This Podcast Is Episode Number 0344, And It Will Be About Quotes Vs. Estimates And Insights To Contract Negotiations   The nature of some types of businesses makes it challenging to come up with a standard price list. For tradespeople and construction company owners like you, what's required in terms of time, skill, labor, and materials frequently vary from job to job. Offering an estimate or quote provides potential clients with a customized figure for what they can expect to pay based on what will be required to complete a specific project. Quotes A quote is a legally binding fixed price a company prepares for a client; as such, they should always be in writing. A quote should summarize the work to be performed and include a detailed breakdown of all the costs and the final total, including taxes.  Once a business offers a quote and a client signs off on it, the price cannot change even if the job ends up costing more than initially anticipated. For this reason, it's crucial to always quote as accurately as possible, allowing ample time to complete the job and carefully pricing out costs for materials and labor (e.g., subcontractors).  To protect your business from "scope creep," a quote should also stipulate that additional charges for extra work beyond what the original quote covers will apply. Estimates Unlike a quote, an estimate isn't legally binding, and it isn't a guarantee of what the actual work will cost. Still, it's recommended that estimates also be provided in writing. An estimate is offered as a ballpark figure, based on the information available about a project at that moment in time. As such, it's understood that the estimate is subject to an increase or decrease once the work begins.  Construction companies should take just as much care when providing an estimate as they would when drafting a quote. Ideally, an estimate should provide a number within roughly 20 percent of the final price. It's good practice for businesses to provide more than one estimate, to offer a range of options at different price points. Tips For Costing Out Jobs For small construction businesses, it's vital to appear as professional as your larger competitors whenever you communicate with clients, but especially when negotiating the details of a potential project.  Be sure when you're preparing your quote or estimate that you include the following information: Your business number  Business contact info (phone, email, address) A detailed summary of the work to be performed A breakdown of costs (subcontractors, materials, time and hourly cost for labor) The total cost A timeline for the work and completion date Contract terms, including deposit and payment schedule Another essential bit of information is to provide your clients when the quote or estimate expires. Many companies choose an expiry date of 30 days, to protect themselves from the possibility of rising costs for materials or other factors that may influence the cost of the job. Insights To Contract Negotiation There are several aspects of the construction business that can only be learned through experience. One of them is negotiating contracts.  Several people fear the negotiation process because it is an intrinsically uncomfortable process. Asking for more money or making personal demands doesn't come naturally to everyone. But with the right toolkit, you can breeze through contract negotiations. And you'd better get used to it because you'll have to handle many contracts whether you're a construction company owner or employee. Having the right mindset is critical to contract negotiations. You have to believe that you are going to get your way. Bring a positive attitude and a smile to the table. You're not signing contracts with the enemy. The people you're negotiating with are going to be your business partners in one capacity or another. Let's take a look at some things you need to remember when you're in the process of...