What is a quote and how do you write one?
A quote, also known as a quotation, is a document issued from a business to a customer outlining the price of a sale before the customer has committed to the purchase. It’s used to let a customer know exactly how much the products or services will cost them and help them to decide if they will continue with your company.
This article explains what a quote is, how it fits into the sales process and how it differs from other sales documents. A sample quotation and free downloadable quote templates for Word and Excel are also provided.Create quotes for free
A quote is sent early in the sales process when a customer is initially enquiring about your prices. The customer is likely shopping around trying to find the best deal.
Quotes are not binding agreements. Once a customer has received a quotation, they can either accept it and continue with the purchase or choose not to move forward with your business.
A quote should be sent when a customer asks you about your prices. It’s important that these prices are accurate as they shouldn’t be changed once the customer accepts the quote. After the quotation has been accepted, it can be converted into an invoice.
Quote and invoice templates generally have the same structure, and your quotations should follow a similar format as invoices. Although there aren’t any legal requirements for quotations, the quote should let the customer know exactly how much their requested product/service will cost.
A quote should include:
Your business name and address
The customer’s name and address
A unique quote number
The quote issue date
The quote expiry date
The description and prices of the products/services
The total amount of the sale
If your business is registered for VAT, you should include VAT on your quotation as well. It’s also beneficial to clearly state “Quote” at the top of the document to differentiate it from other sales documents.
If there are any discounts included in the sale, these should also be reflected on the quote. You may even want to offer a small discount for the customer if they accept the quotation quickly. This would then work similarly to a cash discount: by offering the customer a small saving if they accept the quote quickly, you can often spur customers to action and generate more business.
You want to make every quote as enticing as possible for the customer. At times, it may therefore be advantageous to change the language of your quote for your customer or issue it in their local currency. If you choose to do this and the quote is accepted, for consistency, you should then also issue the invoice in the foreign currency.
Quotes and estimates are very similar, however, there is one key difference. Both documents are sent to a customer who’s inquiring about your products or services. However, an estimate’s price may change.
Quotations should provide clear parameters and a fixed price that should not change if the customer accepts the quotation. Estimates, on the other hand, provide an estimated approximation of the costs involved.
Depending on your industry, it may not be possible to issue a quotation with a fixed cost. You may need to issue an estimate with the approximate cost instead. For example, if you work in construction and create construction invoices, you may need to get specific measurements prior to giving an exact price.
Regardless of if you issue a quotation or an estimate, your document should be clear to the customer. If an estimate is issued, you should state on the document that the price may change.
A proforma invoice is issued at a different stage of the sales process. It’s essentially a draft invoice that is issued to the customer after they’ve confirmed that the sale will occur, but prior to the final details being confirmed.
For example, a customer has committed to purchasing 20 customised t-shirts from your business but doesn’t have the final t-shirt sizes confirmed. A proforma invoice would be issued until the customer responds with the final numbers.
Neither proforma invoices nor quotes are legally binding documents. They need to be converted into a standard invoice when the sale is finalised and payment is due.
Once a quote has been agreed upon, your invoice and quote software will usually allow you to convert the document into a proforma invoice and finalised invoice without needing to reenter information.
To sum up, a quotation is sent when a customer enquires about your prices but hasn’t committed to a purchase. A proforma invoice is sent after a customer has committed to the purchase but the details of the sale may change.
Below, we have provided a sample quote for a graphic design business. It follows a similar layout as an invoice and includes all of the recommended quote fields.
Some small businesses prefer to use Word and Excel to create their invoice and quotation templates rather than invoicing software.
Below, there are free downloadable quote templates in Word and Excel format. There are templates for freelancers and non-VAT registered businesses, as well as templates that include VAT.Download Excel quote templatesDownload Word quote template (non-VAT)Download Word quote template (VAT)
Invoicing software is specifically designed for creating compliant and professional sales documents and can save your business time and money. It not only helps you create invoices, but it can also help you create quotes and other sales documents.
SumUp Invoices is free invoicing software that can help you create and issue quotes in less than 1 minute. Our simple premade template generates several of the fields automatically and makes sure that your quote is correct.
If your customer accepts the quote, you can convert it into an invoice in just a click.Create quotes for free