. Open the estimate and navigate to the assembly containing the item
  2. Click on the material or subcontractor line item
  3. Enable the Allowance toggle
  4. Enter the Price — the budgeted amount per unit included in the estimate
  5. Enter the Quantity and Tax rate if applicable
  6. Click Save

The item's cost (price x quantity + tax) is now included in the estimate total as the allowance budget for that product.

Marking an Assembly as Selection Required​

For allowance items to flow into the selections workflow, the parent assembly must be marked as Selection Required:

  1. Open the assembly
  2. Enable the Selection Required toggle
  3. Save the assembly

When an estimate is sold with selection-required assemblies, the system automatically creates selection records for each allowance item. These selection records are what the customer or designer fills in later with actual product choices and costs.

Bulk-Setting Allowances​

You can set the allowance flag on all material and subcontractor items across multiple assemblies at once:

  1. On the estimate, select the assemblies you want to update
  2. Use the Set Allowance bulk action
  3. All material and subcontractor items within those assemblies are flagged as allowances

This is useful when building out an estimate with many selection categories and you want to quickly designate which items are budget placeholders.

Default Allowance on Catalog Items​

If a catalog item is commonly used as an allowance (e.g., a "Countertop Allowance" placeholder), you can set the default in the catalog:

  1. Go to Settings > Estimating > Items
  2. Open or create the item
  3. Enable the Allowance checkbox
  4. Save

When this catalog item is added to an estimate, it automatically comes in with the allowance flag enabled, saving a step during estimating.

How Allowance Totals Are Calculated​

The allowance total for an assembly is the sum of all its allowance-flagged items:

Per item: quantity x price + tax

Per assembly: sum of all allowance items x assembly quantity

Per estimate: sum of all assembly allowance totals

For example, a "Guest Bathroom" assembly (quantity: 2) with:

  • Tile allowance: 100 sq ft x $8/sq ft = $800
  • Fixture allowance: 1 x $1,200 = $1,200

Assembly allowance total: ($800 + $1,200) x 2 = $4,000

This total appears in the estimate line items, in the selections UI, and on the project overview.

Allowance Tracking on the Selections Page​

Once the estimate is sold and selections are created, the Selections page shows real-time allowance tracking for each assembly:

  • Allowance — The original budgeted amount from the estimate
  • Cost — The actual cost based on selections made so far
  • Over/Under — The difference between allowance and cost

The over/under amount is color-coded:

  • Green — At or under budget (cost is less than or equal to allowance)
  • Red — Over budget (cost exceeds allowance)

These totals also roll up by area and across the entire estimate, giving you a single view of where the project stands relative to the original allowance budgets.

Project Overview Widget​

The project's Sales, Design, or Production page displays an allowance summary widget showing:

  • Total Allowance — Sum of all allowance budgets across the estimate
  • Total Cost — Sum of all actual selection costs
  • Over/Under — Net variance across all selections

This gives project managers and salespeople a quick read on whether selections are trending over or under the original budget without opening the full selections page.

Allowance Reconciliation​

When customer selections differ from the original allowance amounts, the differences need to be formalized. Allowance Reconciliation creates a change order that captures every over/under variance in one place.

When to Reconcile​

Reconciliation is available only on sold estimates. You typically reconcile after most or all selections have been approved and you want to formalize the budget impact.

Creating an Allowance Reconciliation​

  1. Open the estimate's Selections page
  2. Click the menu and select Create Allowance Reconciliation
  3. Choose one of:
    • New Change Order — Creates a new change order project with a salesperson you select
    • Existing Change Order — Adds the reconciliation to an existing change order for this project
  4. Click Create

What Reconciliation Generates​

The system reviews every selection where:

  • The item is flagged as an allowance
  • An actual cost (unit cost) has been entered
  • There is a non-zero difference between the allowance amount and actual cost

For each assembly with a variance, the reconciliation creates a line item in the change order estimate:

  • Positive amount — Customer owes more (selection exceeded the allowance)
  • Negative amount — Customer may receive a credit (selection was under the allowance)

The resulting change order estimate can then go through your standard change order workflow — pricing, contract signing, and billing.

Example​

Original estimate with three allowances:

AssemblyAllowanceActual CostDifference
Kitchen Countertops$3,500$4,200+$700
Master Bath Tile$2,000$1,600-$400
Lighting Package$1,500$1,500$0

The reconciliation change order would contain two line items:

  • Kitchen Countertops: +$700
  • Master Bath Tile: -$400
  • Lighting Package is excluded (no variance)

Net change order amount: +$300

Selections Markup​

After the contract is signed, overages on selections can be marked up before being passed to the customer. This markup is applied during allowance reconciliation to account for overhead and profit on the additional work.

The markup is configured as a percentage. For example, a markup of 125 means selection overages are marked up by 25% (the overage amount is multiplied by 1.25).

Markup can be set at two levels:

  • Company-wide default — Applies to all projects unless overridden
  • Opportunity type override — A specific opportunity type (e.g., "Kitchen Remodel") can have its own selections markup percentage
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Markup only applies to overages on post-contract selections. Pre-contract selections that are approved before the estimate is sold update the estimate directly and do not go through the markup calculation.

Pre-Contract vs Post-Contract Selections​

How allowances behave depends on whether the estimate has been sold.

Before the Sale (Unlocked Estimate)​

  • Selections update the estimate directly with actual pricing
  • The allowance amount is replaced by the real selection cost
  • Estimate totals reflect true costs — no over/under tracking needed
  • Approved selections are factored into the contract price via the selection adjustment

After the Sale (Locked Estimate)​

  • The estimate is frozen — selections do not change the estimate total
  • The original allowance amount stays in the estimate
  • Selections show over/under differences instead
  • Overages are handled through allowance reconciliation as change orders

This is the core value of allowances: you lock in a contract price with budget placeholders, then formally reconcile the differences after selections are finalized.

Allowances in Contracts and Proposals​

Contract Template Section​

When building a contract template, you can include an Allowances section that lists all allowance items from the estimate. This makes the budgeted amounts part of the signed contract so customers know exactly what's included.

To add the allowances section:

  1. Go to Settings > Contract Templates
  2. Edit or create a template
  3. Add a section with the Allowances type
  4. Position it where you want it in the contract (typically after the scope of work)

The section auto-populates with the allowance items and their budgeted amounts from the estimate when a contract is generated.

Client-Facing Allowance Sheet​

A printable Allowance Sheet provides a summary of all allowance items organized by area and category. It shows:

  • Each allowance item and its budgeted amount
  • Per-category totals
  • Per-area totals
  • Overall allowance total

This sheet can be shared with the customer as a reference document alongside the contract.

tip

If you prefer not to show dollar amounts to customers on the allowance sheet, enable the Hide Client Allowance Amount setting in your company features. This removes all monetary values from the client-facing view while keeping the item list visible.