If you work as a builder or a handyman, a potential client will expect you to give them an idea of the cost of your services before agreeing to your work. This means you will need to give a quote or an estimate.
Quotes and estimates are not just two different names for the same thing. They have distinct uses, as well as different benefits and disadvantages. You therefore need to know exactly which one you’re giving to your client. If you don’t, problems can arise that cost you time, customer satisfaction, and even money.
This article discusses the difference between estimates and quotes and explains how you should use each to entice potential clients.
What is an estimate and when should you provide one?
Estimates are essentially educated guesses you make. You may know some of the details about the job, but you haven’t yet been able to price everything up. An estimate may be given when a customer calls to inquire into your business’ services, or when you first visit a building site.
An estimate is only your first opinion. It can change dramatically when you investigate further and get more information. Especially for jobs that require manual labour or construction, there can be numerous hidden costs that are not noticeable upon the first inspection. Unexpected complications may arise, or the scope of what you’ve been asked to do may increase.
Suppose for example, someone asks you for an estimate for landscaping their garden. If they only call you on the phone, you may get information about the size of the plot and the type of work that needs to be done, but no specifics. You can therefore only give an educated guess.
The benefits of using estimates
The key benefits of providing potential clients with estimates are that they are fast, and you cannot be held to your initial assessment. It allows your customer to see what they initially think about your prices, and they’re less likely to trouble you for a more comprehensive quote if they’re not genuinely interested. This will save you time and allow you to focus your energy on serious customers.
What is a quote and when should you provide one?
If you give a quote, you are giving an exact price for the job. Although a quote is not a legal document like an invoice, a quotation is still fixed, and therefore should not be changed once it has been accepted by the client. The only acceptation to this would be if the job itself is changed, for example, if a customer wants additional work or different materials.
A quote should therefore be given only when you are certain of the costs involved in the job. When you issue a quotation, you include most of the information you would expect to see on an invoice. You need to provide a breakdown of the different materials and services the job requires and include prices. Also, you should add your business and your customer contact details, as well as any discounts you can apply.
You should aim to be as thorough as possible when giving your quote, as this will increase the likelihood it’s accepted by your client. After all, people are more likely to agree to something when they know exactly what they’re agreeing to.
Importantly, you must also indicate how long the quote is valid for. The standard time a quote is valid for is 30 days. Some tradesmen, such as builders, may allow up to 90 days for a customer to accept a quote if the job demands a lot of consideration from the client. However, be careful not to extend the period for too long, you don’t want your customer to forget altogether.
The benefits of using quotes
Providing a physical quote will always help your customer to make their decision and give you legitimacy. Whereas an estimate may be considered to be given ‘off the top of your head’, a physical quote will show your customer you have carefully considered the job.
Depending on the services you provide, you may find you only ever need to use quotes and initial estimates are unnecessary. If someone’s asking for the price for certain products, you can just add them up and tell them. Equally, certain services such as wallpapering or painting may have fixed costs, depending on the square footage. However, if you send them a quotation with the exact prices, it looks more formal, gives them official documentation they can refer to, and speeds the sales process along.
From a quote to an invoice
Most invoicing software will allow you to convert a quote directly into an invoice after it has been accepted. This will guarantee that all information has been correctly transferred from the quote to the invoice and nothing is amiss. The total you then invoice your customer will be exactly what they previously agreed to and come as no surprise.
Summary - using quotes and estimates
If an estimate is to be provided, it comes before an official quote is given. It should be considered as the first step to securing a client. If the customer is serious, a more comprehensive quotation can then be provided. Within the construction and manual labour sectors, using invoicing software to create your quotes will allow you to give a breakdown of the different tasks, materials and costs, and convert this directly into an invoice if the customer accepts your quotation.