When a customer asks for "a quote," they may mean a ballpark number. When they ask for "an estimate," they may expect a price they can hold you to. Being precise about which one you're sending protects your margin and their expectations.
The short version
| How firm is the price? | When to use it | |
|---|---|---|
| Estimate | Approximate; may change | Early conversations, or when the scope isn't defined yet |
| Quote | Firm for a defined scope and period | When you know what you'll deliver and can price it |
| Bid | Firm, against the customer's specs | Responding to a request for bids or tenders |
| Proposal | Usually includes a quote | When you need to explain approach, options or value, not just price |
Estimate
An estimate is your best informed guess at the cost. It's useful when the customer needs a number to budget with but the details aren't settled. Make the uncertainty explicit: give a range if you can, list what could move the price, and say the estimate isn't a final price.
Quote
A quote is a specific price for specific work. It names what's included, what isn't, the assumptions behind the price, and how long it's valid. Because customers may rely on a quote, it should be backed by a clear scope of work. Here's how to write a quote step by step.
Bid
A bid responds to a customer's defined requirements, often in competition with other suppliers. The customer controls the format and specifications, so read their documents carefully. They may have required forms, terms, or deadlines that override your usual paperwork.
Proposal
A proposal makes the case for hiring you: the problem, your approach, timeline, team, options, and price. It typically contains a quote. Use one for larger or competitive jobs where the customer is choosing between approaches, not just prices.
Moving from estimate to quote
- Send an estimate with a range and the open questions.
- Answer the open questions with the customer, or through a paid assessment for complex work.
- Write a firm quote and matching scope of work.
- Use change orders for anything that changes after acceptance.
Whatever you call it, label it clearly
Put the word Estimate or Quote at the top. Include a document number, date, validity window and assumptions. Consistent labeling and structure on every job is one of the simplest ways a small business can look as organized as a much larger one.
Frequently asked questions
Is a quote legally binding?
It depends on the wording, how it's accepted, and your jurisdiction. A quote that's accepted may form part of an agreement. Treat your quote as something you'll be held to, and get qualified advice if the stakes are high.
Can I change a quote after sending it?
Before it's accepted, you can withdraw it and send a revised quote. After acceptance, changes should go through a change order agreed by both sides.
Should I charge for estimates or quotes?
Many small businesses provide simple quotes free and charge for detailed assessments, design work or site surveys that a quote depends on. Whatever you choose, state it upfront.
This guide is general business information, not legal, tax or financial advice. Have a qualified professional review contract terms for your business and location.