If your unit is ending up the size you want it to be, that is what matters.
Fabric prep before cutting is another discussion. Some unwashed fabrics will shrink when being steam pressed.
Back to seam allowances..
Try cutting four strips of fabric 8.5 x 2.5 inches.
Sew the strips together using "your" 0.25 inch seam allowance.
Press the unit however you prefer. Pressing seams to the side or pressing them open is another discussion
Now measure the size of what you have.
If it ends up being 8.5 x 8.5 - your seam allowance is "perfect"
If it ends up being 8.5 x 8.75 - uou need to make your seam allowances deeper/wider
If you end up with it being 8.5 x 8.25- then you need to made the seam allowance narrower/ shallower.
This testing/practice is a bit of a bother, but can minimize frustration down the road.
Where variations can occur besides the seam allowance width:
Some threads take up more space
A heftier fabric takes up more space where the fabric turns at the seams
overly entusiastic ironing/pressing can distort the piece
Even measure the actual size of your cut pieces!
"My" 2.5 x 8.5 piece is actually a tiny bit larger than 2.5 x 8.5 inches because of the small space between the ruler and rotary cutter and how I place my ruler.
The more pieces involved, the more chances for differences to accumulate