What is a Quotation?
When you’re running a business, providing a quotation (also called a quote) is the ideal way to let your customer know how much they have to pay for your services before they commit. It also gives you the opportunity to check your figures and make sure you’re selling at the right price.
When to send a quotation
Businesses use quotes all the time as a way of setting out their charges. Unlike a shop where prices are on display, you figure out how much a job is going to cost and how much to charge the client. For example, if a customer is planning a house extension, they’ll likely ask several builders for a quote to see which one offers best value for money.
It’s a great idea to send a quote as soon as you can – people tend to shop around, and if you’re too slow or your quote isn’t competitive enough, they’ll pick the person who’s faster and cheaper.
Give yourself time to make sure the quote is accurate and you can commit to the price – check your costs and calculate the right profit margin before you hit send.
Quotation vs business proposal
The term business quotation is often used interchangeably with business proposal, but the two have different definitions. Whereas a quotation simply gives details of the cost of goods or services, a proposal will provide a detailed outline of the work. It may or may not contain a quotation – some do, some don’t, and others outline costs which are later formalised in a quote.
How to write a business quotation
While there’s no legal format for a quote, there are plenty of templates online to help you. Online payment software helps you nail the online quote format and quickly convert it to an invoice once the quote has been accepted.
Even though there are no legal requirements, remember you’re still trying to woo the client – make sure that your branding is on point and that whatever format you choose looks professional.
What to include in a quotation
There are no hard and fast rules, but include these elements:
Business details – Include your logo, address, phone number and email.
Customer details – Name and address.
Itemised goods/services – A quote is more effective and easier for the customer to understand if you break it down, as a price per unit or an itemised list of services, so they see exactly what they’re getting.
Issue and expiration dates – Date your quote and also provide an expiry date. This lets the client know there’s a limited amount of time to accept or decline.
Terms and conditions – Include your payment terms and any conditions about acceptance, variations and cancellation.
##Frequently asked questions
Can a quotation price change?
Your quote is a fixed price – once the customer accepts, you can’t change it and must carry out the work at that price, even if you do more. If you think the price may change, give an estimate which isn’t legally binding, or include terms detailing in what circumstances prices may change.
Are a quote and an estimate the same thing?
No, a quotation, once accepted, means you’re committed to carrying out the work at that price, whereas an estimate is a best guess at how much the job will cost. You can only change a quote if the scope of the work changes; for example, the customer wants something additional that wasn’t defined in the original quote
How long is a quote valid for?
It’s up to you how long you give a client, but most quotes are valid for 30 days. If your client hasn’t made up their mind within that time, they need a new quote unless you decide to honour it.
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