How to Write a Quotation That Wins the Job and Protects Your Price

A quotation is often the first document a customer sees from your business, and it does two jobs at once. It sells your work, and it sets the price and terms you'll be held to if the customer says yes. This guide is for US contractors, suppliers, agencies and service firms who want quotes that win work without creating legal or tax headaches. You'll learn how a quote differs from an estimate, bid and proposal, when a quote becomes a binding contract, what to include line by line, how long to keep it valid, how to show sales tax, and what to do when a customer's purchase order says something different.

Quick answer

To write a quotation, list who you are and who it's for, a quote number and date, an exact description of the goods or work, quantities and unit prices, exclusions, subtotal, sales tax, total, payment terms, start or delivery date, an expiry date and a signature line. Keep the scope specific and the expiry short, because a signed quote usually becomes the contract.

• Quote = fixed price for a defined scope; estimate = a best guess that can change

• A detailed quote that invites a signature can be an offer — once signed, you're bound

• Under UCC § 2-205 a merchant's signed 'firm offer' for goods holds for at most three months

• Show sales tax on its own line, at the rate for the job or delivery location

• Add a clause limiting acceptance to your terms to win the 'battle of the forms'

Quote, estimate, bid or proposal: which one are you writing?

People use these words loosely, but they mean different things to customers, to courts and to procurement officers. Pick the right one and label your document accordingly.

A quotation (or quote) is a fixed price for a clearly defined set of goods or work, good for a stated period. If the customer accepts within that period and the scope doesn't change, that's the price. Quotes suit work you can measure up front: 400 printed brochures, replacing a water heater, a month of bookkeeping, or a pallet of parts.

An estimate is your best guess at the cost when you can't know everything in advance, such as diagnosing a fault, repairing a car or renovating behind walls. An estimate tells the customer roughly what to expect and is expected to move if the job turns out differently. Some states regulate estimates in specific trades. California's Bureau of Automotive Repair, for example, says auto repair shops must give a written estimate and must contact the customer and get permission before doing work that would cost more than the estimate.

A bid is a price submitted in a competitive process, usually in response to an invitation for bids or a request for quotation from a general contractor or a government agency. Bids follow the buyer's format and deadline, and in sealed public bidding they can be hard to withdraw once opened. A proposal is broader: it explains your approach, team, timeline and price, and is common for consulting, design, software and larger projects where the buyer is choosing a solution as well as a price.

Quote vs estimate vs bid vs proposal

Document	Price	Best for	Typical binding effect
Quotation	Fixed for a defined scope	Measurable goods or work	Often becomes the contract once signed
Estimate	Approximate; can change	Diagnosis, repairs, hidden conditions	Not a promise of the final price; some trades must get consent to exceed it
Bid	Fixed, in the buyer's format	Competitive tenders, subcontracts, public work	Governed by the solicitation's rules
Proposal	Fixed or ranged, with approach	Consulting, design, software, large projects	Usually followed by a separate contract or SOW

Quotation

Price

Fixed for a defined scope

Best for

Measurable goods or work

Typical binding effect

Often becomes the contract once signed

Estimate

Price

Approximate; can change

Best for

Diagnosis, repairs, hidden conditions

Typical binding effect

Not a promise of the final price; some trades must get consent to exceed it

Bid

Price

Fixed, in the buyer's format

Best for

Competitive tenders, subcontracts, public work

Typical binding effect

Governed by the solicitation's rules

Proposal

Price

Fixed or ranged, with approach

Best for

Consulting, design, software, large projects

Typical binding effect

Usually followed by a separate contract or SOW

When does a quote become a binding contract?

A contract needs an offer, an acceptance and something of value exchanged. The key question for a quote is whether it is an offer that the customer can accept just by saying yes, or only an invitation for the customer to place an order that you then accept.

