Last updated on September 7th, 2023
A quote and an estimate are both used in various business contexts to provide cost information to clients or customers, but they have different implications and levels of commitment. Here’s an explanation of the key differences:
Quote: A quote, also known as a quotation or a bid, is a formal offer made by a seller or service provider to a potential customer. It specifies the price at which the seller is willing to provide a product or service. A quote is usually considered more binding and accurate than an estimate because it represents a firm commitment to deliver the product or service at the stated price. Once accepted by the customer, a quote typically forms the basis of a contractual agreement.
Estimate: An estimate is an approximation of the cost that a seller or service provider provides to a customer. It serves as an educated guess or a preliminary assessment of the expected cost. Unlike a quote, an estimate is not a fixed price and is subject to change based on various factors such as unforeseen circumstances, additional requirements, or adjustments in labour or material costs. Estimates are usually provided when the exact scope of work is not yet fully determined, or when the final cost cannot be determined with certainty.
In summary, a quote is a formal offer with a fixed price that is typically binding once accepted, whereas an estimate is a rough approximation of the cost that may be subject to change when requesting pricing information.