Every service business generates daily estimates and quotes to win new business.

Estimating cost for jobs is a key area of running any service business because they control its profitability and growth potential. Customers use estimates to gauge how much a new install will cost them, often drawing in estimates from multiple businesses before settling.

Whether you are a new or experienced business owner, understanding how to prepare a proper estimate is crucial for any business.  It avoids undercutting your services and generate a high success rate. In this article, we’ll cover some job estimate basics, as well as what steps you can take to create the perfect professional estimate.

A good Field Service Software, like Field Force Tracker, has very powerful quote and estimates capabilities. It will help you create professional estimates in minutes.  It also helps you with proper automated follow ups. As a service business, you cannot get a more comprehensive software at such an affordable price of mere $99.99 per month for your team.

What is a professional estimate?

A professional estimate is a document you provide prospective clients. It’s a proper document on the timeframe, costs, and resources needed to complete a project. Professional estimates can be found in every service-based industry from construction and manufacturing to IT and accounting firms. Each business will offer slightly different components in their professional estimate, but the basics generally include:

• Services you’ll perform
• Equipment that you would include
• Parts and Supplies
• Optional Items
• Project deadlines
• Major milestones
• Material and supply costs
• Estimated total cost

Each segment that is vital to the success of the project should be included here. Keep in mind that those categories will have subcategories with a more in-depth analysis of the timeframe and costs.

The difference between estimates, quotes, and invoices

Although they all seem similar, there are quite a few key differences between estimates, quotes, and invoices including:

• Job estimate: This is an approximate cost or high-level ballpark figure for a project, but isn’t legally binding on a business. Let’s say you go out to a job and the customer asks you for an estimate budget for the project. You haven’t done any due diligence on market prices or timelines, so you give them a rough estimate of the price. The customer can’t hold you accountable for that price since it’s not a formal quote.
• Quote: A quote is a formal proposal and a step above a job estimate, providing extensive detail on the costs of each component and services proposed including scope of the work. Once the customer accepts the quote, it serves as a legally binding contract for the cost and timeframe. This is why it’s important to accurately price your products and services since profitability of business depends on it. A good quote software, like Field Force Tracker, can  shows the profit of the quote when you are making a quote.
• Invoice: An invoice is a bill for services rendered against which the customer will make a payment. This could be a down payment for a quote, progress payments on a project, or any other item that you provided a service in exchange for a fee. This document is provided to the customer after you’ve been formally hired and includes itemized costs and payment terms.

This table below shows difference between Quote, Estimates and Invoices

Feature	Estimate	Quote	Invoice
Work Stage	Preliminary	Formal Proposal	Often after the work has been completed, but may also be created for receiving an advance.
Approval Process	Not needed	Required	Implied based on approved quote.
Legal Status	Informal document	Formal and Legally Binding	Formal and Legally Binding.
Types of Document	Simple and Informal	Detailed Work Breakdown with detailed scope of the work.	Only financial data for making payments.

Each of these three components work together to complete a project. A job estimate is the preliminary discussion amount that leads to a formal quote. After the quote is accepted, the customer will receive an invoice. Properly keeping track of each document in a project is vital to complete the project on time and on budget. A  complete Field Service Software like Field Force Tracker can help you keep all information at one place.

What to include in a job estimate

Whether this is your first quote or you have sent dozens before, there are a few components that should be present in each estimate including:

• Company contact information
• Project description
• Overview of the services provided
• Cost of materials and services

If you are giving the formal quote then you will include additional items such as:

• Project timelines
• Total cost
• Payment terms
• Additional terms and conditions

You want to use a job estimate as a high-level overview, giving you flexibility if prices increase or you uncover that the timeframe will take longer than initially expected.

How to prepare a perfect professional quote

When creating a professional quote, you want to take your time throughout the process to ensure you are catching key details and accurately projecting costs. Don’t treat this step as another item on your to-do list. It’s really meant to be a sales tool. Building an in-depth and accurate quote will set you apart from competitors through transparency and clear communication throughout the entire process, minimizing any surprises on both your end and the client’s side.

Here are some of our favorite ways to prepare an effective professional quote:

1. Analyze the project scope

An quote needs to have a timeline with an quoted completion date. Milestones should also be present throughout the timeline to ensure your team is staying on track. This also gives you the ability to charge progress payments. Many business owners take a conservative approach to the project timeline, giving plenty of time for delays or unexpected events. With worldwide shipping delays and material shortages, overestimating the time it takes to complete a project is wise.

