How to make price quotes work for you
Learn how to create price quotes that win you more business and protect your bottom line.
Published Friday 5 June 2026
Table of contents
Key takeaways
- A price quote is a formal document that locks in a fixed price for your products or services, giving both you and your customer clarity before any work begins.
- Professional, well-structured quotes build trust with potential customers, protect your business legally, and help you stand out from competitors.
- Every quote should include a clear pricing breakdown, payment terms, validity period, and terms and conditions so there are no surprises for either party.
- Using quoting software saves time, reduces errors, and makes it easy to convert accepted quotes into invoices.
What is a price quote?
A price quote is a formal document that offers a fixed price for specific products or services. It sets out exactly what you'll deliver, how much it will cost, and the terms of the agreement.
For small businesses, price quotes are essential. They give your customers confidence in what they're paying, and they give you a clear record of what you've agreed to deliver. Once a customer accepts a quote, it becomes a binding agreement between both parties.
Whether you're a tradesperson, consultant, or retailer, knowing how to create accurate quotes helps you win more work and avoid misunderstandings. A strong quoting process also supports better cash flow management, because you can plan your revenue around accepted quotes.
Why price quotes are good for business
Sending professional price quotes benefits you and your customers. Here are the main advantages of making quotes part of your sales process.
- Transparency: customers see exactly what they're paying for, which reduces disputes later
- Trust: a well-presented quote signals that your business is organised and reliable
- Legal protection: an accepted quote creates a documented agreement you can refer back to
- Structured pricing: the quoting process forces you to review your costs and margins for each job
- Competitive advantage: businesses that quote quickly and professionally are more likely to win the work
- Budget planning: your customers can plan their spending with certainty, making them more likely to say yes
The difference between a quote and an estimate
Quotes and estimates serve different purposes. Choosing the right one prevents confusion and protects both you and your customer.
A price quote offers a fixed price. Once your customer accepts it, you're committed to delivering the agreed scope at that price. This makes quotes ideal when you can clearly define the work upfront.
An estimate, on the other hand, is an approximate cost. It gives the customer a rough idea of pricing, but the final amount may change. Estimates work well for projects where the full scope isn't clear yet.
Once work is complete, you issue an invoice to request payment. If you've used a quote, the invoice amount should match what was agreed. With an estimate, the invoice reflects the actual costs incurred.
Types of price quotes
Different situations call for different types of quotes. Understanding your options helps you choose the right format for each customer.
- Fixed quotes: a set price for a defined scope of work, with no variation unless both parties agree to changes
- Dynamic quotes: prices that adjust based on factors like quantity, materials, or market conditions
- Time-bound quotes: quotes that are only valid for a specific period, after which the price may change
- Request for quote (RFQ): a formal process where a buyer invites multiple suppliers to submit competing quotes for a project
How to price your quotes
Getting your pricing right is one of the most important parts of quoting. Price too high and you lose work; price too low and you eat into your margins.
Start by understanding the full scope of what the customer needs. Ask detailed questions so you can account for every cost involved. Check any deadlines that might affect your pricing, such as rush fees or overtime for your team.
Review your current costs for materials, labour, and any third-party services. If you're sourcing materials internationally, factor in exchange rate fluctuations. Always build in a profit margin that reflects the value you're delivering.
There are several pricing models you can use to guide your approach.
- Cost-plus pricing: calculate your total costs and add a percentage markup for profit
- Competitive pricing: set your prices based on what similar businesses in your market charge
- Value-based pricing: price according to the perceived value your product or service delivers to the customer
What to include on a price quote
A thorough quote leaves no room for confusion. Start with the basics that identify who's involved and what's being offered.
- Your business name, address, and contact details
- Your customer's name and contact information
- A unique quote number for tracking and reference
- A detailed pricing breakdown: itemised list of products or services with individual prices
- Applicable taxes, such as goods and services tax
- The quote issue date and a validity expiry date
Then include the terms that protect both you and your customer.
- Payment terms: when payment is due and accepted payment methods
- Terms and conditions covering liability, cancellations, and dispute resolution
- Space for signatures or acceptance confirmation from both parties
- A clear list of services or items not included in the quote
- Provisions for variations or extra costs if the scope changes
- Any relevant due dates or delivery timelines
You can use a quote template to make sure you cover all these details consistently. Or use Xero's quoting software to create professional quotes in minutes.
How to create a price quote
Follow these 6 steps to create a professional price quote that wins you more work.
1. Gather client requirements
Start by having a detailed conversation with your customer. Understand exactly what they need, their timeline, and any specific preferences. The more information you collect upfront, the more accurate your quote will be.
2. Calculate all costs
Add up every cost involved in delivering the work. This includes materials, labour, subcontractors, travel, and any overheads you need to cover. Also account for indirect costs like insurance or equipment wear.
