Small jobs often begin informally.
A customer describes the work, the business replies with a rough figure, and both sides assume they understand what will happen. Trouble begins when those assumptions are different.
Was the number a fixed commitment? Could materials change? Were revisions included? Did the customer add work after the price was discussed?
Choosing deliberately between an estimate and a quotation makes the commercial conversation clearer.
WHAT IS AN ESTIMATE?
An estimate is an informed approximation of what the work is likely to cost.
It is useful when important details cannot yet be known precisely. Examples might include repair work where the underlying problem is hidden, a creative project whose scope needs further definition, or work involving material quantities that cannot be confirmed initially.
An estimate should not be careless. It should still be based on the best available information.
Include:
• the customer and project;
• the expected scope;
• the assumptions used;
• the estimated price or range;
• known exclusions;
• circumstances that could change the figure;
• how and when the customer will be informed of changes;
• an expiry or review date.
Avoid presenting an estimate so precisely that it looks indistinguishable from a fixed quotation.
WHAT IS A QUOTATION?
A quotation offers to complete defined work for a stated price, subject to the written terms.
It is most appropriate when the scope, quantities, delivery requirements and responsibilities are sufficiently clear.
A useful quotation normally includes:
• a unique quotation number;
• business and customer details;
• date and validity period;
• a precise description of the work or deliverables;
• quantities and prices;
• applicable tax;
• payment schedule and due dates;
• delivery or completion expectations;
• revision or change limits;
• exclusions;
• acceptance instructions.
Clear scope is the foundation. A fixed price attached to a vague description creates risk.
USE RANGES CAREFULLY
A range can be appropriate in an early estimate, but explain what moves the result from the lower end to the upper end.
For example:
“Estimated at £450–£600 depending on the condition found after inspection.”
That is more useful than a range with no explanation. It tells the customer what uncertainty exists and gives the business a reason to pause before exceeding the expected figure.
SEPARATE ADDITIONAL WORK
Scope changes are one of the most common causes of lost margin.
When a customer requests something outside the accepted quotation:
1. describe the additional work;
2. calculate its effect on price and timing;
3. obtain approval;
4. record it against the original job.
Do this before performing the extra work whenever practical. Memory is a poor commercial record, especially when several jobs are active.
PUT AN EXPIRY DATE ON PRICES
Supplier costs, availability and workload change. A quotation that remains open indefinitely exposes the business to conditions that no longer exist.
A validity period gives the customer a reasonable decision window while allowing the business to review the price later. Choose a period appropriate to the volatility of your costs and schedule.
TRACK ESTIMATED AND ACTUAL RESULTS
The document sent to the customer is only half of the system.
Internally, record:
• quoted or estimated amount;
• accepted date;
• expected costs and hours;
• actual costs and hours;
• additional work;
• invoiced amount;
• payment status;
• resulting margin.
This turns completed jobs into evidence for future pricing.
If jobs repeatedly exceed estimates, investigate the cause. The answer may be better discovery questions, a larger contingency, narrower scope or a different pricing model.
KEEP THE LANGUAGE CONSISTENT
Do not call the same document an “estimate” in one place and a “quote” in another. Avoid casual wording that contradicts the formal document.
State clearly:
• what the document is;
• whether the price is fixed or approximate;
• what is included;
• what could change;
• how acceptance works.
Clarity reduces uncomfortable conversations because expectations were established before the work began.
A REPEATABLE WORKFLOW
A practical sequence is:
1. Capture the enquiry.
2. Decide whether enough information exists for a quotation.
3. Calculate costs, time, overhead and profit.
4. Issue a numbered estimate or quotation.
5. Record acceptance.
6. Track additional work separately.
7. Convert accepted work into an invoice.
8. Compare estimated and actual results.
The Quotation and Job Tracker
Quotation and Job Tracker brings this workflow into one local Excel workbook, covering customer records, quotations, job progress, invoices and payment tracking
If the underlying price still feels uncertain, begin with the Free Business Pricing Health Check
Free Business Pricing Health Check and then calculate the figures in the Pricing and Profit Workbook