Quote vs estimate:
fixed or flexible?

Before most jobs, the customer asks "how much?" How you answer shapes everything after: what you can invoice, how a price rise is handled, and whether the customer feels misled at the end. A quote and an estimate are both answers to that question, but they promise different things.

The difference in one table

What the law says for consumer customers

When you work for households, the Consumer Rights Act 2015 matters. Section 50 treats what you say or write to the consumer about the service as a term of the contract, if they take it into account when deciding to go ahead or when making decisions about the service later. A written quote the customer relied on is exactly that kind of statement. If no price was agreed at all, section 51 says the consumer must pay a reasonable price for the service, and no more.

So a quote to a household is not a casual figure. Put the scope and the price in writing, say what is excluded, and say how long the price stands.

For business customers

With business customers, a quote the customer accepts, often confirmed by a purchase order, normally becomes the contract price. Larger customers may insist on a fixed quote for budgeting and will query an invoice that does not match it. If the work changes, agree the change and its price in writing before doing it, and show it as a separate line on the invoice with a reference to that agreement.

Writing a good quote

A quote that prevents disputes covers:

• a reference number and date
• your details and the customer's
• the scope: exactly what is included, with quantities
• exclusions: what is not included
• the price, with VAT shown if you are registered
• how long the price is valid
• payment terms, and any deposit or stage payments
• how changes will be priced

Price it with your costs and margin in view. The profit margin calculator shows the margin a price earns, and the markup calculator turns your costs into a price. Many tradespeople mark up materials; the markup guide explains how that differs from margin. If you are VAT registered, the VAT calculator shows the price with and without VAT so the customer sees both.

Writing a useful estimate

An estimate is honest about uncertainty. Say what it is based on, what you cannot see yet, and what could change the figure. A range, or a figure with a stated contingency, sets expectations better than a single number. Most important, promise to tell the customer before costs go beyond the estimate, and keep that promise: stop and agree before doing work that pushes the bill up.

Which to give: a decision guide

Handling change: the change note

Most arguments about the final bill are really arguments about change: work added, removed or discovered during the job. A short written change note, even a text message the customer replies to, settles them in advance. It should say what is changing, why, the extra cost or saving, and any effect on the timetable, and the customer should confirm before you do the work. On the invoice, each change becomes its own line with the date it was agreed. That habit alone prevents most invoice disputes.

Pricing with a margin in mind

Whether you quote or estimate, the figure must cover your costs and leave a profit. Work out your direct costs for the job, such as materials and any subcontracted labour, add your own time at a rate that covers your overheads, and then set the price to give the margin you need. Remember the difference between margin and markup: a 25% markup on cost is only a 20% margin on the price. Underpricing a fixed quote is the most common way small businesses lose money on a job, because the customer has no reason to pay more for your mistake.

Validity periods

A quote should say how long it stands, commonly 30 days. After that, material prices, your availability and the customer's needs may all have changed. If a customer accepts an expired quote, you can honour it or re-price, but say which before starting work. For an estimate, the validity period matters less than the assumptions: restate them if the job is delayed.

From quote or estimate to invoice

The invoice should read as the natural end of what was agreed. For a quoted job, invoice the quoted price, with any agreed extras as separate lines. For an estimated job, invoice the actual work and costs, and if the total differs from the estimate, explain why in the description, referring to the conversation where the customer agreed. The guide on how to write an invoice covers the layout, and invoice disputes covers what to do if a customer challenges the final figure.

Quotes, proformas and invoices

A quote offers a price. A proforma invoice asks for payment in advance, laid out like an invoice. An invoice demands payment for work done. Give each its own number series so your invoice sequence stays unbroken when quotes are declined; see invoice numbering.

A worked example

A plumber is asked to replace a bathroom suite. The job is well defined, so she quotes: supply and fit a named suite, remove and dispose of the old one, £2,850, valid for 30 days, 25% deposit, balance on completion. The customer accepts in writing. Halfway through, the customer asks for an extra radiator. She prices it at £320, the customer agrees by text, and she fits it. Her invoice shows the quoted £2,850, the agreed £320 extra with the date it was agreed, less the deposit paid. There is nothing for the customer to question.

Deposits and payment terms in the quote

The quote is the right place to settle how you will be paid, because the customer accepts it before any work starts. State any deposit and when it is due, any stage payments, the final payment terms and how the customer can pay. For larger jobs, a deposit on acceptance protects you against cancellation and covers early material costs; for long projects, stage payments tied to visible progress keep what you are owed at any one time small. If you quote business customers, you can also mention that late payments attract statutory interest and compensation. The guide on invoice payment terms sets out the options and their limits.

Keeping quotes with your records

Keep every accepted quote with the invoice it led to. Together they show what was agreed and what was billed, which is the first thing anyone asks for in a dispute, and they help you price the next similar job accurately. Declined quotes are worth keeping too, with a note of why: they show which prices win work and which lose it.

Common questions

Can I change a quote after the customer accepts it? Only by agreement. If you underpriced, that is usually your cost to bear, unless the job itself changes.

Should I charge for quotes? Most trades quote free for ordinary jobs. For complex work needing surveys or design, some charge and credit the fee against the job.

Does a quote need VAT on it? If you are VAT registered and the work is taxable, show the VAT so the customer knows the full price. If not registered, show none.

Is "quotation" the same as "quote"? Yes. See quotation for the definition.

A quote says what the job costs; an estimate says what it will probably cost. Choose the one you can honestly stand behind, write it down, and let the invoice follow from it without surprises.