Guide · Estimates
Estimate vs. quote vs. bid: what's the difference?
Three words customers use interchangeably. They are not the same, and the difference can cost you money.
An estimate is your best guess at the price and can change if the job does. A quote is a firm price for a clearly defined scope. A bid is a price submitted in competition with others, usually on a defined scope, often for larger or commercial work. Use the word that matches the promise you're making, and write it on the document.
The three, side by side
| Estimate | Quote | Bid | |
|---|---|---|---|
| What it is | An approximate price | A firm price | A competitive offer |
| Can the price change? | Yes, if scope or conditions change | Not unless the scope changes | Usually not, once accepted |
| Best for | Repairs and jobs with unknowns (behind-the-wall work) | Well-defined jobs: a water heater swap, a repaint | Larger or commercial work with several contractors pricing |
| Risk to you | Customer expects the number to hold | You eat surprises | You eat surprises, and you may not win |
General guidance. Terms and legal effect vary by state and by contract.
Which to use
- Use an estimate when something is hidden. Old pipes, wiring behind a wall, rot under a deck. You can't price what you can't see, so say the number may move.
- Use a quote when the job is defined. Same fixture, same location, no unknowns. Customers like firm prices, and you can charge a little more for the certainty.
- Use a bid when you're competing. Property managers and larger customers often ask several contractors to bid on the same scope. Match their scope exactly so the bids compare fairly.
Wording that prevents arguments
- For an estimate: "This is an estimate. The final price may change if we find conditions we can't see today, and I'll get your approval before any extra work."
- For a quote: "This is a fixed price for the work listed. Anything outside the list is a change and priced separately."
- For either: list what is not included, and put a date on it.
Turning an approved estimate into an invoice
Once the customer says yes, the approved estimate should become the invoice with the same lines, so there's no retyping and no gap between what was agreed and what is billed. In Settle, a customer approves from a link and you convert the estimate to an invoice with one tap.
Questions
Is an estimate legally binding?
It depends on your state and on the wording. In general, a document that says "estimate" signals that the price is approximate, while a signed quote or contract is more likely to bind you to the price. Check your state's contractor rules, and for large jobs consider a written contract. This is not legal advice.
Can I go over an estimate?
Some states limit how far over an estimate a contractor can bill without the customer's written approval. Check your state's rules, and get approval for extra work in writing before you do it.
What is a change order?
A change order is a written change to the agreed scope and price, signed or approved by the customer before the extra work starts.
This guide is general information, not legal advice.
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