As a professional, it is important that you have a clear understanding of the difference between your Quote, Bid, Proposal, and Estimate because it is your job as the Pro to understand which version the client needs at which time.
For example, you may speak with a client who is asking for a proposal, when what they need is an estimate. You may need to educate your client and draw distinctions for them between these different options, so that you’re both on the same page about what level of detail and commitment is being offered. Your main goal is to successfully communicate with your client. Gaining a thorough understanding of what your client expects, and what they need, lessens the chance of giving them inaccurate information or having a breakdown in communication.
Accuracy in your terminology will help you speak to your client with ease, reduce the probability of miscommunication and disgruntled clients, and will improve your business’s success.
What is an Estimate?
As the name suggests, an estimate is a roughly calculated approximation of what the project will cost.
After discussing the needs of the project with a client, a contractor typically calculates the cost of services and materials needed to fulfill the project scope and gives it to the client in the form of an estimate.
Estimates are important because they help to not only summarize costs but assist clients with their budgeting. Estimates layout other important information as well such as the work you will complete, the project scope that broadly entails each service, probable timelines and completion times and exclusions to avoid disputes later on.
BEYREP includes an Estimate form in our layout for Pros to easily organize and price projects, for clients.
What is a Quote?
Quotes are expected to be sent after an estimate is approved. They are similar to an estimate except quotes are expected to be more detailed and precise and can be accepted or signed by the client to begin the project, often as an addendum to a contract. Depending on your client’s needs, and the detail included in the initial estimate, a quote may not be necessary at all.
Quotes are typically valid for a certain period of time because the cost of materials and labor demands can fluctuate over time. Quotes can also heavily rely on the supply and demand of the materials and labor around the region of the project.
A quote typically uses all the information you put into the estimate, but breaks it down even further, adding details and more potential costs. Including the research of exactly how much each needed material costs at the time of quote, and any agreements from subcontractors that they agree to be hired at X cost.
Once you’ve finished your Estimate form on BEYREP you can build on it to create your quote, so the work you’ve put into the estimate seamlessly translates for you.
Your quote should have enough detail that your client can accept it as is and you can honor it for the entirety of the project. In fact, it is industry standard to honor the given quote if it’s accepted without changes.
What is a Bid?
Usually a term reserved for larger or commercial projects, a construction bid is typically a firm offer to the customer and usually isn’t created from an estimate.
With a bid, you are expected to submit a document that illustrates the price for performing a specified amount of work at a specific price within a certain amount of time. A bid will be more detailed than an estimate or quote. Bids are more commonly used in government or large corporate projects.
If your company is submitting a bid, you can expect yours to be one of two, three, or more competing bids from companies hoping to take on the job. Be certain to read up on the bid requirements! They tend to be specific. In residential construction for homeowners, a bid usually isn’t necessary unless an insurance company is paying or it’s for an unusually large project.
What is a Proposal?
While the industry usually uses “quote” and “proposal” interchangeably, there is a huge difference.
A proposal should be a comprehensive package that includes all of the information within the estimates, quotes, and any other documents. In BEYREP, your proposal includes links to everything in your BEYREP profile so you don't have to worry about designing a full proposal for each job.
Unlike other documents, the proposal specifically details the scope, timelines, deliverables, and costs. You can include more information, if you would like, to highlight why certain methods or skills are necessary. This helps you really market any advantages you have over the competition.
Your proposal should be as detailed as the quote but more accessible. It’s also more focused on pushing the sale. Not only are you sharing what hiring you for the given project will cost, you’re sharing why you’re worth the cost. A proposal will read more like a presentation for the customer. A proposal is a good spot to share previous client testimonials to establish credibility, or even health and safety documents to build trust in your standards.
Once you have taken the time to understand these essential definitions, utilizing them in your client relationships and sales will improve your success overall. You can also use this clarity to create processes within your own business. Will you typically give an estimate for free or charge a flat rate for it? How long do quotes typically take for you to create? Understanding these differences gives you a better chance to plan for yourself and your client.