Often terms like estimates and quotes are used interchangeably. But, they do not convey the same meaning.
As a small business owner, you need to understand what your client wants and then only prepare a proposal. Luckily, with best project estimation software for your business by your side, you will no longer be confused. Not only will you get more clarity, but you will also be able to see your client better.
Here are a few things you need to understand before sending a quote or an estimate with your online invoice payment processing system.
- Does your client want a cost estimate or a breakdown?
- Do they want a full or partial breakdown of costs?
- Will an itemized breakdown of services work for them?
- Is a comprehensive proposal needed?
If you fail to deliver on these requirements, you will end up giving wrong information and end up with multiple changes. In addition, while the meaning is open to interpretation, it can differ from industry to industry. This post will put all confusions to rest.
So, before you start a new project, you will need to fix a price. For small companies, accounting software for business will help you submit estimate and price quote. But, what does it exactly mean, and what separates it from a quotation?
Understanding A Quote
One of the benefits of providing a quote is that you will avoid loading yourself with additional unpaid tasks. You will have the list of tasks and a clearly defined project scope. This, in turn, will let you arrive at the correct contract value and get a fair price for your work.
A quote lets you arrive at a task’s value. This price provides a cost breakdown, milestones, timelines, and scope of the project.
Whenever you make a quote with project estimation software, you must make it a point to cover all costs. You might need to visit the client site and conduct all checks to make sure your quote is as accurate as possible.
Since a quote has a fixed price, you cannot change it without discussing it with the client first. Thus, they serve as formal contracts and provide you with a solid legal framework. Your accounting software for business can help you build both with ease.
What is An Estimate?
An estimate provides an approx value. It is an educated guess about a project’s price rather than a hard fixed value. Drawing up estimates is not only less time-consuming, but you can also refer to your past works to make a new one.
The main difference is that it does not act as a legal binding. It can easily be adjusted due to changes in scope. Usually, project managers start a job by providing clients with an estimate and then invoice at a later stage. You can consider it as the starting price and not as a final quotation.
The Best Time To Choose A Quote or An Estimate
For small jobs, there is no need to make a complicated contract. Instead, you can discuss with your team and prepare a quick estimate. Usually, these might not require extensive materials or a huge effort on your part. However, for larger projects, you will need to prepare a quote. This is because it will clearly break down all costs and help your clients understand your work better.
One thing that you need to remember while choosing between a quote and estimate is that quotations are legal agreements. If you are unsure of the costs involved, you can prepare an estimate till you are not sure about the small and large costs involved.
Quotation vs. Invoice
Another aspect related to pricing is an invoice. Both a quote and invoice can help you get paid on time. Ideally, the price on your quotes and invoice should be the same. However, you can include any additional fees in the invoice if your client has agreed to it.
The right project estimation software and accounting software for business can help you, onboard new clients faster and provide the best options. But, you must remember that a quote will help you formalize this estimate and even get you paid on time. Still, have you not invested in a good solution? It is time you did that and took your business to the next level!