• The Three Documents Side by Side
  • What a Written Estimate Should Include

An estimate is an approximate price that can change as you learn more about the job. A quote is a fixed price for a defined scope of work, valid until a date you state. A proposal is a longer document that explains how you'll solve the client's problem, with the scope, timeline and price, and it can offer the client more than one option. Use an estimate while the scope is still uncertain, a quote once you can commit to a price, and a proposal when the client is choosing how the work should be done, not just what it costs.

The Three Documents Side by Side

Estimate

  • Price: approximate, and can be a range.
  • When to send it: early, before you know everything about the job.
  • What to include: the work you expect to do, your assumptions, and what would change the price.

Quote

  • Price: fixed for the scope described.
  • When to send it: when you can define the exact work, materials and labor.
  • What to include: itemized line items, the total, an expiry date, and how the client accepts.

Proposal

  • Price: fixed or itemized, tied to a described approach and set of deliverables.
  • When to send it: when the client is comparing approaches or providers, or the work is large enough to need a plan.
  • What to include: the client's goal, your approach, scope, deliverables, timeline, pricing (with options if you offer them) and terms.

What a Written Estimate Should Include

For home improvement work, the US Federal Trade Commission's consumer guide How To Avoid a Home Improvement Scam (July 2022) tells homeowners: "A written estimate should include a description of the work to be done, materials, completion date, and the price." It also tells them to "Get multiple estimates", so expect your estimate to be compared with others.

Those four items are a sound minimum for any estimate or quote, whatever your trade. For a step-by-step method, see how to create a project estimate, and for what makes an estimate persuasive, see how to write a winning estimate.

Is a Quote or Estimate a Contract?

This is general information, not legal advice. Whether a signed estimate, quote or proposal is a contract between you and the client depends on its wording and on the law where you work. The FTC's guide notes that "Contract requirements vary by state." Label each document clearly as an estimate or a quote, say how long the price is valid, and ask a lawyer before you rely on any document as a contract. If a client wants to back out after signing, see how to cancel a signed quote.

Sample: One Job Priced Three Ways

These are sample figures for a fictional job: repainting the walls of a three-room office. The painter charges $55.00 an hour, and paint and supplies cost $600.00.

1. The estimate (before seeing every wall)

  • Labor: 40 to 50 hours × $55.00 = $2,200.00 to $2,750.00
  • Paint and supplies: $600.00
  • Estimated total: $2,800.00 to $3,350.00
  • Assumption stated on the estimate: no plaster repair needed.

2. The quote (after a site visit confirms 45 hours)

  • Labor: 45 hours × $55.00 = $2,475.00
  • Paint and supplies: $600.00
  • Quoted total: $2,475.00 + $600.00 = $3,075.00, valid for 30 days.

3. The proposal (the client wants to compare options)

  • Option A, walls only: the quoted scope, $3,075.00.
  • Option B, walls and trim: add 8 hours × $55.00 = $440.00 of labor and $90.00 of trim paint, so $3,075.00 + $440.00 + $90.00 = $3,605.00.
  • The proposal also sets out the schedule (evenings, so the office stays open), the deliverables and the payment terms.

The quote falls inside the estimate's range, and the proposal builds on the quote rather than replacing it.

Estimates and Quotes in Billed

Billed's estimating software page says you can "Create and manage quotations and estimates", and its FAQ says "Your clients can easily approve or reject the estimates you send via link." The estimate generator page adds: "What matters is what you tell the client: whether the price could change once the work starts, or is fixed for the work described. Say which in the estimate's notes."

When the client accepts, the estimating software page says you can convert "approved estimates into invoices with just a few clicks". It also lists "Estimate Attachments" ("Attach important files and images with your estimates"). Billed's estimating software and estimate generator pages describe estimates and quotes.

To start from a layout, browse the estimate templates.

Related Guides

FAQ

Is an estimate a contract?

It depends on the document's wording and the law where you work, and the FTC notes that contract requirements vary by state. Label the document clearly as an estimate or a quote, state how long the price is valid, and ask a lawyer before relying on it as a contract. This is general information, not legal advice.

When should I send a quote instead of an estimate?

Send a quote when you can define the exact scope, materials and labor and are ready to commit to a price for a stated period. Send an estimate when parts of the job are still unknown, and list the assumptions that could change the price.

What does a proposal include that a quote doesn't?

A proposal explains the client's goal and your approach, and sets out the scope, deliverables, timeline, pricing and terms. It can offer options, such as a basic and an extended scope. A quote gives the price for one defined scope.

Can I convert an accepted estimate to an invoice in Billed?

Yes. Billed's estimating software page says you can convert "approved estimates into invoices with just a few clicks", and its estimate generator page adds that once the client approves an estimate, you can "convert it into an invoice with a single click, so you don't type the work and prices again."

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