What is a Quote or Estimate
A quotation (quote) or estimate is the type of submission taken when providing potential customers with costings or prices of your products or service. Although both quotes and estimates are ways to provide these costs/prices, there are some crucial differences. You may find some people also refer to this submission as a ‘proposal’.
You are able to provide both quotes and estimates to potential customers verbally, but it is highly recommended to submit them in a written format as this provides you with huge advantages.
What’s the difference between Quotations and Estimates?
Quotation or Quote:
A quotation or quote is a fixed price offer, provided by you, to a customer, for the works or services they require. When you issue a quotation you are bound to the cost attached and are legally required to fulfil the work quoted as you have specified and set your cost of the work even if you need to apply far more work than initially expected.
It is advised that you only submit your cost to potential customers as a quotation if you know for certain your total material costs and the labour input required.
Ask yourself the following questions when working out costings for any job to be sure about issuing a quotation:
- Can I work through the entire job in my mind?
- Can I list the exact materials required for the entire job?
- Do I know exactly how long the job will take me – Hours/Days/Weeks?
- Can I see any possible problems arising and can I address then within my costs and time?
You should always submit a quotation whenever possible as this is highly favourable with most people seeking costs. If you feel your job is to big or complicated to answer the questions for certain then try breaking the job into smaller stages and list the materials and cost for each stage. It will also help you to jot down notes when working out costs, explaining each stage, as this will provide you with the bones of a professionally detailed quotation.
Estimate:
An estimate is an estimated and educated guess of the cost of works a customers requires. You should submit an estimate for work that you are unable to attach fixed costs on. This may be because you see various outcomes on particular tasks, see possible problems that may arise or you’re not sure on the duration of the job.
If you are unable to provide a fixed quotation, try to consider all the possible scenarios regarding the work and provide multiple estimates based on these scenarios. At least then the customer is aware of all the different outcomes and what effect this will have on the price. This also pays as the customer can see you are being open and honest – always a good recipe. Again, always provide detailed descriptions to the estimate(s) to cover yourself and remove the cause of any possible disputes.
In Short:
- A quotation is a fixed cost quoted by you and can not be altered, even if the job requires additional input from your labour or materials.
- An estimate is an educated guess of costs which can be negotiated should additional time or material be required.
Why provide a written Quotation or Estimate!
It is pretty much common practise now to submit prices or costings to any potential customer in the form of a written quotation or estimate and most prospects will expect it. Even if you are asked to, or are able to, offer a cost to a customer verbally, you should always follow it up in writing.
Providing your quotes and estimates in writing, even in a basic form, allows you to not only confirm your stated cost but to also layout and specify what work will and will not be included in this price, removing the possibility of dispute should you be awarded the job.
Most people seeking tradesmen to fulfil their requirements will more than likely obtain a selection of quotes before deciding to award the job. They need to feel confident with the choice they are going to make. By providing your quotations and estimates this way enables you to display your knowledge and shows your understanding of the required task. It is also a physical reminder of you and your business which lets the customer know how to make contact with you should they need to discuss the job or hopefully award it.