What Is a Price Quote and How to Create One
A price quote is a business document given to potential customers that lists fixed costs for products, services, or both. Clients typically request price quotations from multiple businesses simultaneously to compare prices and delivery dates. It's important to create realistic and competitive price quotes so that you can bring in more work for your business. Follow our guide to learn how to create professional and effective price quotes today.
What Is a Price Quote?
A price quote or business quote is a formal document presented to a potential client by a business hoping to secure work or sell goods. Sometimes, a small business owner gives a verbal quote; however, it's better to create a written quote so that there's an accurate record of what was proposed. A price quote is used to communicate to the client some or all of the following details:
- Business contact information
- Client contact information
- Unique quote number
- Date of quote's issue
- Services to be provided
- Service exclusions
- Customized pricing
- Total cost
- Possible extra costs
- Project timeline
- Completion date
- Possible delays
- Space for signatures
- Payment method for a deposit
- Terms and conditions
- Applicable tax charges
- "Valid until" date
Another purpose of a price quote is to protect your business from real-time price fluctuations. The cost of items, such as materials, can change over time, so be sure to set a term for your quote. Include a line at the bottom that states how long the quote is valid. For example, it could say "valid for 30 days from date of issue" or whatever term length works best for your business.
How Do You Calculate a Price Quote?
Figuring out a number to quote is the first thing when creating a price quote. Pricing can be a tricky task. If you bid too low, you won't make much profit or any at all. Bid too high, and you might not land the job. You want to hit that sweet spot the first time, where you can make a good profit at a price that seems reasonable to your client. Here are two steps you can take to calculate an accurate and competitive price quote.
1. Research Competitor Pricing
It's a smart move to take some time to size up your competition. Some quick online research or a couple of phone calls can help you get a better idea of what similar businesses are charging for their goods and services. It's a way to ensure that your pricing is accurate for your area or industry.
2. Calculate Your Price for the Job
To begin calculating your price for a job, jot down all the items you'll need to include on the price quote. It's OK to place some rough estimates next to these items if you know how much they should cost. Then, analyze each job aspect to determine what you should charge to make a fair profit margin. Take a look at items like the cost of goods or hourly service rates. Remember to include variable costs, like taxes or exchange rates.
How Do You Write a Price Quote?
While many price quotes have common elements, you should create a custom quote every time a client requests one. Skynova makes it easy to create a professional price quote. Simply fill in our price quote template and send it to your client by mail or email. You can print, download, or send a price quote from our template for free.
A good quote is a great way for you to gain more business. It's an opportunity not only to inform your client about your prices but also to make a sale. Each price quote should be tailored to your client's needs. Make sure you relay all pertinent information clearly and concisely. Below are seven steps to help you make the best price quote possible.
1. Add Your Business's and Client's Contact Information
On Skynova's price quote template, you'll notice that your business information is the first thing to add. Your company name, your name, and your contact information should be placed in the correct space so that the client can quickly see who sent the document and how to contact them. The client's name and contact information should be added below yours.
2. Add a Logo Customized to Your Business
In addition to your business contact information, your company's logo should be added to the price quote. A logo helps you establish your brand, create recognition, and look more professional. Skynova's templates give business owners the ability to quickly and easily upload their logos. The logo is placed directly onto the template on the upper right side of the document.
3. Choose a Unique Number for Each Price Quote
Just like an invoice, each price quote should be uniquely numbered. This practice makes these business documents easier to organize and track. You can decide how you want your numbering system to work and which number to use as a starting point. Place the appropriate quote number in the space provided on our price quote template. You'll find this space to the right of the client's contact information, above the quote date. Using Skynova's software, we'll automatically create a unique number for you and ensure that each new number is in sequential order.
4. Include a Quote Date
It's important to include a quote date when filling out the template, as this form can become a binding legal document. The quote date is the day you created and sent the quote to the client. It's also known as the issue date. You need this date so that you can calculate the expiration date of the price quote.
For example, say you send quote #124 to a client on Dec. 1. The quote states that it's valid for 30 days. The client has until Dec. 31 to accept the price quote. You can also use this time period to follow up with the client and let them know how much longer the quote will be valid. You'll find the space to enter the quote date directly below the quote number box on our template.
