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September 13, 2023
Updated: January 15, 2024

Price Quoting Explained: Your Complete Guide (2023)

Your ultimate guide to price quoting outlines— the ins and outs of creating quotes for customers. Discover the importance of price quoting and how to write converting quotes— with examples.

Price quoting gives you an incredible opportunity to seal a business deal. People are interested in your services and want to consider the cost against what you offer.

So it's crucial to get your quoting process locked down. It might be the difference between a new customer or a lost lead.

We know which one you want. And our complete guide to price quoting will help you get there.

Let's dive in.

Key Points

  • A quote outlines the work, includes a breakdown of the individual costs, and states the total cost - including taxes.

  • A quote in itself isn't legally binding - it becomes legally binding when both parties accept it.

  • A professional price quote outlines all required information yet is concise.

  • Price quoting fosters understanding, promotes trust, and brings people closer to buying.

  • A quote sets clear terms and details project information.

  • Professional price quotes help you close more sales.

What's a Price Quote?

People refer to a price quote as a "quote" or "quotation." A quote is a formal document or verbal communication outlining the price of a product, service, or project.

Price quoting is often done online through a quoting calculator. No matter how they're agreed, quotations follow the same principles.

The business involved supplies the potential customer with a price quote for the job. This helps the prospect understand what the business will do and the breakdown of costs.

Price quotes offer transparency and help people compare prices, evaluate options, and make informed decisions. They can be both non-binding and legally binding.

  • Non-binding - a quote in itself is not a legally binding contract. It's not considered an offer, which would be legally binding.

  • Legally binding - once a prospect accepts the quote - and both parties agree on their responsibilities - it becomes legally binding. Quotes can have terms and conditions that parties must meet to preserve the legal integrity of the accepted quote.

Businesses should always be clear about the legal nature of quotes. People value transparency because it's the hallmark of trustworthy companies.

Note: the legality of price quotes can vary depending on your industry and the laws in your country.

What's Included in a Price Quote?

A professional price quote contains all required information yet is concise.

  1. Quote number - This identifies the quote, and the customer can reference it if they're contacting the business later.

  2. Date of issue - Record the date and time of issue (particularly useful if there's a validity period).

  3. Business info - The company must include its name, address, and contact details. Other business details like tax numbers can also be useful.

  4. Client info - Ensure the client's details are on the quote. This makes it easy to reference and link the client to the correct quote.

  5. Included services - List the services the client wants and expects.

  6. Excluded services - Services the client doesn't want or expect.

  7. Cost breakdown - A detailed list of the costs associated with the quote.

  8. Total cost - The overall cost of the quote, including materials and labor and tax if applicable.

  9. Completion date - An idea of when the client can expect work to be completed.

  10. Validity term - Some quotes include this, especially in industries where prices can change quickly.

  11. Signatures - A place for the business representative and the client to sign off on the quote.

  12. Payment methods - Options for paying a deposit or the entire sum.

What you include in a quote may vary depending on your industry. For instance, a photography price quote will look different from a screen print quote.

But you should ensure everything is clear for the potential customer so there are no misunderstandings. Clarity in your quotes helps you close more customers.

They're more likely to use your business if they understand everything in the quote. Any confusion could lead to doubt in your services, putting potential customers off.

The Purpose of Price Quoting

Quoting a price is crucial for service businesses and companies with complex pricing structures. For instance, a carpet cleaning business might offer a variety of services involved with carpet cleaning.

So it needs to divide these services into different pricing tiers. Potential customers can check its website and get carpet cleaning quotes online for the service they want.

The potential customer knows what services the business offers. And the business learns what the person wants from it.

So price quotes help the company and potential customers understand each other.

Price quoting also lends transparency to the business/customer relationship. People place more trust in a business when it offers upfront pricing.

Have you ever been happy when a company hits you with a hidden cost? No, we didn't think so - it erodes trust in the relationship.

But a price quote offers transparent pricing upfront. People know what they're getting and how much it'll cost.

A price quote promotes transparency and strengthens customer trust.

Price quotes also guide people closer to the buying stage of the customer journey. Outlining the services and explaining the prices make it easier for potential customers to decide.

Quoting a price removes one more objection to buying. Often, pricing is a chief opposition point for people, but a clear outline of the services and prices softens the blow.

So price quoting dismantles objections and leads people closer to buying.

What's the Importance of Price Quoting?

People expect a price quote in certain industries - like trades and construction. They're unlikely to commit to buying unless the business quotes a price.

That's a huge reason quoting a price is essential. Here are 4 more.

