Businesses usually spend significant time preparing a quote or an estimate for prospective clients. This process requires tremendous effort because every project’s requirements differ, increasing the time and workload to determine the project cost. This is particularly undeniable for those in the construction industry.
However, many people often use an estimate and a quote interchangeably, assuming they’re the same. Of course, they have a similar purpose, but in reality, they are quite distinct. Therefore, you need to make sure you use the right one when dealing with new clients.
Think from the customer’s perspective, how would they feel if they were expecting an estimate but received a quote instead? None of your clients wants to be caught off guard by an unexpectedly hefty project cost.
That’s the reason why you should know the difference between estimate and quote. In this blog, we will cover exactly what you are looking for – what is an estimate, what a quote vs estimate is, and when to use them.
Key Takeaways:
- Estimates and quotes aren’t the same. An estimate gives a rough idea of the cost, while a quote provides a fixed price that cannot be changed once agreed upon.
- Use an estimate early on when you’re still figuring things out with a client. It’s flexible and not legally binding.
- Use a quote when everything’s finalized, like after a site visit or detailed discussion. Once accepted, it becomes a legal agreement.
- Quotes are more detailed than estimates, with exact labor, material costs, and deadlines. Estimates rely more on assumptions.
- Both documents should include essentials like customer details, pricing, timeline, and terms, whether you’re estimating or quoting.
What Is a Quote?
A quote is a written document outlining the project cost, which cannot be changed once the customer has agreed. Therefore, quotes are only generated if you are confident there will be no amendments later. Quotes are prepared following detailed inspections and determining the exact cost of work required.
Neither the business nor the customer can change the price mentioned in the quote. When you issue a quote to the customer, they will know the exact price required to get things done. So, a quote is a fixed price that, once offered, no one has the right to change.
What Is an Estimate?
An estimate is a formal document offering an estimate of the project’s cost and estimated completion time. Estimates are generated without any detailed inspection or knowledge of the exact labor or material costs. The project cost is just a ballpark number entailed in the estimate, and it is likely to change when you determine the scope of the project and the materials required to complete the work.
The estimator uses guesswork to brief clients about the approximate cost and timeline of the project. Estimates are based on initial thoughts influenced by past work experience and are likely to change once more information is gathered.
Difference Between Estimate and Quote: Quote Vs Estimate
An estimate and a quote hold significant differences that you must know before meeting prospective clients. Here’s how an estimate differs from a quote.
| Differences | Estimate | Quote |
|---|---|---|
| Price |
A price mentioned in an estimate is a round figure and not the exact one because it is made considering assumptions about materials and labor costs. This estimated price is likely to change. | Unlike estimates, a quote comprises a fixed price that can’t be changed following the customer’s approval. Prices are written only after checking the project scope and requirements. |
| Project Duration | An estimate does not exactly say when the project will be completed because it is just a rough idea presented on paper, meaning it will change once you start digging more about the project work. | A quote highlights the exact time of the project. It helps both parties to understand when the project work will be finished. It is generated after gathering detailed information. |
| Calculations | The random calculations are made when preparing an estimate. So, calculations are likely to change after you get the exact material cost. Calculations on an estimate are just ballpark figures. | A quote has an exact calculation of labor and material costs that collectively contribute to the project cost. Calculations are based on meticulously counting the materials & labor costs. |
| Legality | Estimates are not legally binding because it is the result of guesswork and not the actual project cost. It is shared to help clients understand what would be the approx. project cost. | Quotes are legally binding documents because they commit both parties to the agreed price and mentioned terms, offering more clarity in the transaction. |
| Time of Sharing | Estimates are usually shared in the first meeting with the client to give them a rough idea about the overall project cost. They are made prior to the client’s approval. So, the client is yet to commit to the project work. | Quotes are shared only after all project details have been finalized, probably in the second or third meeting with the client. You should have gathered all the details while making quotes and therefore, it will be shared when an estimate is accepted by the client. |
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When Should You Use an Estimate?
You can share an estimate only when your clients demand the estimated project cost and not the exact numbers. Once they identify the approximate project cost and if it aligns with their budget, they would be interested in hiring you for the project work. Since they have not made any commitments, you can offer them a price based on a guesstimate without digging into the details.
For example, if the prospective client wants to hire you for flooring installation and repair work, they might ask you how much the cost is. On this occasion, you can share an estimate outlining the approximate project cost and deadline. There is no need to pay for a site visit or consult the flooring contractors. You can mention the estimated amount in the estimate and share it with clients straightaway.
If the prospect agrees with the project cost, you can start digging deeper to prepare a quote. However, if they feel the price doesn’t align with their budget, you haven’t invested too much time or effort yet.
When Should You Use a Quote?
