Quote vs Estimate: What's the Difference?

You priced a job, put the number on paper, and sent it over. At the top it says Estimate, or maybe Quote. You have used both words for years, and nobody ever told you they are two different things.

Now the job is costing more than you expected. The parts came in higher than you figured, and you want to bill the difference. So you are guessing at what that piece of paper already committed you to.

Does the word at the top of the page actually mean anything? Can you charge more than the number you sent? And what happens if the customer signs it, then calls two days later to say they changed their mind?

By the end you will know which word puts you on the hook for a fixed price, whether you can bill more than your estimate, what happens when a customer changes their mind, which jobs that cancel rule leaves alone, and what to put on every quote.

Short answer: a quote is a fixed price you have agreed to do the job for. An estimate is your best guess at the price, and it can move.

• Send a quote and the customer accepts it, and you owe them that job at that number.
• Send an estimate and the final bill can be different, though several states put a hard cap on how different.
• Get a signature at the customer's home rather than at your office, and federal rules give them three business days to cancel.
• Whichever one you send, the words on your estimate and invoice template are what you will be held to later.

How I know: the cancel rule is the Federal Trade Commission's Cooling-Off Rule, and the state caps are written into statutes like Minnesota's Truth in Repairs Act. I quote both below.

Key takeaways

• Minnesota caps you at 110 percent of any written estimate you gave for work on a home.
• California wants home improvement work over $500 under a written contract, and every change signed before you do the changed work.
• Sign a customer up at their house for $25 or more, or anywhere else for $130 or more, and you owe them a printed cancellation form.
• You cannot write a waiver of that cancel right into your contract. The rule bans it.

Quote vs estimate: which one did you just send?

Here is the part that decides who pays when a job costs more than you expected.

A quote is a specific price for a specific scope of work. When the customer accepts it, you have both agreed on a number, and that number is now the deal. If the job takes you two extra days, those two days come out of your margin, not theirs.

An estimate is your honest guess before you know everything. The scope is not final, the price is not final, and both of you understand that the bill at the end may be different.

So it comes down to one question: who pays for a surprise? On a quote you do. On an estimate they do, up to whatever your state allows.

So use an estimate while you are still figuring out the job, and switch to a quote once you have seen the work.

That covers what the two words mean between you and your customer. The next section is about what your state says, because in a few states an estimate is a lot more binding than any of this suggests.

Can you charge more than your written estimate?

In most states, yes, within reason. In a few, there is a hard number you cannot bill past, whatever the job turned out to involve.

Minnesota has a law called the Truth in Repairs Act. Here is what it asks of you. You write a customer an estimate for work on their home.

The law calls that home a dwelling place, meaning "a room, apartment, or structure in which one or more persons live or any fixture thereof," and it covers any repair priced over $100.

From there, Minnesota law says you "shall not charge more than 110 percent of the total price stated in [your] estimate." Write $4,000 and the most you can bill is $4,400.

There is one way past that number, and it is a step you take before you do the extra work. If you find work you could not reasonably have known about, you stop and write the customer a revised estimate. Hand it to them and get their authorization to keep going.

Do the work first and ask after, and the most you can bill is still $4,400.

California gets there a different way. Home improvement work over $500 has to be under a written contract. And the California statute says that contract "and any changes to the contract shall be in writing and signed by the parties to the contract prior to the commencement of work."

So a change order you agreed to over the phone is not a change order in California. Get the signature before your crew starts the changed work, not on the last day.

Most states ask for less than either of these. That is exactly why this is worth ten minutes: the rule that decides your final bill is a state rule, and yours may be stricter than you think. Your state contractor licensing board publishes it.

What if the customer signs and then changes their mind?

Then they can cancel on you, and for three business days you have to let them. This one surprises almost everybody, and it has nothing to do with which word is at the top of your page. It comes from the Federal Trade Commission (FTC), in what people call the Cooling-Off Rule.

