An estimate in sales is a non-binding document provided by a seller to a customer that indicates the price for certain items or services.
It is an informal document that may be used early in the sales process to offering exactly that—an assessment of the pricing of specified items or services.
The buyer may request an estimate before a quotation is prepared, or he or she may proceed directly to the invoice. Because it is a non-binding contract, a buyer can often opt out of the deal with no consequences.
Blinksale Estimate Example:
When should an estimate be used?
In the early phases of a transaction or project, an estimate is typically requested or generated. The document contains information regarding the products or services that the seller will offer to the customer, as well as the anticipated cost.
Because an estimate is non-binding, customers can seek estimates from many sellers or providers and then choose the offer that works best for them.
Although it is not a formal business document, it may be useful for small businesses in terms of staying competitive and gaining new customers. An enticing estimate submitted to a potential customer undoubtedly helps to gain a sale, so knowing what your rivals' prices could be and what you're ready to charge is beneficial.
Who should rely on estimates?
An estimate may be used in a wide range of circumstances and businesses. Estimates are most typically employed in project-based activities such as building, contracting, design, and so on.
This enables the costs of certain project items indicated by a potential customer to be clearly communicated. Because it is an estimate, the expenses should reflect the seller's best estimate of the total that will be required if the transaction succeeds.
Why should you use an estimate rather than a quote?
Estimates are obviously different from quotations. While not legally binding, a quote holds greater weight when it comes to formal documents throughout the sales process.
A quotation is sent when a customer has agreed to do business but is still working out the details with the seller. Quotes should be accepted or rejected. If approved, it is usually turned into an invoice. If the quotation is rejected, a revised quote is generally issued.
An estimate, on the other hand, offers potential customers information that will assist them in making a decision about a certain firm as the source of the goods or services they are looking to acquire.
Wrap Up
Estimates cannot be effective unless the basis on which the accountant estimates figures is reliable:
- The dependability of historical data is predicated on the assumption that such values are unlikely to change.
- When the accountant estimates figures using a vendor contract, documentation is a useful source of information.
- Your Own calculations must be thoroughly recorded for future reference.
From estimates to invoices, delivery notes to payment receipts, managing your documents using an online invoicing system like Blinksale is simple and quick. No credit card is necessary to try it for free.
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