A quote should be issued only after collecting all the necessary information and ensuring no further changes are expected. This process involves visiting the job site, consulting with site engineers, and finalizing your profit margin before preparing the quote. Nowadays, it’s common practice to share an estimate before a quote to satisfy customers and reduce back-and-forth communication.
Let us continue with the same example here. If the client is happy with the estimated price you shared, you can then proceed with a quote. Since you have received approval, remember to gather more details because a quote will be more detailed than an estimate.
Once you have identified materials or project costs and expect no price changes, you can hand over the final quotation to the customer. Remember that neither you nor the customer can revise the price or timeline once you have issued a quote.
Essential Elements to Include in Your Estimates and Quotes
Estimates and quotes, both usually have the same information to be included in the document. Let us walk you through the main details you must add while making a quote or an estimate.
1. Customer’s details
Include necessary customer details, such as their name, residential address, and contact information, to specify to whom the document is issued.
2. Date & time
Mention the date and time you issued a quote or estimate. This will help both parties agree on the document’s validity.
3. Labor & material costs
List out the material costs based on a guesstimate if you are preparing an estimate. Otherwise, do a detailed analysis before calculating the labor and material costs when writing a quote.
4. Final Price
Add the final price of the project so the client can understand how much they will need to pay after the work is completed.
5. Project deadline
Include the estimated time of project completion when you make an estimate or mention exactly when you will finish the project in case you are creating a quote.
6. Terms & Conditions
Highlight the terms & conditions regarding your job work, warranties of material used, or accepted payment methods, regardless of whether it is a quote or estimate.
💡Pro Tip:
Always add a “valid until” date in your quotes.
This sets clear expectations and protects your business from rising costs or scope changes. A typical validity period is 15–30 days. It encourages clients to act faster and avoids stale quotes, which can be confusing later.
How To Convert an Estimate into a Quote?
Converting an estimate into a quote is a natural next step when a client shows interest in moving forward after receiving a rough cost idea. While estimates give your client a general understanding of the project cost and timeline, a quote finalizes the deal with a fixed price and terms. Here’s how to smoothly transition from an estimate to a formal quote:
1. Get Client Feedback on the Estimate
Before preparing a quote, check in with the client to see if they’re comfortable with the estimated cost and timeframe. If they’re not, this gives you a chance to adjust your approach before going further.
Tip:
Ask clear questions like: “Does this range work for your budget?” or “Would you like a more detailed breakdown of the costs?”
2. Conduct a Detailed Assessment
Unlike estimates, quotes are based on precise information. To convert an estimate into a quote, you’ll need to:
- Visit the project site (if applicable)
- Get exact measurements
- Finalize material and labor costs
- Consider additional expenses like taxes, permits, or special equipment
3. Confirm Scope of Work
Make sure both you and the client are 100% aligned on:
- What’s included (and what’s not)
- Deadlines and project phases
- Payment terms
This prevents misunderstandings later and ensures the quote reflects exactly what will be delivered.
4. Lock in the Final Price
Once everything is accounted for, finalize your pricing. Unlike the ballpark figure in an estimate, this number should not change. Be sure to include your profit margin and double-check for hidden costs.
5. Prepare and Send the Formal Quote
Use professional invoicing software like Moon Invoice to create a clean, detailed quote. Include:
- Customer details
- Date of issue and quote validity
- Itemized costs
- Project timeline
- Terms & conditions
- Payment schedule
Make sure the client understands that once they approve this quote, the price and terms are legally binding.
6. Get Client Approval
Once you send the quote, wait for formal approval—either via e-signature, written confirmation, or digital acceptance through your invoicing tool. Only start the work after this confirmation.
Why This Process Matters?
Converting an estimate into a quote gives both you and your client peace of mind. It eliminates ambiguity and locks in expectations, so there’s less risk of disputes later on. Plus, it reflects professionalism, builds trust, and improves your chances of winning repeat business.
Are Estimates and Quotations Legally Binding?
An estimate is a negotiable project proposal, so it is not legally binding. The price might change once you initiate the in-depth analysis and meet on-site engineers. The price written on an estimate does not have to be an exact match, so it is not binding by law. A quote is a legally binding document.
If the client agrees to the quoted price, you are legally obligated to provide the services at that cost. So, when your bid is successful, at that point you will be legally obliged to provide services as per the terms & conditions mentioned in a quote.
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Conclusion
Quote and estimate are two different terms, even if they are used for the same purpose. Understanding their key differences, you should know which one to share when discussing project work with clients. An estimate or quote may receive faster approvals if made online using invoicing software like Moon Invoice.
The reason is that when you can make professional estimates or quotes with readymade templates rather than creating them on paper, clients will easily understand them. Also, there is no chance of misplacement because every document will be saved in cloud storage.
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FAQs
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