As a general rule, a bare price list or a quick "it's about $400 a unit" is treated as an invitation to negotiate, not an offer. But a detailed quotation that names the customer, describes the scope, sets quantities and a total, and says "sign below to accept" looks a lot like an offer. If the customer signs it before it expires and before you withdraw it, you'll usually have a contract on those terms. That's why the safest assumption for a small business is simple: write every quote as if the customer's signature will turn it into the contract.

Federal contracting takes the opposite approach and spells it out. Under FAR 13.004, which covers simplified acquisitions, a supplier's quotation is not an offer and can't be accepted by the government to form a contract. The government's purchase order is the offer, and the contract forms when the supplier accepts it, in writing or by delivering or substantially performing the work. Until then the government can withdraw or amend the order. If you sell to federal agencies, read the order carefully before you ship, because shipping is acceptance.

Can you withdraw a quote?

Usually yes, until the customer accepts, even if the quote says it's valid for 30 days. There's an important exception for goods. Under UCC § 2-205, which nearly every state has adopted for sales of goods, a merchant's signed written offer that promises to stay open can't be revoked during the stated period, even though the customer paid nothing for that promise. The period can't run longer than three months; if you don't state one, it's a reasonable time. If that assurance sits on a form the customer supplied, you must sign that term separately for it to bind you.

In practice this means a signed quote for goods that says "prices held for 60 days" is a promise you'll have to keep if materials jump in week three. If your costs are volatile, say so: keep the validity short, or state which prices are firm and which are subject to change, such as a metals surcharge or fuel adjustment.

The battle of the forms: your quote vs their purchase order

Business customers often reply to a quote with their own purchase order, and the PO's fine print rarely matches yours. Your quote says payment in 15 days and liability limited to the price of the goods; their PO says net 60 and unlimited warranties. Which terms win?

For sales of goods, UCC § 2-207 answers that. A definite acceptance sent within a reasonable time still counts as an acceptance even if it adds or changes terms, unless it is expressly conditional on the other side agreeing to the new terms. Between merchants, the additional terms become part of the contract unless one of three things applies: the offer expressly limited acceptance to its own terms; the new terms would materially alter the deal; or the other side objected, either already or within a reasonable time after hearing of them. And when both sides act as if there's a deal even though their paperwork doesn't match, § 2-207(3) says a contract exists on the terms the writings agree on, with the gaps filled in by the UCC's default rules.

Battle of the forms between merchants (UCC § 2-207)

Step 1

Your quote (offer)

Step 2

Customer's PO adds or changes terms

Step 3

Contract still formed

unless the PO is expressly conditional

Step 4

Extra terms join the deal

unless your offer limited acceptance, they materially alter it, or you object in time

The defaults aren't always kind to sellers. The UCC implies warranties of merchantability, for example, unless they're properly disclaimed. So small suppliers should take three precautions:

• Put a clause on the quote stating that acceptance is limited to its terms and that conflicting or additional terms in the buyer's documents are rejected.
• When a PO arrives with different terms, send a written order acknowledgment that objects to them and restates yours before you ship.
• For important customers, negotiate one master agreement so individual quotes and POs only carry prices, quantities and dates.

Services are different. Article 2 covers goods, so a pure services quote is governed by general contract law, where an acceptance that changes the terms is traditionally treated as a counteroffer rather than an acceptance. For mixed jobs, such as supply-and-install, courts generally look at whether goods or services are the main purpose of the deal. Either way, getting your terms acknowledged in writing is the practical fix.

What to put on a quotation, section by section

A good quotation is short, specific and easy to sign. Work through it in this order.

Header and identification. Your legal business name and any DBA, address, phone, email, and license number if your trade requires one (many states require contractors to show it). The customer's name and the site or delivery address. A unique quote number and the date issued. If you'll later convert the quote into an invoice, using the same numbering family makes it easy to tie them together.

Scope of work or goods. This is where most disputes start, so be precise. Describe each item or task with quantities, sizes, models, brands, colors and standards. For services, describe deliverables and what "done" means. Then list exclusions: what you're not doing or supplying, such as permits, disposal, painting after drywall repair, or content writing for a website build. An exclusion costs one line and can save a week of argument.

