A quote is a legally binding fixed price a company prepares for a client; as such, they should always be in writing. A quote summarises the work to be performed and includes a detailed breakdown of all the costs and the final total, including taxes.
Once a business offers a quote and a client signs off on it you have a binding contract. The price cannot change even if the job ends up costing more than originally anticipated.
Allow ample time to complete the job and carefully price out costs for materials and labour e. Describe the job clearly in general terms. Estimates should always include a disclaimer that the price is subject to change depending upon a more detailed quote being prepared. Be as specific as possible, including:. If you have formal terms and conditions drawn up always include a copy with your estimate or quote.
This not only gives your customer with a very positive impression of your business being upfront and honest, it also provides them with information such as your normal payment terms, deposits required, penalties for non-payment, etc. Dating estimates and quotes helps you determine exactly when you prepared them.
Fees and costs naturally increase over time so setting a limit on how long your price is good for protects you from being caught out by old estimates or quotes which are now unrealistic.
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Other popular articles. Free trial. Quotes 8 November However, there can be a lot of confusion between the two. Quotes vs. Key Points to remember… Estimates are a rough idea of price. Quotes are legally binding and should ONLY be used when you are certain of the costs involved. Frequently asked questions about estimates vs.
When you prepare an estimate it's good practice to give the customer a written copy , including a full breakdown of costs. You must include your full business contact details in your estimates. If you have letterhead, it's a good idea to put your estimates on this.
It is advisable to get signed acceptance of your estimate and to make sure your customer is clear about what has been agreed. Include a disclaimer stating clearly that the estimate's price is subject to change. Agree in advance how any variations will be costed. These can arise if the client changes their requirements or if a job turns out to be more complicated than expected.
If you think price complications are likely to arise, it's a good idea to supply a number of estimates based on different scenarios. This will help to avoid any disputes with your client as the work progresses. When you start to work or supply, you should keep good records of any cost over-runs, along with how and why they occur. Software packages can help you identify the costs involved in work for which you're providing an estimate. Many accounting and spreadsheet packages can be used for this purpose.
It's good practice to give your customers a written quotation. This should include the:. It's also advisable to get your customer's written confirmation that they're happy with the price you have quoted and the work that this includes. This should be done before you carry out the work, or provide the goods or services.
Computer software can be used to help you determine the costs involved in any work for which you're drawing up a quotation. Many accounting and spreadsheet packages can be used for this.
If you provide goods or services to other businesses or the public sector, you may have to compete for contracts by submitting a tender. Although value for money can be an important component of many tenders, the way you price your bid can also make the difference between winning or losing business. Before you price a tender, check the instructions in your client's bid specification. These will usually detail how the costs should be displayed so that bids are easier to compare. Even if a detailed breakdown isn't asked for, it's in your interest to provide one.
It can help you to win contracts by showing your client you're offering good value. For more advice on how to price contracts, read the page in this guide on how to win contracts at the right price. In your tender document, your overall price should be set out in both words and figures.
You should also state how long your prices will be valid for. It can sometimes take a long time for tender decisions to be made - by which time your costs may have increased. It is a good idea to add a contingency for any unexpected costs or additional work that may arise.
Explain where and why you have included this in your bid. Pricing a tender for the first time can be difficult as you will have no benchmark or idea of what competitors might bid. Price is important when submitting a tender, but don't lose sight of the quality you will provide when deciding on it.
Clients often consider the lifetime cost of the products and services they buy.
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