Here is what it asks you to do. You go out to a customer's house. You price the work, you write it up, and you ask them to sign it right there.

Because you asked for that sale somewhere other than your own place of business, it counts as a door-to-door sale. That is the trigger, and the customer never has to give you a reason for using it.

The amounts are small. At the customer's home the rule starts at any sale of "$25 or more." Anywhere that is not their home, such as their workplace or a hotel, it starts at "$130 or more."

Four things the rule asks of you at the moment they sign:

• Put a line on the contract in bold 10-point type. The rule gives you the exact wording: "You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction."
• Hand them two copies of a separate form headed Notice of Cancellation. It has to be in the same language you sold the job in.
• Tell them out loud that they can cancel.
• If they do cancel, refund every dollar they paid you within 10 business days.

One more line worth knowing, because owners try it: you cannot add a waiver to your paperwork and have the customer sign the cancel right away. The rule bans that outright.

Does that cancel rule apply to every job?

No. The rule only covers a sale you went out and asked for, so three kinds of job fall outside it.

The customer called you out to fix something of theirs. If they asked you to come repair or maintain their own personal property, that job is outside the rule. Watch the edge on this one: the exclusion covers the repair they called about, and selling them something extra while you are standing there is a separate sale.

It was a real emergency and they put it in writing. A job is outside the rule when the customer called you out for an emergency. They also have to give you "a separate dated and signed personal statement in the buyer's handwriting describing the situation." Typed does not count, and a line on your own form does not count either.

Nobody met in person. A sale done entirely by mail or telephone, with no other contact between the two of you before you do the work, sits outside the rule. Read that one closely before you rely on it. Drive out, look at the job, then email the quote, and you have had other contact, so this exclusion is gone.

4 things to put on every quote before you send it

Working out how to price a job is your own call, and it changes by trade. This is the other half: how to write an estimate or a quote so the number you picked is the number you get paid. The same five lines belong on both.

1. The word you actually mean, at the top. Pick Quote or Estimate on purpose and make the document say which one it is. Two minutes of deciding is cheaper than arguing about the extra cost later.

2. An expiration date on the price. Material prices move, so give the number a life span: good for 30 days, or good for 14. Without a date you are quoting today's cost against next quarter's invoice.

3. What is not included. Name the things that would turn into a change order: hidden damage behind a wall, a permit you have not priced, a second trip for a part. A customer who read that line before you started is a customer who signs the change order without a fight.

4. When they pay, and how much up front. Say the deposit, the schedule, the methods you take and your late fee rate. Watch your state on this one. California's home improvement statute requires this warning in the contract itself: "IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED."

So you automate it. A quote follow up email becomes a step in every job, the same way the first message to a new lead gets sent on its own while you are out on site. Two or three follow-ups on a quote is normal, the same way more than one attempt on a new lead is normal.

FAQ

Is a verbal quote binding?

A spoken price can still form an agreement in most states, and that is the problem. You have nothing to show for it, and neither does your customer. Several states take the question away from you anyway: California requires home improvement work over $500 to be in a written contract, so a number you said in a driveway is not the deal there.

The customer canceled on day two and I already bought the materials. Now what?

Treat this as a scheduling question. Do not order special-order parts or put a crew on the calendar inside those first three days, unless the job is one of the excluded kinds above. On a job you can stage, order the materials once the cancel window has closed. Count business days, not calendar days, because a weekend pushes that deadline out.

My customer is another business, not a homeowner. Does any of this apply?

The cancel rule covers goods and services bought "primarily for personal, family, or household purposes," so a commercial job is outside it. Your state's estimate and contract rules can still apply, and those are written separately, so check them rather than assuming commercial work is unregulated.

Get your quotes out the same day you see the job

Catch CRM is an all-in-one platform for home service and trade businesses across the United States, and estimates, quotes and invoices live in it beside your leads. If quotes are sitting for two days before anyone sends them, or nobody is following up after, book a demo and we will walk through what that looks like on your jobs.