What is a quote? A simple guide to quotations for small businesses

If you run a small trade business, or you’re a contractor, or similar — then you’re probably used to issuing quotes. But if you’re new to the game, or you just need to brush up on how to write one — you’ve come to the right place. 

We’ve broken down how to format a quote, what to include, how to issue one to a customer or client and what to do once you’ve entered an agreement. Learn all about it in this guide.

What is a quotation in business?

A quotation (or quote) is a written document that can be used in business practice to provide a price to a buyer for goods or services. Essentially, it’s written communication stating the price the seller is willing to offer and the price the buyer has to pay. Once the buyer receives the quote, they can then decide if they want to commit and buy the goods or services.

Why do businesses need to use quotes? 

If you’re a UK business owner, you might be familiar with using quotes as it’s an important way to communicate with customers and a part of doing business. They work by clearly outlining the costs, the total price and any terms and conditions. Quotes are especially useful in the trade industry where the prices are normally different per customer - like a car garage or painter, for example. Learn more about tradesman insurance. 

Imagine you run a local car garage, and customers come to you for MOTs and general repairs. You can’t give a one-size-fits-all price because cars have different parts that need replacing and repairing. Instead, you check the car and give a quote to the customer on the work that needs doing. Perhaps it needs new brake pads or an oil change - in this case, you write up a quote with the parts and labour costs and give it to the customer before they decide to go ahead with it.

What’s the difference between a quote and an invoice? 

A quote is always given before the work is agreed upon. Once the work is complete, an invoice can be sent to secure payment from a customer.  

To make sure you’re business is properly protected if things don’t go to plan, it’s essential to have business insurance in place. For example, if you damage a customer’s property when carrying out the job and they challenge the payment, it’s best to have your back covered before taking on any work.

When to send a quotation 

• A quote is normally issued when potential customers are shopping around for prices. It’s normal for customers to receive several quotes from different places, especially when it’s a high-value purchase, and they want to find the best deal. So if you’re planning to give a customer a quote then it’s best to do it quickly, but also accurately.  
• If you’re too slow in providing a quote, you could end up missing out on the business! Similarly, if your quote is too high then you may miss out because of the price point. 
• Sometimes when sending a quote, it makes sense to provide several different prices for the same product or service. At Bionic, we work with a panel of trusted providers and use a tech-enabled team to provide quotes for our customers from different suppliers/providers. These are often at different price points, depending on the supplier, so the customer can choose the one that fits them best. 
• But remember,  it’s not just about the price — it’s also about the right fit, the reputation of the supplier and trust. Sometimes longstanding suppliers with a higher price point seem more attractive to customers than a lower price with an unknown supplier — it depends on the customer’s preference.  

At Bionic we can help sort your business essentials, providing quotes for business energy, business broadband phone or business insurance. Start a quote online today!

Types of business quotes 

Depending on the industry, quotes can be broken down into different types. Here are the most common types of quotes: 

• Estimates - An estimate is what it says on the tin. It’s an informed guess on the pricing of a job. Estimates aren’t fixed prices as sometimes there are unforeseen costs as part of a job. Tradesmen who renovate houses may find some work costing more than they originally estimated, but sometimes this can’t be helped due to the nature of the work. An estimate helps give a customer a ‘roundabout’ price. 
• Fixed-price breakdown - On the other hand, fixed prices are static costs that state the exact amount a customer needs to pay, that’s not subject to change.  This type of quote should only be used in business if you know exactly how much something is going to cost, such as car parts, for example. 
• Request for a quote  (RFQ)-  This is when a customer comes directly and asks for a quotation for specific services. These are normally strictly formatted quotes for goods or services that are formally fixed. This is common with brokers or providers where they provide a set of quote(s) that the customer can choose from. At Bionic, you can even start a quote with us online.

What key information needs to be included in a quote? 

