While the terms estimate, quote and proposal are often used interchangeably, they do have some technical differences. It’s useful to get your head around these terms when establishing or refining your business processes. Regardless of what you call it, the document may be your first point of professional contact with a potential client, and you’ll want to make a good impression.

Before we get started…

There are essentially three types of business activities associated with kitchen and bathroom design:

  • fabrication and installation of kitchens
  • renovation and installation of bathrooms
  • design only of kitchens and bathrooms on a fee for service basis

To manufacture and install a kitchen is – in most states of Australia – regarded as a residential building contract, and licensing and legislative requirements may need to be met in order to carry out this work. Likewise, overseeing and/or undertaking the renovation of a residential space to accommodate a new kitchen or bathroom can require a particular licence, depending on the extent of your involvement in project management.

If you’re not licensed to project manage or supervise any level of construction, it’s important to make your client aware of your service parameters. Providing a detailed written scope of work is the best way to ensure your client knows just how far you’ll be taking their project. Ideally, you’ll want to set this out in your quotation or fee proposal, and you’ll definitely want to make sure it’s evident in your contract.

In this feature, we’ll address the quotation and contractual requirements for a design only service.

Understanding Estimates

An estimate could be described as a ballpark figure. As the name would suggest, it’s simply an ‘estimation’ of how much a job will cost. Do you have limited information about the scope of work involved in a new design project? Are you uncertain about the client’s sincerity in engaging a professional designer? In both instances, an estimate may be a practical option to open up new lines of communication, or prevent wasted time for yourself and the client. Your estimate may include a nominated scope of work, and allow extras or upgrades to cover extended scope. Alternatively, it may offer a range of fees to allow for a variety of scenarios. Always make it clear that your submission is an estimate only, and may be subject to change.

Qualifying Quotations

While not always legally-binding, a quotation is considered to be a more precise presentation of the costs associated with your services than an estimate. Quotes are perfect for easily quantifiable projects with few variables; if you’ve got a well-determined scope of work, a quote may be your best option. As the price of your services or associated products may increase, make sure you include an expiry date for any quoted works. (For example, a quote provided in September this year may be off the mark next June, so ensure you’re not leaving your quote open-ended.)

Putting your best foot forward with Proposals

If you suspect you’re competing with other designers, consider preparing a structured and comprehensive proposal. A proposal may include a quotation or estimate, along with in-depth details about the project and the services you offer.  Your proposal should include a schedule of work, indicating how long you’ll need for the various stages of the project. If your schedule has some assumptive qualities – like receiving answers from your client in a timely manner – you’ll want to make sure this is made clear. And if your project schedule depends upon a specified start date, ensure your client knows precisely when you’ll need an official ‘go-ahead’ to secure the time frame.

Regardless of which of the above options you choose to submit to your client, it’s essential to include the following in both design fee submissions and any subsequent contracts:

  • Business details: providing your ABN and contact information is a legal requirement.
  • Costs: detail the specifics of your services, and outline inclusions and exclusions.
  • Variations: explain how different scenarios or variations may affect the price, and how they’ll be handled contractually.
  • Payment terms and conditions: indicate when you’ll require payments, and the terms in which you operation (e.g. seven-day payment terms).
  • Quote expiry date: clearly note the date you need the quotation to be accepted by, particularly if you require notice to fit the project into your schedule.
  • Payment methods: set out your preferred method of payment if you are taking a deposit upon quotation acceptance.
  • Customer acceptance signature: include a ‘sign here’ statement to fix the agreement.

When you’ve won the work

While your quotation, estimate or fee proposal may tick all the boxes above, it may not give you the security, clarity or professionalism of a signed contract. Learn more about why you should use a contract here.

As always, we’d value your contribution to this conversation, so please feel free to comment below.