Estimate vs. Quotation: What's the Difference?

Many freelancers and small business owners use the terms "estimate" and "quote" interchangeably, but legally, they mean very different things. Understanding this difference is crucial for protecting your business from disputes.

What is an Estimate?

An estimate is an educated guess at what a job will cost. It is not legally binding. It provides the client with a rough idea of the budget required, but the final invoice may be higher or lower depending on the actual time and materials used.

Use an estimate when the scope of work is unclear or subject to change.

What is a Quotation (Quote)?

A quotation is a fixed price offer. Once a client accepts a quote, it becomes a legally binding contract. You cannot charge more than the quoted amount unless the client requests additional work outside the original scope (which requires a new quote or a change order).

Use a quote when you know exactly what the job entails and how much it will cost you to deliver.

Best Practices

Always clearly label your document as either an "Estimate" or a "Quotation."
If providing an estimate, include a disclaimer stating that the final price may vary.
If providing a quote, clearly define the scope of work so you aren't forced to do extra work for free.