Estimate, Quote or Proposal: Which Should You Send?

Clients use "estimate", "quote" and "proposal" as if they meant the same thing. Consumer law often doesn't. In England, Citizens Advice puts it plainly: with a quote, the trader can't charge more unless you agreed to extra work; an estimate is their best guess. The word on your document sets expectations, and sometimes your obligations. Here's what each one promises, and when to send which.

An Estimate Is Your Best Guess

An estimate tells the client what the work will probably cost, based on what you know now. The UK's trading standards guidance calls it "generally a rough guess". A rough guess still has limits. Under the UK's Consumer Rights Act 2015, when the price isn't fixed, the customer owes "a reasonable price" and no more. Some U.S. states and Canadian provinces set hard limits, mostly for car repair and home renovation:

• California auto repair shops can't charge above a written estimate without the customer's consent, given before the extra work is done.
• Florida limits how far a final repair bill can exceed the written estimate: $10 or 10%, whichever is greater, up to $50.
• Ontario caps consumer bills at 10% over the estimate unless the customer agrees to the extra in writing.

Those rules protect consumers, so they may not apply to your business clients. Their lesson does: when the scope grows, get the client's yes to the new price before you do the work.

A Quote Is a Price You'll Stand By

A quote names a fixed price for defined work. Queensland's government guidance says an estimate isn't legally binding, while an accepted quote becomes a binding contract. U.S. contract law starts from the other side: a price quotation usually isn't an offer. But it can become one. In Architectural Metal Systems v. Consolidated Systems (7th Cir. 1995), the court held that a quote can be an offer when it leads the recipient to reasonably believe that accepting it seals the deal. That quote listed items, quantities, prices and delivery terms. In other words, the more complete your quote, the more likely the client's "yes" binds you to it. So quote only what you can price with confidence, and say what's excluded.

A Proposal Sells the Approach

A proposal adds the how and the why to the price: your understanding of the problem, your approach, timeline, team and relevant past work. There's no official definition for freelancers, but U.S. federal purchasing shows the difference well. Agencies judge proposals on price plus non-price factors such as technical approach, past performance and experience. Send a proposal when the client is comparing ways to solve a problem, not just prices for a known job.

What to Put on Any of Them

Consumer agencies in three countries recommend much the same contents, and they work for business clients too:

• The scope. What's included, itemized, and what isn't. The U.S. Federal Trade Commission advises homeowners to get a written estimate with the work, materials, dates and price.
• The price, broken down, with tax shown and any rates for extra work.
• How long it's valid. Citizens Advice lists "how long the price is valid for" among the essentials. No rule sets the period; 30 days is a common convention. Without an end date, Queensland's guidance warns, you may be held to a price that no longer covers your costs.
• Payment terms. Deposit, milestones and when each invoice is due. Our guide to payment terms helps you pick.
• A clear way to accept. A signature, or a written "approved", so there's no doubt later about what was agreed.

This is general information, not legal advice.

Which One to Send

• An estimate when the scope is still uncertain: discovery work, repairs, anything that depends on what you find.
• A quote when the scope is defined and you can price it as a package.
• A proposal for larger work where the client is choosing between approaches, with your quote or estimate inside it.

What BillGrid Does Today

BillGrid calls them estimates, and you can use one as either an estimate or a fixed quote: the line items, tax and notes are yours to write. Put your validity period and exclusions in the estimate's terms, or set them once in Estimate Defaults so every new estimate starts with them. You email the estimate from BillGrid; your client opens it from the link, can leave a comment with a question, and approves or declines it online. Once it's approved, Convert to invoice carries the client, line items and totals over, so the invoice matches what was agreed. The help article on converting estimates shows how.

Where We Think the Product Should Go Next

Comparing this guide with the product showed two gaps:

• A valid-until date. Validity lives in the estimate's text today; a date the client sees, after which the estimate can no longer be approved, would be clearer.
• Proposals. There's no proposal format or e-signature; an approval is the client's yes to the estimate, not a signed contract.