What is the lead time on material purchases? Do you need to hire additional employees? Both of these questions impact the timeline. For large projects, it may take weeks or months to get a single shipment or find employees to hire. These considerations must be factored into the quote. Keep in mind that you want to manage client expectations, which involves creating a reasonable timeline that the client agrees on.

2. Quote resources

One of the major steps in understanding how to write an quote is to piece together needed resources. This is where the bulk of your quote work will be found because you need to price out any subcontractors, consider material costs, and understand labor costs. Be realistic about the capabilities of your business and don’t be afraid to outsource work to subcontractors. Realizing your capabilities in the estimation process allows you to plan costs properly for areas you won’t be able to handle. Include safeguards in the quote process for unexpected client demands. For example, maybe the client calls you up at the last minute and says they need the flooring for the entire house done in one week. This project might take you two weeks on your own, meaning you will need to find subcontractors or additional employees to help with the work. Have a line item for each resource with an associated cost. This breaks down the costs and gives you the ability to adjust items to find the right price.

3. Utilize the right tools

Online tools can take a significant amount of the burden off your plate. Instead of manually calculating line-item totals or sorting through piles of past quotes, you can use technology. The first piece of software you should have is an estimating tool that stores past quotes, provides guidance on building a current quote, and gives you access to an quote template. These features will save you hours, allowing you to quote more jobs and grow your business.

Equally as important in how to write an quote is a B2B payment software that helps you manage cash flow, send and track invoices, and generate customer reports. An advanced Field Service  software, like Field Force Tracker, gives your business the ability to stay on top of progress payments and track invoices sent to customers. Let’s say a business agrees to the first phase of the construction of a building. Your business will need to collect a down payment and have future billings laid out. Using payment software allows you to invoice customers on time.

4. Present your quote quickly

The presentation of the professional quote shouldn’t be weeks after you talked with the customer. This gives the customer the ability to talk to other companies and search around for a lower quote. An quote email is an email that you send to the prospective client with a document outlining all project costs. First, you will need to introduce yourself and the business. Then, you should give a brief summary of the attached quote. Finally, you will conclude with some benefits of working with your business and the next steps. How to write an quote email is confusing for many business owners, but keep the email short and to the point.

Follow Up on Submitted Quotes

If the customer doesn’t respond for a few days or weeks, schedule a follow-up call to discuss their thoughts on the quote. You might find that the customer changed their mind about the scope of the services or the time frame doesn’t line up. Understanding the reason for the delayed response is critical to improve your conversion and success rates.

Advanced field service software, like Field Force Tracker, has built in automated scheduling. This will allow you to send quote and let the system take care of reminders and follow ups using AI based tools.

Managing Online Approval Process

Modern small business CRM systems, like Field Force Tracker Software, never make you wait on sending a quote and getting it approved. You  simply send quotes electronically and let your clients approve or decline work right away electronically. Quick email notifications update you on the status changes so you can follow up with the customers.

Safeguarding Your Business with Proper Terms and Conditions

It is very important to protect your business with proper terms and conditions. Here are sample terms that we as a leading field service software, Field Force Tracker, recommend to our customers,

1.  Price Validity: This quote is valid for 30 days from the issue date, or the validity date specified in the quote whichever is the earlier. After this period, prices are subject to change without notice and should be re-confirmed.

2. Error and Omissions (E&O): All prices are subject to correction in the event of clerical or system errors or omissions. In the event of a pricing error,  the business reserves the right to amend the quotation to correct the error and request modification to an order, or not accept any orders placed based on the incorrect price.

3. Material/Cost Fluctuations: Due to volatile market conditions, material costs are subject to change. The final price of any specialized product may be adjusted based on a sudden price increase by the manufacturer or supplier at the time of order placement with mutual consent.

4. Change in Scope of Work: This quotation is based on the scope of work described. Any additions or changes to the scope will require a re-quote or a change order at current pricing.

5. Final Approval: This quotation is not a contract and is subject to final review and acceptance by us (xyz).

6. Loss, Damage or Delay: Our company xyz shall not be liable for any loss, damage, or delay occasioned by any causes beyond Seller’s control, including, but not limited to, governmental actions or orders, embargoes, strikes, differences with workmen, fires, floods,
accidents, or transportation delays. IN NO EVENT SHALL SELLER BE LIABLE FOR ANY CONSEQUENTIAL OR SPECIAL DAMAGES.