Home service business owners spend a lot of time providing estimates and quotes to potential clients. After all, most clients want to know what a job will cost before they commit to a service provider.
While some people use the terms interchangeably, quotes and estimates are different. What you end up sending to a client depends on a variety of factors as well.
To make sure that you’re sending out the right numbers at the right times, we’ll break down the key differences between quotes and estimates in this resource.
What is an estimate?
An estimate is the approximate cost of a job. Estimates don’t include exact prices for things like labor or materials. They’re not fixed amounts, meaning they can change as more details are provided about the project: such as:
- the size of the area
- property condition
- material costs
- or other relevant factors
Estimates are usually not as detailed as quotes and make up a rough approximation of the total cost of a potential job.
They are great for industries where costs can be affected by outside factors, like:
- the square footage of the service area
- job site preparation
- the condition of the property
An estimate in action:
Let’s say you have a client reach out to ask how much it would cost to install new flooring. They aren’t sure of the square footage of the space, but there is existing flooring that will need to be removed.
To provide a quick response and price range, you can give them an estimate for the job.
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However, when it comes to estimates, it’s important that you tell the client that the number you provide is not an actual quote, and it might change.
Always make sure that you tell your client that you’re only providing them with an estimate, and a site visit or photos are required to give them a proper quote. From there, put them in your CRM and schedule a follow-up appointment to stop by to go over what they’re looking for.
What is a quote?
A quote is a breakdown of all the costs associated with a job, including materials and labor. Quotes are fixed prices, meaning they total the exact amount that a client will need to pay for a job.
To create an accurate quote, you should have as many project details as possible. It’s best to visit the job site and do a walkthrough with the client to get a solid understanding of what needs to be done.
A quote in action:
For example, a client wants their house interior painted. Since you need to know the square footage and condition of the walls before pricing out the project, you ask the client for some information.
They tell you how many rooms are in the house, but you need photos to confirm the condition of the walls in their home.
You decide to do a site visit, and learn that their walls are in poor condition and need extra treatment, patching, and repairs. Plus, you learn that they also wanted their basement repainted as well.
You finish up with some measurements, price out the job, create a quote, and text it to them using your quoting software.
Once you provide a quote to a client, and they agree to the price, it should not be changed unless the scope of the job changes. Your quote and invoice should have roughly the same information on them.
Quotes should be sent to clients before a job begins regardless of the industry you’re in. It doesn’t matter whether you’re providing HVAC, snow removal, or plumbing services, you should always communicate a total cost to a customer prior to starting a job.
Always be clear about whether you’re providing an estimate or a quote to avoid confusion.
When should I send an estimate?
Estimates should be sent when either you or your client are informally talking about a project, or are unsure of the job specifications needed to give an exact price.
For example, you may decide to send an estimate if:
- A client is looking to get ballpark numbers for a project
- A client is researching costs to determine if a potential project is within their budget
- The job is unique and may require skills or services you don’t normally provide
- You want to provide a quick guesstimate before visiting the job site
When should I send a quote?
Quotes should be sent once you have done a walkthrough and can accurately price all the line items for a job.
This should include everything from labor and materials, to discounts and additional fees.
A quote should be sent:
- Within 24 hours of your initial walkthrough for a job
- Only when you can accurately calculate the total cost for a project
The benefits of using estimates
1. Estimates allow you to provide quick ballpark figures to potential clients.
Not all clients are ready to commit to a job right away.
For clients who aren’t sure about a project, or who just want to get an idea of what it might cost, estimates are a great way to start a conversation.
Plus, an estimate can give you an opportunity to give a client a ballpark figure without having to visit a job site, which means that you and the client both save time.
2. Estimates are easier to negotiate than quotes.
Some clients reach out without having any idea of what their budget might be. However, once they do receive an approximate cost, it can help them to determine whether it’s within their range.
This can mean either the estimate is higher than they thought, and they need help to figure out where they could lower costs by reducing project scope. Or, it could show them that the estimate is lower than anticipated, and you can offer upsell and additional services.
Clients generally feel more comfortable with negotiating estimates as it helps them identify where they have room to play with the project scope.
Since quotes are more firm, they’re harder to go back and forth on.
3. Estimates can be used before quotes.
Maybe you’re swamped and you just don’t have time to do a walkthrough right away. Or, maybe a client has reached out about a straightforward and simple job and you feel confident giving them an estimate before they commit to booking a visit.
Either way, estimates can be used before official quotes to weed out low-budget clients, communicate job tasks and costs, and feel out potential for upsells to other services.
The benefits of using quotes
1. Quotes can help organize your business.
Clear, professional, and organized quotes aren’t just good for your clients, they’re great for you, too.
Quotes can act as records that you can refer to throughout a job to ensure that you’re staying on budget and that the job stays within scope.
The best quotes are made up of a breakdown of individual line items, their associated costs, and even images of what services are included in each component.
By adding your logo, contact information, terms of service, and an expiry date, you can take your quotes to the next level of professionalism, and really impress your clients.
Jobber’s quote management software can help you to create consistent, clear, and accurate quotes that look professional, encourage customers to purchase upgraded services, and help you stand out from the competition.
But, if you’re not ready to invest in software just yet, try a free, entry level quoting tool like Job Toolkit. It will help you stay organized and look professional.
2. Quotes can provide an opportunity to upsell other services.
Quotes are a great way to highlight the other services that you offer.
For example, if you provide a quote for a fence but notice that the client may need a set of stairs built off of their deck, you have an opportunity to provide two pricing options—one for just the fence and one for the fence and stairs.
Including upsells in your quotes is a great way to highlight other services you offer. You can either add them to a quote yourself or use quote management software which can include them in a professional easy-to-read quote for you.
3. Quotes help you to accurately plan jobs, schedule, and cash flow.
Since quotes generally require that you visit a job site and review it, they give you a great opportunity to know what’s coming up the pipe, opportunity-wise.
If you write an accurate quote, you’ll know what to expect for the job, what it will cost you in materials and labor, when to schedule it, and how much money you’ll make from it.
However, if you’re unsure about how to price out your jobs and consider your margins in your quoting process, consider trying this profit margin calculator to help you along the way.
Using estimates and quotes together
While estimates and quotes are two separate tools you can use to price jobs, they can work together to help you organize and run your service business effectively.
While estimates can provide a quick response and general ballpark to a client, quotes can offer solid numbers and opportunities to upsell additional services. Make sure you approach each job individually, and decide for yourself which will make the best fit.
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