Create An Estimate: Everything You Need To Know Before Creating a Cost Estimate (2021)

Creating Estimates is an essential part of planning for small businesses. They are often used by small businesses to comprehend how much a project is going to cost them. Apart from that, estimate helps brands get new businesses and allows the clients to budget for a project. 

A bid proposal of a small business always includes an estimate. Especially for small businesses operating in service delivery, a professional-looking estimate enables them to sketch their service(s) and pricing to win a potential customer. 

Are you confused about how and where to begin? Continue reading this article as we talk in detail about everything related to what an estimate is and present a step-by-step guide on the process to create an estimate. Know that only a clear, precise, and relevant estimate for your potential customers will help you build authority and win business. 

What Is An Estimate?

An estimate is a document sent by businesses to potential customers during the process of deal negotiation. It talks about what services you will provide for a project and what will be the approximate cost of them. 

As a small business, an estimate will help you define the scope of the project, maintain clear communication, and win business.  

An estimate is created with an intent for the client and therefore along with cost and list of services it also includes the timelines and dates of completion of the projects. An added advantage of an estimate is that it can be easily converted into an invoice upon an agreement.

An estimate is basically used in the early stage of deal conversion to help the client budget for the project. Before sending an estimate, it is important for the small business to talk to the client to know their needs and to account for the same when creating an estimate. While it is usually created before taking on the project, an estimate may change as the project progresses.  

When things change, with realizations, the client may add-on or require additional services mid-project, hence accounting for that and keeping the scope open for the same is essential. 

For example, a client may ask a designer for an animated version of a copy, which will eventually increase the costs. Hence, an estimate is a tool that allows small businesses to handle the expectations of their clients

An estimate is supposed to cover all the details that give the clients a thorough understanding of the project. However, keep it simple and to the point, you do not want to intimidate, overwhelm or confuse the clients with extra in-depth details. 

Always create an estimate before taking on any new project. Whether it is with a new or even an existing client, an estimate will ensure that the client knows what to expect and what not to from the project and maintain transparency in the work. 

Estimates do not account as a legal document, however, it is always recommended to get those acknowledged and approved by the client before you proceed further with the project. 

What Is An Online Estimate?

An online estimate is an example of ‘working smart, instead of working hard.’ With brands shifting from traditional methods towards digitizing their businesses, it is no longer the era of sending a hard copy of estimates to clients for getting it signed.

When a customer requests an estimate to budget for the project before committing to it, the supplier can now easily and quickly submit an online estimate to the potential client. 

Due to the online estimate generator, the lead exploration process to lead conversions has got fast and smooth. 

Online submission of estimates has now reduced the chances of delays, frauds, manipulations, and loss of information. While it ensures the detailing of information related to the products/services, the proposed price, and the timeline of the project. 

A bonus of creating and using an online estimate for small businesses is that it allows customization of the same for each project. Hence, it increases the chances of getting new businesses and growing your brand. 

As a small brand owner, an online estimate allows you to focus and give more time on the content of the estimate rather than on the creation or the format of the estimate. The online tool or the software that you use to generate an estimate will take away those worries from you.

Having an estimate ready before you start with the project is beneficial for you as a supplier. Knowing the values, and having things planned makes it more manageable to work on the project and leading it to success. 

Difference Between Quotation And Estimate

A quotation and an estimate are both created with an intention for the customers. Both the documents cover the same details, however, their only difference is the nature of the cost mentioned in them. 

While a quotation specifies a fixed cost, an estimate, as the name suggests mentions an estimation of the project cost. In other words, it gives an approximate cost of executing the project to the client. 

The businesses carrying the nature of costs that are not fixed, go for an estimate instead of creating a quotation to give an approximate of the job to be done. 

In quotation, the validity of the cost is for a specified number of days. Hence, businesses use quotations when the price of materials used in the project keeps fluctuating. If building quotations are likely to form a part of your business then you may want to look at the best quoting software.

In comparison to a quotation, an estimate is a more flexible document. For an estimate, the project timeline and completion date are more prone to circumstantial changes. As mentioned earlier, when required a client can add requirements to the project’s scope mid-way or any unexpected changes can occur.

For small businesses, it is always recommended to go for an estimate for the clients. A quotation adds limitation, as once the client approves, you will have to stick to the commitment and not be able to change the prices. 

Hence, when creating an estimate also, ensure that you talk and understand the needs of the clients in detail. When creating an estimate, you will be able to address what they want, and deliver work as per their expectations. Hence, increasing the chances of conversions. 

Important Elements Of An Estimate

To create a professional-looking online estimate, it is important to include the right elements in it. While the content of an estimate will differ on the basis of the nature of your business, however, to win a client, there are some elements that one should focus on.  

An estimate outlines various details related to a project, these are the basic elements that one should tick off when sketching an estimate:

Your detailed estimate must contain these components. It should be brief for the client to understand, yet cover all the necessary information for them to agree to the project. Consider adding more in-depth information or calculations as an attachment to the estimates and not including it in the estimate itself for refraining from overwhelming the client.

