Quote vs estimate: what your price promises

The difference between an estimate and a quote, when a quote becomes legally binding, and how to label every price your workshop sends.

Your customer reads the invoice at handover, then scrolls back through his phone to a text you sent in March, before you'd seen his Ranger. To you, that number was a rough guide. To him, it was the price. That's the whole quote vs estimate problem: one number, two meanings, and nobody wrote down which.

An estimate is your best guess at the cost, and it can change. A quote is the price you'll do the described work for, and once the customer accepts it, it's a contract. In business.gov.au's words, an accepted quote "becomes a legally binding contract". An estimate holds you to less, but it still has to be a fair guess: WA Consumer Protection says a tradesperson must use their skill and experience when estimating costs under the Australian Consumer Law.

This is general information, not legal advice. Some of the guides linked here are written for Western Australia and the detail can differ between states, so check with your state's fair trading or consumer protection office, and have a lawyer read your standard quote terms.

Quote vs estimate, side by side

The last row is where workshops get caught. WA Consumer Protection's guide for businesses, Quoting for repairs, says you aren't committed to your estimate, but you must be careful not to mislead a customer with an unreasonably low one. Lowball to get the work and the customer may be able to cancel. A quote works the other way: once it's accepted you're held to it, so it has to include everything the job needs.

Is a quote legally binding? Once it's accepted, yes

When a customer accepts your quote, you've both agreed to what's in it: the work described, at the price written. That's why the description matters as much as the total. "Canopy to suit Ranger" leaves room for an argument about drawers, locks and lights. A line for each part leaves far less.

The WA guide splits costs that turn up mid-job into two groups:

• Costs you couldn't have foreseen with reasonable skill and experience when you quoted. You may be able to add them to the price, but you should contact the customer before you carry on. Think of corrosion under the tub mounts that you only see once the tub is off.
• Costs a skilled person in your trade would have included. You can't pass these on, and you finish the job at the quoted price. If you've fitted trays to that model before and left its mounting kit off the quote, that one's yours.

A quote also sits on top of the consumer guarantees, not in place of them. Under the Australian Consumer Law, services must be carried out with due care and skill, fit for the purpose stated, and supplied in a reasonable time if you haven't agreed a timeframe. The guarantees cover services that cost less than $100,000, which takes in a typical tray and canopy build. The WA guide also warns that quote wording can't limit those rights. A line like "all care taken but no responsibility accepted" is misleading and doesn't relieve you of responsibility for faulty parts or defective work.

Label every number before it leaves the shop

Customers treat any number as the price. A "from" price on your website, a range over the phone, or a total in an online builder. They're all estimates until you've seen the ute and agreed the spec. Say so right next to the number, every time.

Whether to publish prices at all is its own decision, covered in Should you put prices on your website? If you do, the wording carries the load:

• Website: "From $X inc. GST. Final price on a written quote once we've seen your ute."
• Online builder: "Estimate inc. GST. We'll confirm fitment and send you a written quote."
• Text or email: "That's an estimate from what you've told me. It can move once I've seen the ute. I'll send a fixed quote after that."

It's how we set up Fitout. The total in a customer's build reads "Estimate inc. GST" next to a button to get a quote, because the workshop still confirms fitment and price.

The phone is the riskiest, because nothing's written down. The WA guide suggests keeping a written note of what's agreed over the phone, and says a call can be confirmed quickly by email. A two-line text straight after the call is better than both of you relying on memory.

The estimate vs quote split is the same one as in How to improve your quoting process: send a range first, and a firm quote once you've measured.

What a written quote should include

business.gov.au has a list of what a written quote should include. In short:

• your business name, ABN and contact details, and the customer's
• a clear description of the work
• itemised and total costs, including GST
• any variations and revisions you've discussed
• payment terms and preferred payment method
• start and finish dates
• the quote's expiry date
• space for the customer to accept, with a signature and date

For a tray and canopy build I'd add the vehicle (make, model, year and cab type), what's excluded (registration changes, engineering, a GVM upgrade), and the deposit: how much, what it covers and when the balance is due. There's more on that in How much deposit to take on a custom build.

The expiry date matters more than it looks. Aluminium, powder coat and outsourced parts change price, and customers can take weeks to decide on a build this size. Pick a period you can hold your prices for, and write the end date rather than a number of days. The WA guide suggests a clause stating how long the quote is valid, recommends getting customers to sign quotes, and says it's a good idea to get legal advice when you draft your standard quote form.

When the job changes, agree the price before you cut

Halfway through the build, the customer asks for a fridge slide and a water tank. That's not in the quote, so it's new work with its own price. WA Consumer Protection tells consumers that tradespeople must get their permission for extra work and can't do it first and ask for payment later. It also tells them they don't have to pay for extra work done without their permission.

So write a variation before you order parts or pick up a grinder:

• what's changing, in the same detail as the quote
• the price inc. GST, and the new total
• what it does to the lead time
• what it does to the estimated payload
• the customer's yes in writing, such as a signed note or a reply to your email

The same goes for the surprises in the first group above. When you find something you couldn't have seen at quote time, stop, ring the customer, and confirm the new price in writing before you carry on.

Questions about how a builder should label its totals? Talk to Ben.