5. Input Your Pricing
After researching the competition and calculating your quoted prices, it's time to input your pricing line by line on the price quote template. To create your price list, you'll need to choose one of the five line item categories from the drop-down menu located under "Item." The options to choose from are:
Choose one from the menu and move to the right to add an item description. Add a price under "Unit Price" and a quantity in the next box. The total amount will then be automatically calculated and appear in the "Amount" section.
For example, say you propose to charge an hourly rate of $25 per hour for your 10 hours of labor. Select "Hours" from the menu under "Item" and fill in the description of the labor for which you're charging. Enter $25 under "Unit Price" and enter 10 under "Quantity." A total of $250 will appear in the "Amount" column.
6. Apply Any Discounts You've Offered
Everyone loves to save money. Offering a discount can set you apart from the competition and charm your clients into accepting your offer. You'll need to decide what type of discount you want to propose and how much your business can afford to offer. You can include discounts on the price quote as a line item below your charges.
For example, say you want to offer a $100 discount if the client accepts the price quote offer within two days. Under "Item," choose "Discount" and add a description next to it about the discount. Enter "$100" under "Unit Price" and "1" in the "Quantity" box. The unit price will automatically format to a negative number. A $100 discount will show up under the "Amount" column and at the bottom of the document below the subtotal amount.
7. Add a Note for Extra Context
A "Notes" section is provided at the bottom left of the price quote template for your convenience. Use this space to include any necessary information the client needs to know, such as a disclaimer if an item is subject to change.
If you find you have more information to add than can fit in the space, you could attach a cover letter or include it in your email with the price quote attached.
What Is the Difference Between a Price Quote and an Estimate?
Once a client accepts a company's price quote, it becomes a legally binding agreement. The business must deliver its goods and/or services by the delivery or completion date listed on the price quote. The client must pay for the goods and/or services. A price quote includes the specific hours of work and units of goods. All costs and payment terms are usually fixed on the acceptance date.
On the other hand, a price estimate is an informal communication between a business and a potential client. Estimates are used to provide a client with a rough number of costs and an estimated completion or delivery date. They're often given verbally or via email, and they aren't legally binding.
Some clients may not know the difference between a price quote and a price estimate. You may want to add a line to your price quote document to inform the client that it's a legally binding agreement once they've accepted it. This information will reassure them that you'll deliver what you've promised and let them know that they're expected to pay for what you'll provide.
What Are Some Best Practices for Sending Clients a Price Quote?
Writing a professional price quote is only half the battle to achieving success. You also need to foster positive client relationships to gain trust, ensure prompt payment, and encourage repeat business. Consider the following steps when sending clients a price quote to guide your business practices in the right direction.
Communicate With Your Clients
Communicating well with your client is essential for establishing a positive relationship and writing an accurate price quote. You need to fully understand every aspect of the client's expectations for the job you're quoting. You also need to communicate your expectations to the client and whether any variables could affect the proposed pricing and delivery dates.
Are there any factors out of your control that could affect your quote? Be upfront with the client from the start so that they won't be shocked if there's a kink in the timeline or an increased cost. Being on the same page with your client will lessen the chance of disputes.
Set Clear Timelines for Getting Paid
If you're not clear about when you expect payment from a client, they may forget or even intentionally put off compensating you. Being decisive about payment terms isn't bad business; it's good for you and the client. They'll be less likely to get behind on payments and accrue late fees when you provide clear expectations. Sending payment reminders before the invoice becomes overdue is a good business practice, too.
Make It Easy for Clients to Accept Your Quote
To get to work as quickly as possible, you want to make it as easy as possible for clients to accept your price quote. Skynova lets you send your price quotes directly to your clients online. They can open it and immediately accept it via the Skynova platform. No need for anyone to download files or print and sign paperwork. Our business software is designed to save you and your client time and energy.
Build a Successful Business With Skynova's Price Quote Template
Knowing how to calculate and build a price quote is a cornerstone to running a successful business. Price quotes create transparency between you and your clients, which leads to greater trust. Positive customer relationships help gain work and encourage repeat projects with the same clients. They may also recommend you to other people if you consistently offer fair prices and excellent goods or services.
Skynova's price quote template can make your day-to-day business operations even more efficient, leaving you time to focus on the part of your business that you love. Our template helps you quickly create and send personalized price quotes. Use Skynova's business software and free templates today to simplify your quoting process to earn clients' business and get paid faster.