Writing Estimate Terms and Conditions

When a potential client or customer is thinking of hiring you for a project, they'll want to know how much they will have to pay you. Whether you're working as a graphic designer or a plumber, providing an accurate and professional estimate will provide this clarity. It will further attest to your business's professionalism and trustworthiness.

An estimate isn't binding, but it provides some idea of what the project will cost your client or customer. They can then decide if they want to enlist your services. Clearly defined terms and conditions are an important part of any estimate, clarifying critical details, such as payment terms.

This step-by-step guide explains the importance of terms and conditions and details what your estimates should cover.

What Is an Estimate?

An estimate is a written document that details the approximate costs of a project. An estimate is provided to potential clients or customers, giving them the essential information that they need before committing to hiring your services. A cost estimate is not legally binding; it's an educated guess. A person or business isn't obligated to hire you just because you give them an estimate.

Say you go to the car dealership to get a new car. You have your eye on a shiny, new Porsche. However, it doesn't have a price sticker on it, and when you ask the salesman, he can't quote you a price. Instead, he hands you a sales contract and asks you to sign it. You would not only refuse to sign — you would probably not want to do business with that salesman at all.

When you ask a potential customer or client to hire you without providing an estimate, you're that salesman. If you're going to buy a Porsche, you not only expect to know the price upfront. You also expect to know the details of the sales contract, like what kind of warranty you can expect. The estimate terms and conditions are like these details — essential information, such as accepted payment methods, that a client or customer wants to know before hiring you.

Why Does an Estimate Need Terms and Conditions?

The terms and conditions of an estimate also help to safeguard the interests of the company. Here are some practical reasons your estimate needs term and conditions:

  • Avoid missing or incomplete payments: Terms and conditions set out payment details, like what methods are accepted and what fees may be associated (such as credit card fees). Presenting this information to your client upfront will streamline payment.
  • Prevent lawsuits: Terms and conditions can also cover unexpected measures, like unforeseen costs of a project and extreme circumstances that may interfere with the timeline or costs, like natural disasters or a pandemic like COVID-19. Detailing exceptions can avoid lawsuits.
  • Protect your reputation: As a small business owner, your reputation is important. It's what helps you stand out from bigger competitors. Providing accurate and comprehensive estimates with thorough terms and conditions will help uphold a professional reputation.

How to Write Estimate Terms and Conditions

Every business is unique, and no two sets of terms and conditions will be identical. The terms associated with a photography business will address different scenarios from those required by a health care company, for example. That said, there are some basic best practices you should follow when writing any estimate terms and conditions.

Use an Estimate Template

Use a template like Skynova's free estimate template to ensure your document is professionally formatted and clearly presented. The template includes a "Notes" section, where you can include terms and conditions. Using a template also ensures consistency. Plus, you can create estimates more quickly because you'll just have to change a few critical details, like the client name and project information, each time.

Include Necessary Payment Information

Your estimate should detail a price and basic payment details. It's important to note that the price in your estimate is "subject to change." This will protect your small business in case of fluctuating prices. For example, if you're a general contractor and need to buy lumber to complete a project, you can't control market prices of lumber (which your estimate will take into account).

You may also want to note how any work or price variations will be charged. If the job becomes more complicated than anticipated or a client changes what they want, you can refer back to this for guidance.

Add Your Estimate Terms and Conditions

Finally, you can add terms and conditions. You will want to include general, detailed, and payment terms and conditions and any industry-specific terms and conditions. Below, we provide some examples of different terms and conditions, which you can use for inspiration, adapt for your own needs, or even copy and paste if they suit your needs.

General Estimate Terms and Conditions Example

Here's what your general terms and conditions might look like:

  • This estimate is not guaranteed. The price named above is an approximation based on the project requirements defined in conjunction with [client/customer]. The actual cost may change after all elements of the project are negotiated and finalized. [Client/customer] will be notified of any such changes in cost in advance. This estimate remains valid for 30 days (expiry date: X).
  • Services: If you accept the terms of this estimate, [Company] will perform the services as described in this estimate. If you would like [Company] to perform additional work not covered in this estimate, these services will incur additional charges.
  • Schedule: The services will be completed according to the project schedule provided with this estimate or according to a timeline otherwise approved by both you and [Company] in writing.
  • Changes: Any changes requested to the services described in the estimate, e.g., specifications, quantities, or schedule, are not binding unless [Company] accepts and confirms these changes in writing. Any changes may lead to additional charges. You agree to pay these charges when you request and agree to these changes.
  • Payment will be due in full upon project completion unless explicitly agreed otherwise. If an estimate has been provided, the full amount, minus any already made payments, must be paid at this time. If an estimate has not been provided, [Company] will inform you of the amount due and provide a detailed invoice within [X] hours.
  • Taxes: You are responsible for all applicable local, state, and federal taxes levied on the transaction described in the estimate. No tax exemption may be recognized unless a valid certificate of tax exemption is provided.
  • Payment terms: All invoices related to services defined in this estimate are to be paid within 30 calendar days (Net 30) of the invoice date.
  • Late charges: Any invoices not paid within the Net 30 time frame will incur late fees. An interest rate of 12% per year or the highest legally permissible rate will be applied until the invoice is paid.

Detailed Estimate Terms and Conditions Example

Here are what the more detailed points of your estimate might look like:

Payment Terms and Conditions Example

Here are what your estimate's payment terms and conditions may look like:

All prices include the relevant sales tax.

The company accepts the following payment methods:

  • Credit card (define card types accepted)
  • Check
  • Cash
  • Etc. (define any surcharges, e.g., a percentage processing fee for PayPal)

Any materials or goods supplied by [Company] will remain [Company]'s property until you have paid the total amount due.

You might also cover points like taxes, payment terms, and late fees.

Industry-Specific Terms and Conditions Examples

As mentioned, you also have to include industry-specific terms and conditions. For example, a general contractor might include an estimate disclaimer addressing liability issues. Here are a couple of examples:

  • Graphic design estimate terms: This estimate is not binding. It is based on the information provided and may change based on additional services or new specifications. This estimate's price does not include the costs of copywriting, video, animation, third-party artwork, web server charges, or advanced programming functions.
  • Construction estimate terms: This estimate is formulated on a best endeavors basis. Unless a fixed price quotation has been provided to the customer, work will be charged based on the price of parts plus labor charged by the hour. This estimate is not binding, and the pricing may change depending on the aforementioned factors.

Use Skynova's Software to Help Manage Your Estimates

As a small business owner, you have plenty to worry about without stressing about potential lawsuits or struggling to collect payment from your clients or customers. An estimate with detailed terms and conditions will help prevent these kinds of stress. Save your time and energy when writing estimates with Skynova's free template. We have an array of tools and additional information to support your business success. Find out how we can help.