If you’re formatting a quote for your small business, it’s best not to skip any details. Make sure it includes the following: 

1. Your business details - The quote should specifically outline your company details and who is issuing the quote — don’t forget a contact number or email! If the customer needs time to decide if they want to go ahead, they need a way to contact you back and go ahead! 
2. The customer’s details - Make sure to include the customer's name, business address and any other correspondence relating to the customer.  
3. A unique quote number - Each quote should contain a unique quote number. This is to help you identify each customer you’ve quoted and makes it easier to store quotes in a database. This is usually 3-5 characters long and can be made up of numbers and/ or digits. 
4. The quote issue date - This is the date on which you’ve issued (or given) the customer the quote, which is important for documenting and referencing the quote. 
5. The quote expiry date - This is the date on which the quote expires. This is important to include because quotes can often be time-sensitive, and the price given is only valid for a limited time. Ideally, a quote expiry date should be 14-30 days from the issue date. 
6. The description and prices of the products/services - Outlining the products or services with clear pricing is arguably the most important part of the quote. This should be clearly laid out and easy for customers to read. 
7. The total amount of the sale - The quote should tally up the total amount for all the products and services that the customer needs to pay 
8. Terms and conditions - This is often included to outline any terms and conditions of the quote given. For example, this might include an hourly rate for any additional work needed to complete a building project. 

How to write a business quote 

Never written a business quote? Or need some guidance? Here are a few pointers to consider when crafting one: 

• Create a template - If you often use quotations to do business, then it’s best to have a template you can reuse. A simple layout and design is all you need, but don’t forget to add your business name and logo, this will help you look more professional. 
• Write the quote - Using the points mentioned above, write the quote, including customer information, details of the product/service and pricing 
• Specify payment terms -  Make it clear how the customer needs to pay.  
• Make sure to proofread - Before you send off your quote, make sure to check it over for spelling and grammar mistakes. A simple spell check in a Word or Google document will do the job! It’s also a good idea to double-check that the customer's name is correct. 
• Send to your client - Once you’re happy with your quote you can send it off to your customer, whether via email, post or even in give it in person at your business premises.  
• Follow up - If your customer hasn’t come back to you about your quote, make sure to follow up with them via email or even a phone call after you’ve given them a bit of time to think about it but don’t leave it too long either!

What's the difference between a quote and an estimate? 

An estimate is an informed guess of how much a job could cost a customer. This is normally based on the scope of work, materials and labour. A quote is much more of an exact amount on the costs. If a customer accepts a quote, then you should go ahead with the agreed price unless, in the terms and conditions, you have stated otherwise.

Is a quote a contract? 

A quotation (or quote) itself is not a contract. This means a customer doesn’t have to go ahead with it once it’s issued.  

But you should only give a quote if you’re happy with all the details and pricing because once a customer accepts the quote, it’s likely you have entered a contract, and you can issue an invoice for payment. A customer can accept verbally in person or through a phone call, but also by a written contract such as a message or email. 

Is a quotation legally binding? 

Under contract law, an offer is normally considered legally binding, not an issued quote. But, once a customer accepts, this changes. Accepting a quote can make it legally binding under these conditions: 

• The quote must outline what each party will provide to the other. For example, you will carry out the work quoted in exchange for payment from the customer.  
• The quote must be formally accepted, this could be through written email confirmation or a signature.  

You then enter an agreement that must be fulfilled. You carry out the work, and the customer pays for it — all within a certain timeframe.  

But remember, a customer can cancel the agreement before any work has been carried out if they get in touch to inform you. In this case, they don’t have to pay anything else to you (even if they’ve given you a deposit that you have specified as non-refundable). 

Note: This guide is informational content and is not a substitute for legal advice. If you are seeking legal help, then speak to a professional, experienced lawyer. They should be able to advise on writing and outlining legally binding contracts.

What happens if a customer doesn’t pay a quote? 

If you find yourself in a situation where you’ve carried out work and not had payment from a customer — it’s normal to feel frustrated. 

Before you start to worry, it’s best to send a reminder to the customer, as it could be the case that they just haven’t got around to paying or it’s simply slipped their mind. It’s best to stay calm, be polite and only contract customers during normal working hours to keep the law on your side. Make sure to keep a paper trail of all communication, and if you still have no luck, you could take it further, such as issuing a statuary payment demand. 

This is where you issue a formal demand for payment to an individual or company, and anyone who is owed money can do this, and you don’t need a lawyer. Find out more on the government website. 

Protecting your business with help from Bionic 

If you issue a quote, it gets accepted and then it never gets paid, it can cause a headache. Sometimes this just can’t be helped, but you can be proactive and protect your business with business insurance. Bionic can help you find the right business insurance by working with a panel of trusted providers and arranging a package for you, which could just protect you from unforeseen circumstances — and difficult customers! 

Interested in more resources for small business insurance? Head to our insurance guides now.