Today, I will cover when to give an estimate an when to give a quote because this was an issue for me in my business for many years for pricing and creating profit.
You may ask, what's the difference is? Carefully listen, because what you give to your potential customers or clients will determine if you will make a profitable sale. A profitable sale is when you have a net income of the gross revenue (amount of the sale) minus the cost of goods sold or cost of services sold in a business. The net amount is profit.
A quote is a set offer. The offer will lock the buyer into a set price regardless of other factors of a business. However, if the cost is more than expected, the seller can’t change the price without breaking their original offer. An honest seller will stick to the offer, but in the end, you can lose money because the job took more time and money to produce the end product or service. If you set prices and offer the same service price without variables per sale than you can offer a quote and be profitable.
An estimate is a possible price for the development of a product or the cost to provide the services. You can change the price with the estimate because the price is the possible price, not the final price. An estimate includes a price based on past projects similar to the new client's potential needs; however, once you get in, you notice that the new client has some unique needs or something that worked for another client doesn’t apply to this client, and this client needs a new plan. The tools it will take to provide the service may be different or cost more and perhaps the cost of labor will need more people or more of your time. In the end, the price is more than expected. I notify my clients when I reach the estimated hours. I ask the client if they would like me to continue. I don’t like to surprise the client with a bill.
Let the client know the difference if they don’t understand a possible price change. Tell them upfront and put it in writing to help people to understand and to trust you more.
Let me know if you have any questions.
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Recorded Video for FaceBook Live. Edited with additional information.