Guide To Create A Proper Estimate

An estimate is a document consisting of the approximate cost of the product/service that is sent from a supplier to a potential client. For every business, writing a winning estimate is critical to get new businesses and grow as a brand. 

Below are the steps that one can follow to create a perfect estimate.

Step 1: Fill In The Necessary Details

Nowadays, customers are looking for detailed estimates that appeal to their clients. If you do not send it to them, your competitors will. Therefore, it is important to send the right estimate at the right time to your potential clients.

When using the Refrens estimate maker, the process is easy and instant if you know the following details that are to be filled in your estimate.

  1. Estimate Title
  2. Estimate Number
  3. Issue date & Due Date 
  4. Your details 
  5. Client’s details
  6. Product/service description
  7. Terms and conditions
  8. Additional notes

Once you have filled in all the required and relevant details, your estimate is almost ready. Now it is the time to make it look professional by beautifying it according to your business needs. Therefore, the next critical step is to select template, colors and font to customize your estimate.

Step 2: Select Templates

Choose the estimate template that fits the nature of your business. There are a range of options available for selecting a template including Business, Professional, Letter Head, and Print Friendly. You can customise it further for making it look appealing with customized colors and fonts.

If you do not wish to choose from the color options available, you use the “Magic Color” feature available on Refrens. This feature extracts the color from the logo you have uploaded on the estimate and implements it on the whole document. Easy to create, use these templates free for a lifetime to make professional estimates.

Step 3: Share Your Estimate

You can directly share your estimate through our system via email, WhatsApp or even send the link to your client using the copy link option. The only additional step required would be to add your client’s email ID and click on the save button. 

The system at Refrens will send a customized email to your clients by automatically adding the subject and body of the mail. However, you also have the access to edit both the fields. Other than this, there are more options like printing your estimate or downloading it as a PDF for reference. You can send this downloaded estimate to your clients.

Once your client receive the estimate, they can either edit the estimate directly by login-in or they can use any pdf editor to edit the estimate.

Along with you, the client also is provided with the option of downloading and printing the estimate once they open it.

Step 4: Schedule A Follow-Up

Following up with the client is a tactic that generates favorable results for people who religiously implement it. When you send an estimate, follow up with the potential client. Check if they have any doubts or questions regarding the project, that they would like to clear before proceeding further. 

Generally it is good to wait for 2-3 days post sending the estimate to your client before following up with them. Let them use this time to review your estimate or compare it with others they might have received from your competitors. 

If you follow up with them after 2-3 days, it will show that you have interest in the project and will show your dedication towards work too. If you receive a response from them, you can plan your schedule accordingly too. 

Customize Estimate Using Templates And Colors

In a complex world, it becomes essential to stand out from your competitors and make an identity of your own. Keeping this in mind, personalizing your estimates helps you to appeal more to your clients.

Along with adding your logo and a digital signature, Refrens helps you take your estimates one step ahead by letting you select a template that suits your business needs. 

You can choose from a variety of templates to design your estimate including a letter, business, professional, print friendly, etc. It also allows its users to change the template colors from more than 24 colors available and a variety of fonts on the estimate.

Refrens estimate templates are designed carefully by our experienced designers to make them user-friendly and beautiful. We ensure that they will look great on mobile devices, desktop and even on paper. Making it easy for your clients to read, our templates are sectioned precisely with critical elements.

In the end, we want your estimate to look professional and to feel like you’re representing your brand identity.

Difference Between Estimate And Invoice

Occurring in the different stages of deal negotiation, an estimate is sent before an invoice is presented to the client. An estimate is created before you take on the project, hence, an estimate is a part of a deal proposal. 

An invoice is generated after the client confirms the project, therefore is shared when you ask for the payment from the client. 

In plain words, an invoice is a bill that you send to a client for the products or services delivered and an estimate is a proposal for selling of those products or rendering of those services. 

There is a difference in the timing of both the documents, however, the intent of both is to present to the clients. An estimate has an approximate cost of the project and an invoice carries the final cost of the project. 

Here is an image showing a template of an estimate and an invoice:

On a brief look, the templates may look similar to each other, however, the difference lies in the words mentioned. If you see keenly, the estimate template has the words “estimated total”, instead of “Total due” mentioned in the invoice. 

Unlike an estimate, an invoice sent with the intention of asking for payment has a due date mentioned for the client. 

Benefits Of Creating Estimate Online

Saving time and putting in fewer efforts is possible if you make the right choice of generating estimates online. An online estimate maker helps you create a professional-looking estimate to win your clients over. 

Apart from saving time and effort, using an online tool comes with other advantages. Below are a few reasons – why one should create an estimate online:

Mistakes To Avoid When Creating Estimate

A single mistake committed can cost you a client. Therefore, precision and an eye for detail are critical to staying ahead of your competitors. Along with a good-looking estimate, these are the points that you should avoid to improve your chances of winning:

Pro Tips To Make Good Estimate

Now that you know how to make a perfect good-looking estimate, it is time to ensure that you create an estimate that improves your odds of winning the project. 

