In the business world, it’s very easy to confuse the terms “quote” and “estimate” as they are similar when shopping around for work and services to be completed. However, they are different enough that you don’t want to use these terms interchangeably for legal reasons. Here’s a look at those two accounting terms related to invoicing, and how you can easily tell the difference between the two.

The difference between purchasing services, or products combined with services, and purchasing products from a store is that the overhead cost is not always the same with services. For example, if you buy a loaf of bread each week from the grocery, the same store and the same brand of bread, you can likely expect it will be the same price each week. This is because the ingredients used for the bread, the machines and the employees who make the bread, the packaging it comes in, the shipment and delivery, and the distributors all cost the same amount day over day, and month over month.

But with services, the cost depends on so many different variables, that you have to get an estimate or a quote in order to have any idea how much the service would cost in total.


A quote is a fixed cost (provided by the seller and given to the customer) that cannot be changed once it is accepted by the customer. A quote can come in a document form, which sometimes looks just as an invoice would, or is sometimes presented in the form of a letter. The quote outlines the scope of work to be completed, along with any other purchases, and the amount to be owed by the customer, once the job is done. Before accepting a quote, a customer can negotiate the cost of the scope of service, especially if their needs have changed since the quote was created. Typically, a quote is valid for 30 days from the time it was issued, unless otherwise noted.

Note that the price on the quotation must remain the price paid, even if the completed work ends up being more than the work outlined in the quote. If the company providing the quote feels they don’t have enough information to calculate a proper amount, then they will only offer an estimate.


On the other hand, an estimate is an educated, solid guess at what the service would cost given the scope. An estimate has no guarantees, so you have to be more careful with these. A quote is legally binding, while an estimate is not. For example, if you get an estimate on the work that needs to be done on your car, and agree to that amount, it could end up being more money, given that unforeseen costs could have cropped up while the mechanic was working on the vehicle.

An estimate can still come in written form, and will often include contact information for all parties involved, the total cost, a breakdown of the job including products and services to be completed, a schedule for service completion or delivery, the assumption for which the estimates were created, terms and conditions, any preferred terms, and an estimate expiry date.

An estimate will also likely have language surrounding the fact that it is subject to change, and will probably require a signature. In some cases, a vendor may ask the customer to provide written proof that they are satisfied with the items include in the estimate.

It’s good to gather estimates from different companies, and if one or more of the estimates seem like good ideas, you can always ask for a more formalized quote so you have a more secure number to work from.