Quotation vs Estimate: Which One Should You Send to Your Client?

Clients often use the terms 'estimate' and 'quote' interchangeably, but in business law and project accounting, they have vastly different ramifications. ### The Estimate: An Educated Guess An **estimate** is an informed projection of what a project might cost based on preliminary or incomplete specifications. - **Price flexibility**: The final cost may vary higher or lower (typically within +/- 15-20%) depending on unforeseen site conditions or scope changes. - **Best suited for**: Early discovery meetings, home renovations with hidden variables, exploratory research, and conceptual software projects. ### The Quotation: A Fixed-Price Commitment A **quotation** is a definitive, legally binding commitment to deliver a specified scope for an exact monetary sum. - **Price certainty**: Once accepted by the customer, the seller cannot charge more unless the customer signs an official Change Order. - **Best suited for**: Well-defined service scopes, standard manufacturing orders, IT packages, and turnkey construction contracts.