An estimate is the approximate or a rough calculation of the value of a product or service. In your business, an estimate is a document that you give to your customers with an approximate prediction of the price of the product or service that you’re offering to them.
An estimate is different from a quotation. A quotation is a fixed price offer that must be contractually adhered to, furthermore it has legal substance whereas an Estimate does not.
Article Link: Estimates Vs. Quotations
Lets look at Brian's custom Guitar business to better understand Estimates.
Scenario: Brian runs a custom build Guitar shop. One of his customers has a vintage Guitar they want him to restore. He requests some photos of the Guitar, examines them and sends the customer his estimate to restore it. As he gets on with the restoration he notifies the customer of any extra work he may need to do, and adjusts the estimated cost when he invoices the customer for final payment.
Additionally, you can use an Estimate to provide the costs of products or services to your customers so they can negotiate the price before they accept the order. When the prices are fixed this can sometimes be called a Quotation.
Article Link: How to Change an Estimate into a Quote
You don't always have to give your customers an Estimate. If the customer is placing the order, or has placed the order and the costs are fixed you can just provide them with an Invoice to pay you. But if the time between the order being placed and the payment date is more than a few days, an estimate is a good way of giving a written offer of the deal and costs you have agreed on.
Life-cycle of Estimates
The next steps after an Estimate has been accepted are:
- Ship customer goods (Where you are restoring or repairing customer's items)
- Raise a part payment (Deposit)
- Create a job sheet (So you can manage the process of completing the job)
Below you will find multiple articles that will help you when creating and managing estimates in Tudodesk:
Creating and sending Estimates
Creating an Estimate from a Lead or Inquiry
How to Create and Send an Estimate
How to Change an Estimate into a Quote
[Using live chat to negotiate estimates]
[Automatically following up your estimates]
How to Accept or Reject an Estimate
Accepting Estimates In The Client Portal
How to Print or Download a Copy of an Estimate
How to Attach a Project File to a Document
How to Set the Standard Terms for Estimates