Estimate or quote: what are you signing?

Four documents, four meanings

Estimate: the business's best guess at the cost, based on what it knows now. The final bill can be higher or lower.

Quote (quotation): an offer to do defined work for a stated price. Once you accept it, that price normally holds unless the work changes.

Proposal: a fuller offer — scope, approach, timeline, price and terms — common with agencies and larger projects. Signed, it often is the contract.

Invoice: a bill for work done or goods supplied. You don't sign it to agree; you check it against the quote and pay it.

Estimate: a forecast, not a promise

An estimate tells you roughly what the job should cost. It is built from assumptions — quantities, hours, the condition of what can't be seen yet — and if those turn out wrong, the price moves. Signing an estimate typically authorises the business to start on that basis; it doesn't lock the total. That makes a written upper limit, or a rule that they must ask before going over a figure, the most useful thing you can add. Our guide to approving an estimate shows how to write that limit next to your signature.

Quote: a price for defined work

A quote is an offer: this work, this price. Accepting it usually fixes the price for everything the quote describes. The protection is only as wide as the description, though. Extra rooms, different materials or problems the quote excluded can still be charged, normally through a change order you sign separately. Quotes also expire; a “valid for 30 days” line means the business can re-price after that date.

Watch for quotes that are really estimates in disguise: “Quote: approximately $5,000”, or a fixed labour price with materials “at cost”. The heading says quote, but part of the price is open.

Proposal, bid, tender and invoice

A proposal usually goes further than a quote: it explains how the work will be done, sets out phases and a timeline, and often includes terms and conditions. Agencies, consultants and larger contractors use them. If it ends with a signature block, signing it is usually how you accept, so read the terms section as carefully as the price.

“Bid” and “tender” are mostly used in construction and public purchasing for a priced offer submitted in competition with others. Once accepted, a bid works like a quote. An invoice comes at the end, or at each stage: it asks for payment for work done and should match the accepted quote plus any signed changes.

How the words are used in different countries

UK: Citizens Advice describes a quote — sometimes called a quotation or fixed estimate — as a promise to do the work at an agreed price, and an estimate as the trader's best guess. A trader can't charge more than a quote without a good reason, such as extra work you agreed to; for an estimate, the final price should be reasonable.

New Zealand: Consumer Protection defines a quote as an offer to do a job for a specified price and an estimate as the provider's best guess, adding that the final price should generally land within 10–15% of an estimate.

Canada: in Ontario, consumer protection law caps the bill at 10% above an estimate unless the consumer agrees in writing to pay more. Other provinces have their own rules.

United States: there is no single national definition, and the rules vary by state and trade. Read how the document itself defines the price, and ask for the word “fixed” or a “not to exceed” figure if that is what you were told.

Sources

• Citizens Advice: Problem with building work, decorating or home improvements
• Consumer Protection (New Zealand): Quotes and estimates
• Ontario: Business guide to consumer protection — estimates