Estimates vs Quotations – What’s the difference?
It is useful to understand that an estimate and a quotation are two different contracts.
A quotation is a fixed price offer to provide products and services (labour and materials) to achieve an agreed outcome. When more work is required than anticipated to achieve the end result then this burden falls on the shoulders of the person providing the quote. Conversely, if much less time or materials are needed then there would be no reduction in the final cost charged.
An estimate is a best guess at what a job may entail by way of tasks (Labour) or materials. It is not a binding fixed cost. If the work takes longer or requires more materials than anticipated the price will go up. If it takes less time and uses fewer materials the price will go down.
Whether an estimate or a quotation we recommend, to tradespeople and customers, that it should be provided in writing and contain a clear description of the work to be undertaken and materials to be supplied.
The table below highlights some of the differences between the two.
|Job specification||Outcome Focused||Lists of tasks & materials|
|Variable final cost?||No. Provided the outcome remains the same||Yes. Up or Down|
|Cost Itemisation||Cost given as single amount||Itemised prices per task & materials|
|When used||• When providing standard services or materials|
• Specification of outcome is clearly delineated
|• Fault finding
• Unforeseeable aspects of a job
• Non standard undertakings