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What is an estimate?

An estimate is a rough guess of what a project will cost given to a prospective client.

Estimates don’t normally have exact details of a project. However, a business estimate will generally include a breakdown of the products and/or services, their costs and an estimated timeline with finish dates.

Clients use estimates to compare companies and assess whether your services/products are within their budget.

Essentially, they help you win jobs.

That’s why it’s important for business owners to understand what an estimate is. If you need to make an estimate for your business, download one of our free estimate templates or try using Bookipi for free to make professional estimates online. Learn how to make an estimate with our detailed business tutorial.  

What is a job estimate?

A job estimate is a document that outlines the products and/or services with their respective costs being provided as a part of a larger project.

Estimates are used by clients to get an overview of the costs and timeframe of a service being provided by a company.  With estimates, clients can budget better or compare companies that offer similar services.  

Estimates generally include the following:

  • What is and isn’t included in a project
  • Services being provided
  • Cost of services
  • Cost of materials (if not included in the services)
  • An approximate timeline of services
  • Terms and conditions

Prior to drafting an estimate, there will be an initial conversation between the client and seller about the project requirements, expectations, and when these will need to be provided by.

Estimates are not fixed and can be adjusted as a project changes. Additional services may be added or removed as seen fit. Costs can also change if there are any issues or the price of materials has changed since the first estimate.

There are benefits of estimates for both the seller and the client. With an estimate, clients are able to factor the project into their budget. For the seller, they are able to plan the resources they dedicate to the project and schedule other projects accordingly.

Estimates are also useful to confirm a mutual understanding between the client and seller about what each party wants and are required to provide.

It should be noted, that an estimate is not a legally binding document.  Estimates aren’t invoices or receipts, and don’t confirm payment.

What’s the difference between an estimate and invoice

The big difference between estimates and invoices lies in timing. An invoice is a bill for services or products. An estimate is sent only before a seller is hired. In contrast, an invoice is usually sent during or after a project.  

An estimate is more of a general outline of the costs and services and is provided before a project. See below for an example of an estimate generated by Bookipi invoice software.

You might also notice the language is different on an estimate and invoice.  An invoice can also be a legally binding document if it is part of a signed contract.

What’s the difference between an estimate and quote

Unlike a quote, an estimate is not a fixed price. An estimate gives an approximate cost for the goods and services provided.

Generally, the fixed price in a quote will be available for a limited time. Depending on your services and industry, this can vary. However, this time frame is usually around 30 to 90 days. A quote’s fixed price and conditions can’t be changed once accepted by the client.  An exception is to change the amount of work required if extra work is required.

Quotes are also legally binding if it is part of a signed contract whereas an estimate is not. As a result, you should never label an estimate as a quote or vice versa.

The main benefit of sending an estimate over a quote is that it’s flexible. You don’t have to guarantee what is written on an estimate. Alternatively, with a quote, you are required to meet what has been outlined. However, you are able to set the price of a product that normally fluctuates and the client must pay the price you set. Generate a professional quote using our combined quote, estimate and invoice generator. 

Online tools to help you with small business estimates, invoices & more

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