A quotation is a fixed price you offer before work starts. An estimate is an approximate price that can change. An invoice is a payment request you send after the work is done. A quotation and an estimate are about price; an invoice is about getting paid.
That one-paragraph answer is all most people need. The rest of this guide shows how the three documents differ, when to use each, and what a good one contains.
Quotation vs Invoice vs Estimate: Side-by-Side
| Estimate | Quotation (Quote) | Invoice | |
|---|---|---|---|
| When it's sent | Before work, while scope is unclear | Before work, once scope is agreed | After delivery or completion |
| Purpose | Give a rough idea of cost | Offer a fixed price | Request payment |
| Is the price fixed? | No, approximate | Yes, for the validity period | Yes, final amount due |
| Binding on the seller? | Generally not | Yes, once the buyer accepts | Yes, it's a demand for payment |
| Has a due date? | No, but may have an expiry | Validity date (often 15–30 days) | Payment due date |
| Can it change? | Yes, freely | Only by issuing a revised quote | Only through a credit/debit note |
| Used for tax claims? | No | No | Yes, a tax invoice supports input tax credit |
What Is an Estimate?
An estimate is your best guess at what the job will cost. You use it when you can't yet know the full scope: a renovation where walls might hide surprises, a software project with fuzzy requirements, a repair that depends on what you find once you open the machine.
An estimate usually shows a price range or a "from–to" figure, the assumptions behind it, and a note that the final price may differ. Because it's not a commitment, the customer can't hold you to it.
What Is a Quotation?
A quotation (also called a quote) is a formal offer to do specific work for a specific price. You use it when the scope is clear: 200 printed brochures, a monthly bookkeeping retainer, 50 units of a product at an agreed rate.
A good quotation includes:
- Your business name, contact details and tax registration number
- The customer's name and details
- A unique quotation number and the date
- An itemised list of products or services, with quantity, rate and total
- Taxes shown separately
- A validity period (for example, "valid for 30 days")
- Payment terms and delivery timeline
Once the customer accepts, a quotation works as the agreed price for the job. You should honour it for its validity period, even if your costs rise.
What Is an Invoice?
An invoice is the document that asks for money. You send it after delivering the goods or finishing the work (or at agreed milestones). It lists what was supplied, the amount due, the due date and how to pay.
In countries with a sales tax regime such as GST or VAT, a tax invoice is also the legal document the buyer needs to claim input tax credit. A quotation or estimate can't do that job.
Quote vs Estimate: Which Should You Send?
- Send an estimate when the scope is uncertain and you want to give a ballpark without committing. Say clearly that it's approximate.
- Send a quotation when the scope is defined and you're confident in your price. This is also what most corporate buyers ask for, because they need a fixed number to approve a purchase.
If you start with an estimate and the scope firms up, follow it with a quotation. Don't let the estimate quietly turn into the final price.
Quotation vs Invoice: The Real Difference
The two documents often look almost identical, because a quotation's line items usually become the invoice's line items. What differs is the job each one does:
- A quotation says "This is what it will cost." It comes before the sale.
- An invoice says "This is what you owe." It comes after the sale.
Practically, that means a quotation carries a validity date while an invoice carries a payment due date. The invoice gets a new, sequential invoice number, and it is the document that goes into your books as a sale.
Example: A Printing Job
- Estimate: A customer asks about wedding invitations but hasn't chosen paper or quantity. You say, "Roughly ₹15,000–₹20,000 depending on the paper."
- Quotation: The customer picks 300 cards on 300 GSM paper. You send a quotation for ₹17,400 including GST, valid for 15 days.
- Invoice: After delivery, you send an invoice for ₹17,400 with a payment due date of 7 days.
The numbers carry through; only the purpose changes.
Quick Mistakes to Avoid
- Using "estimate" and "quote" interchangeably. Customers may assume an estimate is a promise.
- Leaving out a validity date. Without it, a quote could be claimed months later at old prices.
- Treating a quotation as an invoice. It can't support a tax credit claim or serve as a payment demand.
- Not tracking conversion. Knowing how many quotes turn into invoices tells you whether your pricing and follow-up work.
Create Quotations and Invoices Faster
You don't need to rebuild the document each time. myBooksai's free quotation generator creates a professional quotation in a couple of minutes, and the myBooksai app lets you turn an accepted quotation into an invoice without retyping the line items. For the GST angle, see what a GST quotation should contain.
FAQs
Is a quotation the same as an invoice?
No. A quotation offers a price before the work; an invoice requests payment after it.
Is an estimate legally binding?
Usually not. An estimate is an approximation, whereas an accepted quotation generally is binding. Laws vary by country, so check local rules for large contracts.
Can I charge more than my estimate?
You can if the scope changed or your estimate said the price might vary, but you should tell the customer before doing extra work. Overruns with no warning damage trust.
Do I need to charge GST or VAT on a quotation?
A quotation should show the tax you will charge, but the tax liability arises when you actually supply the goods or services and issue the tax invoice.
Can a quotation be changed?
Yes, by issuing a revised quotation with a new number or version, so both sides know which one applies.
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