Giving an estimate instead of a quote
Understanding the difference between a quote and an estimate can save you time and money and protect you from legal risks and business losses.
Unlike quotes, estimates are not legally binding. Many businesses find estimates are an effective way to indicate the likely cost and scope of a job without committing to prices and terms.
When to use an estimate
Estimates are particularly valuable if you are initially engaging a customer's interest in your products or services or waiting on clearer information about your customer's requirements. Estimates are also useful if you are unable to guarantee prices of materials or labour or are unsure about the size of the job.
Estimates are not a substitute for effort. Don't use an estimate just because you don't know the details of the job. Try to find out the specifics and provide a quote instead.
What to include in an estimate
A well-prepared estimate will include:
- your ABN and business's contact details
- a total cost
- a breakdown of the job or product components and cost
- a schedule outlining proposed service or delivery dates
- any assumptions on which the estimate is based
- your terms and conditions
- your preferred terms, means and schedule for payments
- an estimate expiry date.
Ensure that you title your document 'Estimate', and consider including a disclaimer stating that the price is subject to change.
For more involved jobs, good estimates often include prices and terms based on several different scenarios - including a worst-case scenario.
I want to...
- BizLink - Townsville 17/10/2018
- WEALTH series: #Self-investment and renewal - Retreat 18/10/2018