Quote vs Estimate vs Invoice: What's the Difference for Contractors?
Quote, estimate, bid, proposal, invoice: what each means, when to use them, and how the wrong one can cost a contractor money.
Clients and contractors use these words loosely, and the confusion causes real disputes. Here is a plain guide.
Estimate
An approximate price based on available information. It may change, and it is usually not binding. Good for early conversations when the scope is unclear.
Quote
A fixed price for a defined scope, valid for a set period. Once accepted it is typically binding on both sides, which is why scope and exclusions must be exact.
Bid
A formal price offer submitted in competition, often for commercial or public projects, following the client's documents and deadlines.
Proposal
A fuller document combining price with a description of the approach, schedule, credentials and terms.
Invoice
A request for payment for work done or a deposit due. It shows amounts, taxes, due date and payment methods, and it is the document the CRA expects to see for GST/HST purposes.
Which should you send?
- Unknown conditions: estimate with a range and a note on what could change it
- Defined work: quote
- Competitive or large project: bid or proposal
- When work is accepted or complete: invoice
Protecting yourself
If you give an estimate, say it is an estimate. If you give a fixed quote, list exclusions and handle changes in writing: change orders. Add terms from a contract when the job is big.
One flow, not four documents
The cleanest approach is a single record that moves from quote to accepted job to invoice. See how to write a professional quote and how to write a quote that wins jobs, or try free quoting.