What’s the difference between an estimate, quote, and proposal?

Find out the key contrasts between these terms

Illustration courtesy of iStock

People use the terms quote, proposal, and estimate interchangeably. Indeed, a forum discussion on SitePoint highlights the common challenges brought by using these terms.

But as one person on the forum puts it: “Doesn’t matter what you think the difference is, it’s what the person asking thinks it is.” So, before you send anything, discuss the details of what they want.

While open to interpretation, these three words are meaningfully different. There are widely accepted definitions that hold true across industries. Let’s explore these definitions to put confusion to bed and keep you from a costly miscommunication.

Quotes versus estimates: key differences


As the name suggests, an estimate is an approximation of what things will cost.

Estimates help you determine costs and assist clients with budgeting. They’re usually drafted without an in-depth understanding of the client’s requirements and are subject to change as new information surfaces (that contractor estimate can get blown when they discover asbestos or old wiring, for example).

But estimates don’t only detail costs. They provide a high-level overview of:

  • The services you’ll provide so clients understand the work you will complete
  • Project scope, so clients understand broadly what each service entails
  • Timelines and completion dates to manage client expectations
  • Exclusions to avoid disputes
  • Other specific terms that the client should know if they want to do business with you

The idea is simple: With an estimate, you want to manage client expectations.


Unlike an estimate, a quote provides a fixed price for a project subject to a specific time frame.

Ever seen a quote that reads “Valid for 30 days”? In many industries, companies will have these terms to protect themselves from cost fluctuations later down the road.

Regardless, once the customer accepts the quote you have to complete the work as detailed in the quote and at that price. For this reason, you’ll want to compile a quote with a thorough understanding of what the client wants. In this way, you’ll be able to go into detail about the services, exclusions, timelines, and project scope.


You’re probably familiar with the following scenarios:

  • Your client asks you to send a pitch after a client meeting
  • They say you’re shortlisted with other contractors for a project and wants you to “compete” for the business
  • A client wants an estimate, but you decide to go the extra mile and provide more detail and showcase the value your business can provide

In each of these scenarios, you will, invariably, create a proposal. Proposals include all the information contained in estimates and quotes. But they take things further by showcasing the value that you can offer a prospective client and including testimonials and examples of past work to establish trust.

Proposals are usually put together to win a client’s business at the start of a new relationship. When you submit a proposal, you’ll often do so in competition with several other companies. As a result, it’s essential that you take time to construct an excellent proposal and showcase value.

You will often need to submit supporting information. This may include previous client testimonials to establish credibility or even health and safety documents.

Key takeaway

Getting clear about what your client expects is the first step to winning their business. While you may now understand these terms, communicate to ensure you’re both on the same page.

This post was originally published on the FreshBooks blog and has been revised for Ideas by We.

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