  1. Set clear terms

  2. Detail project information

  3. Tailor your services

  4. Get started immediately

1. Set Clear Terms

Price quoting is vital for setting clear terms between your business and potential customers. A quote outlines the following:

  • Services you'll provide

  • What prospects can expect

  • Cost of the services

  • Timeline for delivery

  • Terms and conditions (if any)

Quoting a price makes everything clear for potential customers. They know what to expect and how much it'll cost - it removes any room for misunderstandings.

2. Detailed Project Information

Your business provides more detailed project information with a price quote. Prospects get the following:

  • An itemized breakdown of the costs

  • Possible additional costs (price fluctuations, taxes, etc.)

  • Payment options or financing terms( if applicable)

Being upfront with costs and possible additional costs and providing multiple payment options make it easier to close the deal.

3. Tailor Your Services

Quoting a price for customers helps you tailor your services. You can be flexible and offer unique solutions to prospects.

With a price quote, you have more room to customize your services. It's more adaptable than a rigid pricing list.

This customization can help you land more clients. Your tailored quote can offer a solution to their problem - it increases the chances of closing a customer.

4. Get Started Immediately

A price quote makes it easier for prospects to buy. Once they do, you can get started immediately.

And the services are laid out in the quote. You and the customer are already on the same page.

So you can get started immediately without any confusion. Progressing like that with every customer makes your operation run efficiently.

How a Price Quote Differs From an Estimate

People often use "quote" and "estimate" interchangeably. But the terms have vital differences.

A price estimate is a rough calculation of the cost for a product, service, or project. It gives prospects a general idea of the pricing without an itemized cost breakdown.

People don't consider an estimate as a formal price offer. It lacks the breakdown of the services and the corresponding costs. Think of an estimate as a ballpark figure when those involved don't know the entire scope of the work.

Price estimates often change as more details come to light.

A price quote is a formal and detailed offer from a business to a prospect. It outlines the pricing details for work, including a breakdown of services and costs.

You can give potential customers a quote when you have a clear understanding of the project. Because quotes are more detailed than estimates.

And unlike estimates, quotes are formal offers and are legally binding when customers accept them. Quotes contain fixed prices - unless the terms and conditions allow for pricing fluctuations.

Price quotes are a detailed breakdown of the costs and are legally binding once accepted.

How do You Write a Price Quote?

Writing a price quote is easy once you know what to include, the purpose of price quoting, and the importance of quoting a price. Good price quotes are clear, accurate, and brief - yet comprehensive.

Here are 7 steps to writing a good price quote.

  1. Choose a professional quote template - this builds trust right off the bat and shows you run a serious business. Templates also make the process easier for you and your prospects. For instance, a clothing company might use a T-shirt price quote template. That makes it easier to input product information and for customers to select what they want.

  2. Generate a quote number -  you can track the quote, referencing it if needed. With a website quote builder, you get automatically generated quote numbers. But you can write the number yourself if you quote manually - ensure quote numbers are unique and sequential.

  3. Include your business information - place your business information where prospects will see it. Include the name, contact info, and other relevant details - like tax numbers. Ensure the info is clear and accurate. People should be able to contact you quickly.

  4. Add the issue date - it's always best to record when you sent the quote. The issue date provides proof of this and confirms the start date if the quote has a validity period.

  5. Include customer details - these make it convenient to identify who the quote is for. And including customer information makes following up on the quote simple.

  6. Break down the services - list the services you're quoting, and include descriptions and a price breakdown. Ensure this is clear and accurate for the customer.

  7. Specify terms and conditions - sometimes companies include terms and conditions to clarify your and the customer's responsibilities. That avoids any confusion or potential misunderstandings. And it protects you and your customers.

What Are Some Quoted Price Examples?

Examples of price quotes differ depending on the industry. For instance, a construction quote varies from an office supplies quote.

Let's look at a photography quote example first.

examples

Photography price quote

example

examples

Printing price quote

example

As you can see, these quotes are different. But they get the information needed to deliver the quote. It's clear what the customer expects and how much it'll cost.

Get Legally Binding Acceptance of Your Quote

As mentioned above, a quote isn't legally binding until it is accepted by both parties. Here is the process to make a quote legally binding.

While handshake agreements and verbal contracts are binding, provided they encompass consideration and acceptance from both parties. The challenge lies in enforcing them due to the difficulty in proving their existence. While a verbal contract holds legal weight, the lack of tangible evidence often makes it hard to demonstrate that an offer was made or accepted.

It's much safer to get written acceptance of the quote from the client. This can be in the form of a signed document, an email confirmation, or a formal acceptance letter. Ensure that the client explicitly states that they accept the terms and conditions of the quote.

Clearly communicate the process of acceptance to the client. Inform them that by accepting the quote, they are entering into a contractual agreement. This can be included in the quote document itself or a separate communication.