Pricing lines. Show unit price and extended price for each line, then a subtotal. Separate materials from labor where the customer or your state's tax rules care about the split. If you mark up materials, you don't need to show your markup, but make sure your margin survives fees and taxes; our guide on how to calculate markup shows the arithmetic.

Taxes and fees. Add sales tax on its own line where applicable (see the next section), then any delivery, disposal or permit fees you pass through. Show the grand total in bold.

Terms. Payment terms and deposit, start and completion dates or delivery lead time, warranty, change-order procedure, what happens if the customer delays, and the validity or expiry date. Add your "acceptance limited to these terms" clause here.

Acceptance block. A line for the customer's name, signature, title and date, and a sentence such as "By signing, you accept this quotation and its terms." Electronic signatures are generally valid for business contracts under the federal E-SIGN Act and state laws based on the Uniform Electronic Transactions Act, so an e-signed PDF or a click-to-accept quote works for most jobs.

Quotation checklist

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• Your legal name, DBA, contact details and license number (if required)
• Customer name and site or delivery address
• Quote number and issue date
• Itemized scope with quantities, specs and brands
• Exclusions and assumptions
• Unit prices, line totals and subtotal
• Sales tax line at the correct location rate
• Pass-through fees (delivery, disposal, permits)
• Total, deposit and payment terms
• Start or delivery date and completion timeline
• Expiry date and which prices are firm
• Change-order and acceptance-limited-to-these-terms clauses
• Signature and date block

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How long should a quote be valid?

Set the validity period by how fast your costs move, not by habit. Materials-heavy work in lumber, metals, electrical gear or fuel-sensitive freight often uses 14 to 30 days. Stable professional services can run 60 or 90 days. Seasonal businesses sometimes tie validity to a date rather than a period: "valid until March 31 for installation before June 30."

Write an actual expiry date ("This quotation expires on November 8") rather than only "valid 30 days", which leaves room to argue about when the 30 days started. If you quote goods and want the customer to be able to rely on the price, remember the UCC firm-offer cap: a signed promise to hold the price can't bind you for more than three months. If you don't want to be bound at all, say that prices are subject to confirmation at order acceptance.

When a quote expires, don't just resend the same PDF with a new date. Recheck supplier prices and lead times first. A short email ("Your quote expired on the 8th; materials are up 4%, here's the updated figure valid to the 30th") keeps the relationship and protects your margin.

Showing sales tax on a quotation

Sales tax trips up quotes in two ways: leaving it off so the invoice total surprises the customer, or charging it where it doesn't apply. The rule of thumb is to show tax as a separate line, calculated at the rate where the goods are delivered or the work is done, on the items that are taxable in that state.

Tangible goods are taxable in most states, while services vary widely. Some states tax many services, others very few. Construction is its own world, and Texas shows why. According to the Texas Comptroller, residential repair and remodeling labor isn't taxable, and a contractor can choose between two contract types. Under a lump-sum contract, you pay sales tax on your materials when you buy them and quote the customer one price with no tax line. Under a separated contract, you buy materials tax-free with a resale certificate and collect state and local tax from the customer on the separately stated materials charge, which can't be less than what you paid. Nonresidential repair and remodeling is different: the whole charge is taxable. Your quote format has to match the contract type you choose.

If you sell into several states or cities, use a rate lookup for each job address rather than your home rate. Our sales tax calculator handles the arithmetic, and the Texas sales tax guide and California sales tax guide cover state-specific rules. If the customer is tax-exempt or buying for resale, note the exemption on the quote and collect the certificate before you invoice.

Worked example: a bathroom remodel quote in Houston

Here's how a small remodeling company in Houston might set out a quote for replacing a bathroom vanity, toilet and tile floor in a customer's home. Houston jobs are taxed at the Texas combined maximum of 8.25% (6.25% state plus 2% local).