3. Set your pricing
Apply your chosen pricing model to determine the final price. Make sure your margin covers your profit goals while remaining competitive. If you're unsure, research what similar businesses charge for comparable work.
4. Add dates and validity period
Include the date you're issuing the quote and how long it's valid for. A typical validity period is 14 to 30 days. This protects you from cost increases if the customer takes time to decide.
5. Include payment terms and conditions
Spell out when and how you expect to be paid. For larger projects, consider requesting a deposit upfront with the balance due on completion. Include your terms and conditions to protect both parties.
6. Format and send professionally
Present your quote in a clean, branded format. You can follow a quote example to get the layout right. Include your logo, use clear headings, and make sure the content is easy to read. Send it promptly via email or through Xero's quoting software, which lets you track when your customer opens it.
5 tips to get your quotes accepted
Sending a quote is only the first step. These tips help you increase your conversion rate and win more business.
1. Make it professional and comprehensive
A polished, detailed quote gives customers confidence that you'll deliver quality work. Include a full breakdown of costs, clear timelines, and your terms and conditions. First impressions count.
2. Send within 24 hours
Speed matters. Customers often request quotes from multiple businesses, and the first professional response has a significant advantage. Aim to send your quote within 24 hours of the initial enquiry.
3. Use quoting software
Quoting software like Xero speeds up the process and ensures consistency. You can save templates, auto-populate customer details, and convert accepted quotes directly into invoices.
4. Follow up within 2 to 3 days
If you haven't heard back, send a polite follow-up. A brief message shows you're keen without being pushy. Ask if they have any questions or need clarification on any part of the quote.
5. Track and analyse your conversion rate
Monitor how many of your quotes get accepted. If your conversion rate is low, review your pricing, presentation, or response times. Small adjustments can make a big difference to your profitability over time.
How to ask for a price quote
If you're on the buying side, here's how to get the best value from the quoting process.
1. Understand your needs
Before reaching out to suppliers, define exactly what you need. Write a clear brief, similar to a business proposal, covering scope, timeline, budget, and any specific requirements. The clearer you are, the more accurate the quotes you'll receive.
2. Research the market
Look into potential suppliers and understand typical pricing for the type of work you need. This helps you spot quotes that are unusually high or suspiciously low.
3. Request quotes
Reach out to at least 3 suppliers with the same brief. Ask each one to itemise their pricing so you can compare like for like. Set a deadline for responses so you can make your decision on time.
4. Compare and choose
Don't just look at the bottom line. Compare what's included in each quote, the payment terms, validity periods, and any exclusions. The cheapest option isn't always the best value for your business.
When quotes can change
While a price quote is generally fixed once accepted, there are situations where changes are reasonable.
If the customer requests additional work beyond the original scope, you can issue an updated quote for the extra items. Unexpected issues during a project, such as discovering hidden damage during a renovation, may also justify a revised price.
If costs change significantly before the customer accepts the quote, and the validity period has expired, you're within your rights to issue a new quote at updated prices. Always communicate changes clearly and get written agreement before proceeding.
Simplify your quoting with Xero
Creating professional quotes doesn't have to be time-consuming. Xero's cloud accounting software lets you build, send, and track quotes from anywhere, on any device. You can customise templates with your branding, set up itemised pricing, and convert accepted quotes into invoices with a single click.
JAX, Xero's AI financial superagent, takes it even further. JAX can automate creating and sending quotes via Xero, WhatsApp, SMS, and email, so you can respond to enquiries faster without the manual work.
Whether you're just starting a business or looking to streamline your existing processes, Xero makes quoting simple and professional. Get one month free.
FAQs on price quotes
Here are some frequently asked questions about price quotes.
Is a price quote legally binding?
A price quote can become legally binding once the customer accepts it. At that point, it forms a contract between both parties. Include clear terms and conditions on every quote to protect your business.
How long is a price quote valid for?
Most businesses set a validity period of 14 to 30 days. After this period, you're not obligated to honour the quoted price. Always state the expiry date clearly on your quote so both parties know where they stand.
What is the difference between a price quote and an invoice?
A price quote is issued before work begins and sets out the agreed price. An invoice is issued after the work is complete to request payment. You can use Xero to convert accepted quotes directly into invoices, saving time and reducing errors.
Can a price quote be changed after acceptance?
Changes are possible if both parties agree. Common reasons include scope changes requested by the customer or unexpected issues discovered during the project. Always document any changes in writing and get confirmation before proceeding.
How much should you charge for providing a quote?
Most small businesses provide quotes free of charge as part of their sales process. However, if preparing a quote requires significant time or expertise, such as a detailed site inspection, it's reasonable to charge a quoting fee. Be upfront about any charges before you begin.
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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