Estimate, Quote, Bid and Proposal—What’s the Difference?

Entrepreneur freelancer making a presentation

People often use the terms, bid, quote, proposal and estimate interchangeably. In this article, let’s put the confusion to rest.

Before you send anything to your client, understand the details of what they want, like cost expectations, desired services or past client testimonials and recommendations.

If you fail to get crisp on what your client expects, you run the risk of giving them the wrong information and stalling the process.

While open to interpretation, an estimate, bid, quote, and proposal are meaningfully different. There are widely accepted definitions that hold true across industries. It’s these definitions we explore in this post to put some of the confusion to bed.

Let’s jump in.

What’s an Estimate?

As the name suggests, an estimate is an approximation of what things will cost.

Estimates help you determine costs and assist clients with budgeting. They’re usually drafted without an in-depth understanding of the client’s requirements and are subject to change as new information surfaces (that contractor estimate can get blown when they discover asbestos or old wiring, for example).

But estimates don’t only detail costs. They provide a high-level overview of:

  • The services you’ll provide so clients understand the work you will complete
  • Project scope, so clients understand broadly what each service entails
  • Timelines and completion dates to manage client expectations
  • Exclusions to avoid disputes later on
  • Other specific terms that the client should know if they want to do business with you

What’s a Quote?

Unlike an estimate, a quote provides a fixed price for a project subject to a specific time frame. Ever seen a quote that reads “Valid for 30 days?” Sure you have.

In many industries, companies will have these terms to protect themselves. For example, if you have your own cake business you know that the price of the ingredients can fluctuate from one day to the next.

Regardless, once the customer accepts the quote you have to complete the work as detailed in the quote and at that price. For this reason, you’ll want to compile a quote with a thorough understanding of what the client wants. In this way, you’ll be able to go into detail about the services, exclusions, timelines and the project scope.

What’s a Bid?

Bids are common where the scope of work is clear. For example, think of a government agency looking for suitable contractors to complete a project. They will detail what they need and make these requirements available.

Companies will then bid for these projects by specifying how much it will cost to complete the project. The agency will then choose a winner among the many bids.

A bid will have more detail than estimates and quotes. While Bids and proposals are similar, proposals usually have more detail.

What’s a Proposal?

You’re probably familiar with the following scenarios: A client asks you to send a pitch after a client meeting and you get shortlisted. Now, they want you to compete for their business and ask for an estimate, but instead, you go the extra mile and show off your real value.

In each of these scenarios, you’ll, invariably, create a proposal. Proposals include all the information contained in estimates, quotes and bids. But they take things further by showcasing the value that you can offer a prospective client and including testimonials and examples of past work to establish trust.

Specifically, they detail project scope, timelines, deliverables, and costs (or investment). They’re specific and not an approximation.

They’re usually put together to win a client’s business at the start of a new relationship. When you submit a proposal, you’ll often do so in competition with several other companies. As a result, it’s essential that you take time to construct an excellent proposal and showcase value.


Estimates, quotes, bids, and proposals are different, despite the overlap between these documents.

It’s important that when you submit any of these to a client, you take the time to understand what they’re expecting to receive. Why? So that when you’re asked to deliver a quote, you’re not delivering it based on what you think, but on what the clients want. This should prevent confusion and make life easier for you and your clients.

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Tags: Customer StoriesHuman Resources