The contractor chooses a separated contract, so materials and labor appear on separate lines and tax applies to materials only:

• Vanity, faucet and mirror (model numbers listed): $1,850
• Toilet (model listed) and wax ring kit: $420
• Porcelain floor tile, 60 sq ft, plus thinset, grout and backer board: $1,130
• Materials subtotal: $3,400
• Demolition, disposal and installation labor: $4,600
• Subtotal: $8,000
• Sales tax at 8.25% on materials ($3,400): $280.50
• Total: $8,280.50

The quote then states a 10% deposit, progress payment on tile completion and the balance on completion; a start date and a five-working-day schedule; exclusions (no plumbing relocation, no repair of subfloor rot found after demolition, which would be priced on a written change order); a one-year workmanship warranty; an expiry date 21 days from issue; and the signature block.

Under a lump-sum contract the same job would show one price, say $8,280, with no tax line, because the contractor would have paid tax on the materials when buying them and built that cost into the price. Either approach is lawful for Texas residential work. The quote just has to match the contract type, and the contractor's purchasing and tax records must match too.

From quote to paid invoice

1. 1

   Site visit and measurements

   Confirm scope, photos and any hidden-condition risks before pricing.

2. 2

   Build the price

   Materials at cost plus markup, labor hours × rate, pass-through fees.

3. 3

   Send the quote with an expiry date

   Include exclusions, tax line, deposit and acceptance-limited-to-these-terms clause.

4. 4

   Get the signature and deposit

   An e-signature works for most jobs. Confirm any state deposit cap first.

5. 5

   Handle changes in writing

   Signed change orders before extra work starts.

6. 6

   Invoice against the quote

   Use the same line items and reference the quote number.

   How to make an invoice

Consumer rules that change what your quote must say

When you quote homeowners rather than businesses, state and federal consumer rules can add requirements. Three are worth knowing.

Contractor contract rules. Many states set rules for home improvement contracts. In California, the Contractors State License Board says a written contract is required for home improvement projects over $500 in combined labor and materials, and the down payment may not exceed $1,000 or 10% of the contract price, whichever is less, with no exception for special-order materials. The contract must describe the work and materials in detail, include a payment schedule that never runs ahead of work done, say who obtains permits, give a completion date and require signed change orders. If your signed quote is the contract, it has to meet these rules. Check your own state's contractor board before you set deposit terms.

Consumer-quote thresholds to know

$500

California home improvement jobs over this need a written contract

$1,000 or 10%

California down payment cap

whichever is less

$25

FTC Cooling-Off Rule — sales at the buyer's home

$130

FTC Cooling-Off Rule — temporary locations

The FTC Cooling-Off Rule. If you sell to a consumer at their home for $25 or more, or at a temporary location such as a home show or hotel for $130 or more, the buyer generally has three business days to cancel, and you must give them the cancellation notice and contract copy the rule requires. Exclusions include sales where the buyer asked you to come to the home to repair or maintain their property (although extra goods or services you sell on that visit aren't excluded), genuine emergencies where the buyer waives the right in a handwritten statement, and sales made entirely by mail or phone. Some states give longer cancellation periods.

Estimate rules in regulated trades. Auto repair in California is one example where a written estimate is mandatory and the shop must get consent before going over it. If you're in a licensed trade, check your licensing board for similar rules.

Common quotation mistakes and how to fix them

Vague scope. "Install new flooring" invites a dispute. Specify the area, the product, prep work, transitions and what happens to the old floor.

No exclusions. Customers assume everything is included. List what isn't, especially permits, disposal, finishing work and hidden conditions.

No expiry date. An open-ended quote can come back months later when your costs have risen. Always state a date.

Missing tax line. If the customer budgets for the pre-tax figure, the invoice will feel like a price increase. Show the tax, or say clearly that the price includes it.

Accepting a PO without reading it. A PO with net-90 terms or unlimited warranties can override your quote if you just ship. Acknowledge in writing and object to terms you don't accept.