To begin with, know that it is okay to spend more time researching and calculating estimate amounts than to spend time on creating an invoice. Apart from losing out on a client, your time and efforts also go to waste if you compromise and create an estimate in a hurry. 

Remember, an estimate is the first document that you send to the client, hence showing professionalism and impressing the client is critical here.

Here are the other pro tips that you must keep in mind when you begin to create a good estimate:

1. Know the project and requirements in detail

Creating an estimate based on a vague and incomplete brief is not an ideal step to take. Ask the clients what they exactly want. Do not make the mistake of creating the estimate solely based on the expected finished outcome. 

Get details of the process too, and discuss it with the client before you make any assumptions. Knowing that a healthy discussion with a client can strengthen your relationship with them by ensuring that both of you are looking in the same direction and opens the room to clear any misunderstandings that may occur.

2. Make a clear timeline

Measure your time and derive the deadlines for each task and stage. It is crucial to convey to the client the amount of time it will take to complete the project. It also helps clear the payment due date according to the timeline for the client

As said, accuracy with estimating the time required is needed to avoid disputes or confusion later. If required, mention in advance the possible reasons that may lead to any delays.

3. Consider the materials and man-power costs

An estimate is all about calculating the approximate values of all the resources needed for executing the project. Consider the materials, manpower, tools, time, and effort; basically the cost of any input needed for the completion of the job. 

Ensure to minimize the cost. For e.g., you can check to outsource part of the work or rent a tool at a lower cost instead of buying it. Reject or avoid taking any project which does not seem profitable to you, i.e. if the cost overheads are more than the revenue.

4. Keep a tab on your competition

We are all thriving in a very competitive world. If you do not stand out or instantly optimize on any opportunity, there are high chances of you losing a client to your competitors. 

Do not overprice or underprice your projects. Check what your peers in the industry are charging for similar projects to get an idea.

5. Do thorough market research

When starting with anything new, it is important to conduct detailed and relevant marketing research. Use various platforms and multiple sources to know about anything related to the project including the manpower, tools, time, pricing, etc.

6. Know that time is ticking 

Be quick in sending the estimate. You are aware of the intense competition around, hence the high chances of losing out a client. 

After all the hard work that you put into creating the estimate, you do not want to miss out on the project just because of your timing. 

Hence, get your estimate to the client as soon as possible, even before the other supplier thinks of creating one. An online estimate generator makes this process quick and easy for you.

Free Website To Create Estimate

A good quality estimate makes a huge difference in your brand landing more business. As discussed, creating an estimate manually is time consuming and requires too much effort. Hence, it is better to use the online tools to create an estimate seamlessly and quickly.

One of its kind, on Refrens, freelancers, small business owners and agencies can issue cost estimates to their customers using its Online Estimate Generator. The Estimate generator on Refrens is a user-friendly platform, where you can create estimates for your products and services and send them to customers worldwide. 

The tool’s automation element eliminates the task of re-entering data to convert your estimate into an GST invoice or TAX invoice. You can even easily duplicate your estimates and not go through the whole process of creating one from the scratch.

The process to create an estimate on Refrens is simple and quick. What makes it more appealing is that it allows you to customize your estimate by adding a personal logo, digital signature, notes, attachments, images, etc.  Along with supporting multiple currencies with just one click, it also allows you to create a tax compliant (including GST) estimate.

Our system is not only limited to creating an estimate, we support you with the facilities further too. Once an estimate is generated, you can print it, or download it as PDF. Sharing your estimates is convenient through our system, as you can share your estimates through WhatsApp or directly email it to your clients. 

All of these benefits, that too without charging a penny. Generating an estimate on our platform is totally free and an easy process for you. Refrens estimate generator is changing the way freelancers, small businesses, agencies and entrepreneurs are running their work process making it more effortless and quicker.

Alternatives To Using An Estimate Maker

Gone were the days when people used to deliver estimates in a hard copy form. Today, most businesses create an estimate online

To begin with, many brands use excel or word to create an estimate using their templates. However, it is convenient to use these tools when you only have to create 1-2 estimates. 

Eventually, when you move on to making estimates in more quantity using these, you will realize that it is a time consuming and tedious task.

Monotonous tasks such as duplicating and renaming estimates every time you want to create a new one, going through the trouble of organizing and keeping old files in a place, and taking the long route with additional steps to turn an estimate into an invoice.

Hence, to get yourself free from all this administrative work, it is recommended that you use online software or tools to generate estimates for a hassle-free process that allows you to keep your focus on the growth of your business. 

Recommended Reads: E-invoicing In GST: A Complete Guide


An estimate is sent to the prospect client before the project commences. One the reasons for sending an estimate is to give the potential client an idea of the approximate cost of the project. Along with the cost, it also lets them know about the scope of the project, exclusions, timelines, payment terms, etc. 

With a professional-looking detailed estimate it is easy for you to win over more business and lead the path to success. From creating an estimate to converting it into an invoice to managing your leads and expenses – Refrens is by your side through the journey with its variety of workflow tools.

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