Include detailed terms and conditions with the quote. These should cover payment terms, delivery schedules, cancellation policies, and what happens in case of changes to the project scope. Make sure the client has access to these terms when they are making their acceptance.

In some cases, asking for a deposit or an advance payment upon acceptance can serve as a confirmation of the agreement. This not only secures a commitment from the client but can establish the acceptance as legally binding.

Keep a record of the acceptance. If the acceptance is in the form of an email or a letter, save a copy. If it's a verbal acceptance, follow up with a written confirmation summarizing the conversation and request a written acknowledgment from the client.

Once you receive the acceptance, send a confirmation communication to the client. This could be a thank you email, a formal acknowledgment letter, or a contract agreement reiterating the terms and the fact that the quote has been accepted and is now binding.

Ensure that your quote and acceptance process complies with relevant laws and regulations. This will vary depending on your industry and location.

If you're unsure about the legalities, or if the project is particularly large or complex, it might be wise to consult with a legal professional to ensure that your process for acceptance is legally sound.

How to Get Price Quotes Accepted

Quoting a price for a prospect means you're trying to close the sale. It's crucial to make a good impression on any potential clients.

Your price quoting process can convert clients or scare them away. The former is the preferred outcome for any business owner.

A quoting strategy can help you maximize sales and boost profits. Here are 5 tips for getting quotes accepted.

  1. Ensure quotes are professional

  2. Use our quoting software

  3. Send quotes quickly

  4. Quote follow-ups

  5. Feedback

1. Ensure quotes are professional

Professionalism ensures you make a good impression on prospects. Your quotes should look the part because they represent your business.

But there's more to professional quotes than looking good.

The best price quotes are clear, accurate, and brief. Yet they're comprehensive and cover everything the potential customer needs to know.

Professional quotes address customer expectations and help you close more deals.

2. Use our quoting software

Yes, this is a shameless plug. We know our software is incredible for quoting, among other uses. Thousands of businesses use our software to automate their quoting process and grow their business.

Embed a quoting tool on your website - do business 24/7. And it's way faster than manual quoting, allowing you to streamline the entire process.

A construction company can use our building cost calculator template and start getting quotes in minutes. Automating the process saves your business time and effort.

3. Send quotes quickly

You don't want to mess around when it comes to quoting a price. It's best to process quotes within 24 hours.

People usually request a quote because they're ready to buy. They only need to see if the price suits them - don't let the lead cool.

Price quoting software is perfect for this. Prospects can get a price instantly.

4. Quote follow-ups

Following up with potential customers is vital for closing sales. But doing it too soon can come across as pushy.

Two or three days is a great timeframe for following up on leads. That keeps your front of mind without being too forward.

Again, price quoting software is perfect for follow-ups. You can automate emails to reach out to prospects who request a quote.

5. Feedback

Requesting feedback helps you identify any issues with your quoting process. Maybe the quote wasn't clear enough. Maybe you followed up too soon.

Whatever the problem, asking questions pinpoints it. You can use the feedback to improve your price quoting.

Better processes = more sales.

Price Quote FAQ

Is a quote an exact price?

A quote is typically an exact price for a service or product. It outlines the work, includes a breakdown of the individual costs, and states the total cost - including taxes.

But not all quotes are an exact price. Sometimes companies quote a price with terms and conditions.

This often happens in the construction industry. Builders might include terms and conditions to cover the rise in material costs - the quote might be valid for 30 days, for instance.

But once both parties accept the quote, the company must deliver the work at that exact price. The quote becomes legally binding at that point.

What's the difference between a price quote and an invoice?

A business sends a prospect a price quote before it starts any work. The quote outlines what the company will do and breaks down the costs.

Price quotes help potential customers compare prices, evaluate options, and make informed decisions.

A business sends a customer an invoice after it completes the work. It outlines the final cost and provides options to make a payment.

Do you have to stick to a quoted price?

A quote in itself is not a legally binding contract. So you could change the quote before it's accepted.

A business might make a mistake quoting a price. They could amend the quote before the prospect accepts it.

But once both parties agree to the terms and accept the quote, you have to stick to the quoted price. Because a quote is legally binding when both parties accept it.

Should I charge for quotes?

Charging for quotes isn't a good idea. Many people expect free quotes and don't like when companies charge.

There's an idea that charging for quotes can weed out people who aren't serious about buying. It ensures everyone is invested in the process - the company and the prospect.

It's a personal choice at the end of the day. But charging for quotes can turn people away before you even get started.

Conclusion

Creating clear price quotes helps you avoid confusion and misunderstandings with potential clients. Price quotes ensure your business is transparent and trustworthy.

They help people compare prices, evaluate options, and make informed decisions. That builds understanding between your business and prospects.

So price quoting helps you close more sales.

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