Starting extra work on a verbal OK. Use a signed change order with its own price before doing anything outside the original scope.

Not converting the quote into the invoice. Re-typing line items creates errors. Generate the invoice from the accepted quote so the numbers match, and track it until it's paid with good accounts receivable habits.

Official references

• FAR 13.004 — Legal effect of quotationsFederal purchase orders and quotes
• FTC — Cooling-Off RuleThree-day cancellation for in-home sales
• CSLB — Home improvement contractsCalifornia contract and deposit rules
• Texas Comptroller — Real property repair and remodelingLump-sum vs separated contracts
• California BAR — Consumer's Guide to Auto RepairWritten estimates and consent

What to do next

Build your template once and reuse it: our free quotation generator lays out the header, line items, tax line, terms and signature block, and converts cleanly into an invoice with the invoice generator. Check your pricing with the markup guide before you send, and when the customer signs, follow our guide on how to make an invoice so you get paid on the terms you quoted.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is a quotation legally binding?

Not on its own in most cases. A price quote is usually treated as an invitation to deal, and the contract forms when the customer's order or signed acceptance is accepted by you. But a detailed quote that names the price, scope and quantities and invites the customer to accept by signing can itself be an offer, so once it's signed you're bound to its terms.

What is the difference between a quote and an estimate?

A quote is a fixed price for a defined scope, valid for a stated period. An estimate is an informed guess that can change as the work reveals more. Some states regulate estimates in specific trades; California auto repair shops, for example, must give a written estimate and can't charge more without the customer's consent.

How long should a quotation be valid?

Long enough for the customer to decide and short enough that your costs won't move: 14 to 30 days is common for materials-heavy work, 60 to 90 days for stable services. State the expiry date, not just a number of days. Under UCC § 2-205, a merchant's signed promise to hold a price for goods open is binding for the stated time, but never longer than three months.

Should I include sales tax on a quote?

Yes, show it as a separate line wherever the item is taxable, using the rate for the delivery or job location. Customers compare totals, and a missing tax line causes disputes at invoice time. Contractors should check their state's rules: in Texas, for example, residential repair work can be quoted lump-sum with no tax charged, or separated with tax on materials only.

What happens when the customer's purchase order has different terms from my quote?

For sales of goods, UCC § 2-207 governs this 'battle of the forms'. Between merchants, extra terms in an acceptance generally become part of the contract unless your offer limited acceptance to its own terms, they materially alter the deal, or you object in time. Include a clause limiting acceptance to your terms and object in writing to conflicting PO terms.

What should a quotation include?

Your business name and contact details, the customer's name, a quote number and date, a clear description of the goods or work, quantities and unit prices, any exclusions, subtotal, taxes and fees, total, payment terms, delivery or start date, the expiry date, and a place for the customer to sign and accept. Add your license number if your trade requires one.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.FAR 13.004 — Legal effect of quotations — Acquisition.gov (General Services Administration) · accessed 9 October 2026
2. 2.UCC § 2-207 — Additional terms in acceptance or confirmation — Legal Information Institute (Cornell Law School) · accessed 9 October 2026
3. 3.UCC § 2-205 — Firm offers — Legal Information Institute (Cornell Law School) · accessed 9 October 2026
4. 4.Cooling-off Period for Sales Made at Home or Other Locations — Federal Trade Commission · accessed 9 October 2026
5. 5.16 CFR § 429.0 — Definitions (Cooling-Off Rule) — Legal Information Institute (Cornell Law School) · accessed 9 October 2026
6. 6.Learn About Home Improvement Contracts — California Contractors State License Board · accessed 9 October 2026
7. 7.Real Property Repair and Remodeling (Publication 94-116) — Texas Comptroller of Public Accounts · accessed 9 October 2026
8. 8.A Consumer's Guide to Auto Repair — California Bureau of Automotive Repair · accessed 9 October 2026