If you run a small business, you'll send quotes. They're one of the most basic parts of working with customers — and one of the easiest things to get wrong if you've never thought much about them.

This guide explains what a quote is, what it should include and how to make sure it works in your favour.

What is a quote?

A quote is a formal offer to do work or supply goods at a set price. When a customer accepts your quote, it becomes a binding agreement between you and them. That means you're committed to doing the work for the price you quoted, and they're committed to paying it.

That's the key difference between a quote and an estimate. An estimate is an approximate figure, not a fixed price. A quote locks in the cost.

Quote vs estimate: what's the difference?

People often use these words interchangeably, but they mean different things legally.

• A quote is a fixed price. Once accepted, you can't increase it unless the scope of the work changes.
• An estimate is a best guess. The final price can be higher or lower depending on what the work actually involves.

If you give a customer an estimate and the job turns out to cost more, you need to let them know before you proceed. You can't simply invoice them for a higher amount without their agreement.

Which you use depends on the situation. If you know exactly what the job involves, give a quote. If there are unknowns, an estimate with clear caveats is more honest and protects you both.

What to include in a quote

A good quote leaves no room for confusion. Here's what it should cover.

• Your business name, address and contact details
• The customer's name and address
• A quote number and the date it was issued
• A clear description of the work or goods
• The price, broken down if there are multiple elements
• Whether VAT is included or will be added on top
• How long the quote is valid for
• Your payment terms: when you expect to be paid and how
• Any conditions or exclusions (what's not included)

The more specific you are, the less room there is for a dispute later. Vague descriptions like 'building work' or 'design services' leave too much open to interpretation.

How long should a quote be valid for?

That's up to you, but it's important to state it clearly. Most businesses set a validity period of 30 days. This protects you if your costs go up between sending the quote and the customer accepting it.

If a customer comes back after your quote has expired, you don't have to honour the original price. Just be upfront about it and issue a new one.

When does a quote become a contract?

A quote becomes a contract when the customer accepts it. Acceptance can be written or verbal, but written is far safer. If a customer accepts by email, keep that email. If they sign and return a copy of the quote, even better.

Once accepted, neither party can change the terms without the other's agreement. If the scope of the work changes, issue a revised quote before you proceed. Don't just carry on and invoice for more at the end.

What if the job changes after you've quoted?

This happens often, particularly in trades and creative work. The customer adds to the brief, or you discover something unexpected once the work is underway.

The right thing to do is raise it as soon as you know. Let the customer know what's changed, what it will cost and get their agreement before you proceed. This is sometimes called a variation or a change order.

If you just absorb the extra work and say nothing, you've effectively agreed to do it for free. If you invoice for it at the end without prior agreement, you're likely to end up in a dispute.

Tips for writing a clear and professional quote

• Use plain language. Avoid jargon or technical terms the customer won't understand.
• Be specific. List exactly what's included and, where helpful, what isn't.
• Show your working. If you're charging for labour and materials separately, break it down. It builds trust.
• State your payment terms clearly. Don't assume the customer knows when you expect to be paid.
• Follow up. If you haven't heard back within a week or so, a polite follow-up is fine.

Quotes and your business finances

Quotes are more than admin. They're a record of what you agreed to do and for how much. If a payment dispute ever ends up in court, your quote and the customer's acceptance of it are key evidence.

They also help you manage cash flow. Knowing what work you have agreed and at what value means you can forecast income more reliably.

If you're taking on a large job that requires upfront costs, it's perfectly reasonable to ask for a deposit as part of your quote. Many businesses ask for 25% to 50% upfront, particularly for bespoke work or large orders.