When we talk about pricing in the restoration industry, Xactimate has long been the standard for estimating repair costs. This software is designed to be used by contractors and adjusters to streamline the claims handling process and make it fair to all parties involved, including the insured. There are other estimating platforms used, but Xactimate has long been the industry standard. With it being the most widely used, it is often open to criticism and scrutiny. One of the questions I often get from students is “Where does Xactimate get its pricing?” Understanding this is one reason I think Xactimate holds so much credibility in the industry.

Xactimate is owned and maintained by Verisk, a data analytics company. Each month they collect and analyze millions of data points from different sources to update these price lists. Two of the main sources are surveys of contractors and suppliers and also invoices and actual claims data.

One thing I often hear is “Well, Xactimate has never called me or my buddies at XYZ Contracting. How am I to trust that?” This is correct, they are not calling contractors announcing they are from Verisk and surveying pricing because that could lead to contractors saying they charge more than they do in an attempt to skew the pricing. Instead, they are calling anonymously asking general questions and asking contractors about their pricing like they are a customer. So, you may have been surveyed in the past and didn’t realize.

This is just a small piece of the much larger puzzle though. One thing most people don’t understand is they are analyzing the data they are given by all the users each month. They are doing this through “Completed” estimates. When an estimate or file is completed, no changes can be made to it until it is changed back to an “In Progress” status. Once it is completed it is also sent to the cloud and stored. Verisk analyzes these completed files each month and checks what pricing may have been changed. Xactimate is not designed to be an end all be all to pricing. Their pricing is an average which means about half of people are more expensive and half are less. This is why you can go into the components tab of your estimate and change specific material pricing. We as estimators can manipulate and change material and labor pricing to align with the true costs of each project.

Let’s say you’re painting a door, and you need to use a higher grade paint; the material pricing inside Xactimate is not going to account for that upgraded paint, but you can go in and adjust the cost of the paint to what you need.  

We as estimators are doing ourselves a disservice if we are not writing estimates for the true cost of the project and allowing one party to live and die by “Xactimate pricing.” If an ITEL is used for flooring cost and it falls below what Xactimate priced it at, the carrier is going to use the lower pricing. Why are we picking and choosing which materials we’re getting pricing for instead of using an actual job cost?   

In conclusion I’ll ask you this. When was the last time you changed the pricing to reflect your true job cost and when was the last time you actually “Completed” your file and allowed it to be used for price surveying? If you’re not completing the estimates, they are not getting analyzed. Carriers are completing theirs and their prices are analyzed, and part of the price list changes each month, and contractors are not. So, the carrier files are leading the pricing changes while we just sit back and complain about it. Be the change you would like to see. Write your estimates to reflect your true job cost and complete them so your pricing is surveyed and considered like the carrier estimates are.