Price lists, estimates, quotations and tenders

When you prepare an estimate it's good practice to give the customer a written copy, including a full breakdown of costs.

Your estimate should include the:

• overall price
• breakdown, listing the components of the price
• schedule, detailing when you will do the work or deliver the products
• terms and conditions
• time period the estimate is valid for
• payment terms or schedule

You must include your full business contact details in your estimates. If you have headed paper, it's a good idea to put your estimates on this.

Where applicable you should also include the VAT component of your price.

It is advisable to get signed acceptance of your estimate and to make sure your customer is clear about what you have agreed.

Include a disclaimer stating clearly that the estimate's price is subject to change. Agree in advance how you will cost any variations. These can arise if the client changes their requirements or if a job turns out to be more complicated than expected.

In some cases, businesses supply an initial estimate, and then a final quotation once you know the detail of the job.

If you think price complications are likely to arise, it's a good idea to supply a number of estimates based on different scenarios. This will help to avoid any disputes with your client as the work progresses. Make it clear what is included in the estimate, and what is not.

When you start to work or supply, you should keep good records of any cost overruns, along with how and why they occur.

Software packages can help you identify the costs involved in the work that you're providing an estimate for.