A business estimate is a document that describes how much you intend to charge a customer for a product or service. It assists you in outlining the scope of a project and how much it will cost you. The final bill may be more or lower than the predicted sum.
You can send estimates to clients using Invoice24 so they can review a quotes before proceeding with the goods or services. Once an invoice is accepted, you can easily convert an estimate to an invoice to get paid as soon as possible.
Tips and tricks for creating estimates
Before you start the estimate process, be sure you understand what your customer wants. The more you know ahead of time about your client’s expectations, goals, and restrictions, the easier it will be to generate an estimate that matches their vision for the project.
You want to provide your customer with competitive pricing, therefore it’s tempting to simply put the best-case scenario in your template. However, things do not always go as planned. Additional materials and labour may be required, or the cost of supplies could rise. A project delay might cost you a lot of money.
That is why many businesses add a percentage to the cost to account for the unexpected. The amount you raise the price depends on your sector and the type of job.
An invoice is a commercial document sent to a customer that itemises and records a sale transaction. When a consumer receives an invoice, it serves as an official request for these services.
Here is some important information you must include:
- Name, address, contact information, concerned person’s name, and so forth
- Overview of the project
- Itemized list of materials or services with costs for each
- Payment conditions
- Conditions of use
If you don’t want to lose a good job, give your estimate as soon as possible. A verbal agreement is insufficient, and you must be quick in delivering your estimate. Taking too long to provide an estimate increases the probability of landing the job.
Types of estimates
A preliminary estimate helps you determine the viability and budget of the project. It should estimate the entire cost of a project using the most accurate estimating approaches available. Include as much information as possible concerning supplies, labour, and other items that can arise during the procedure.
A detailed estimate includes information on every item required for a project. A comprehensive estimate will typically contain specifications, drawings, or computations. This amount of detail is not required for every project.
A quantity estimate, which is commonly used in construction, compiles a list of the materials necessary, the amount of each material required to finish the project, and the cost of that amount.
Top-down estimates are used early in a project before all the relevant elements are understood. They are typically used to support decision-making and strategy discussions. Using a top-down strategy, break down the project’s end objective into smaller sections.
Bottom-up estimating is the process of assembling all of the project’s components. This method of estimating can also be used to create a work breakdown structure (WBS). Compiling all the expenses will take time and effort, and you must make many decisions.
Estimate proposal templates allow you to specify price information for leads or prospective clients quickly. Templates also guarantee that all of your product or service possibilities are properly described in your proposal, which develops confidence and can be the deciding factor in whether or not someone wants to collaborate with your company. Here are seven free estimate templates you can use to carefully layout your service prices.
A lack of clarity in the scope of work is one of the most typical challenges when estimating, especially for big projects. Construction contractors and professional service providers alike want specific templates that match their company’s demands, branding, and consumer requirements.
Freelance Contractor Estimate Template
Freelancers need a straightforward way to explain how their pricing works. A graphic designer, for example, would charge £50 per hour and expect the design project to take roughly 15 hours.
Contractor Project Estimate Template
Estimates are required by general contractors, builders, renovators, and other trade businesses. It should include the pricing of all goods acquired as well as the projected work hours. More information is available in our step-by-step guide to writing a business proposal.
If you want to build a relationship on the back of a good estimate, you must invest the time upfront. Estimates should provide a high-level overview of the plan and schedule, but exclude finer details. It’s impossible to create an estimate that’s 100% accurate, but we should at least try to come close.
When to use an invoice?
When in doubt, use an invoice. It’s simple and easy to understand. Any deviations from the norm, or items that were unable to be mentioned, can be changed in the description at the bottom. Within 30 days of completing the task, send an invoice to the customer.
However, there are additional factors to consider when deciding whether to issue an invoice:
- If you have a large or expensive project, you might seek advance payment. This means you would issue an invoice before the project begins.
- When engaging in a long-term project, you may choose to submit an invoice when certain phases are completed. You must, however, reach an agreement with the customer and determine a chargeable price for each project stage.
- Simply put, you finish the project and then charge the customer for your work. Most of the time, it works since it is ordinary practice. Now and then, a client will fail to pay the invoice.
- If you provide a regular service to your client, you will have a set billing method, such as every month or annually, depending on your agreement.
Benefits of using an invoice
- Encourages payment
- Helps the customer see what they are getting for their money
- Enables healthy cash flow practices
- Keeps record of payments and sales