Sooner or later — well, usually sooner — prospective web clients want to talk about money. But what they are looking for? It could be:
- a ballpark figure to evaluate budget compatibility
- an overall total cost
- a full and complete breakdown of costs, to identify deferrable features
- an itemized list of deliverables and services
- a formal document covering the work, as well as background, expertise, and reputation, needed to circulate for approval
Each of these requires a different approach and fills a different need. We’ll learn more about web design estimates, quotes, bids and proposals below.
4 types of project costing: Web design estimates, quotes, bids and proposals
Delivering project costing to a client can take one of four forms, but doing this doesn’t have to be an exercise in frustration. Each one achieves different things, so don’t use them interchangeably:
Let’s review four cost presentation options at increasing levels of complexity, formality, and work required.
What it is: A cost approximation providing a general idea of whether services can be delivered within budget in their required timeframe.
When to use: Helpful at early stages of discussion to manage client expectations.
- Estimates are considered variable, given the likelihood of as-yet-unknown factors. Clients who recognize an estimate as such are less likely to be surprised by price changes.
- If the client considers the initial estimate too high, you have the opportunity to scale back on the minimum deliverables, and offer some features as later add-ons for an additional price.
- Estimates are not legally binding, and you can’t be required to complete the work for the price outlined in an estimate.
- Estimates are often drafted or proposed without an in-depth understanding of the project details. Estimates should be offered with the understanding they could change as more is learned about project requirements.
Pro tip: Once you mention a number, that’s what people remember. Be cautious in giving a too-low estimate in hopes of winning a job; you might get pushback later if additional information results in an increased price.
What it is: A more formal version of an estimate, with a fixed price constrained by a limited timeframe of availability.
When to use: Ideal when you typically offer a flat-rate price for a well-specified service.
- A quote can be low-risk when you have high confidence of providing an accurate price without knowing much about specific requirements. A fixed-price Care Plan is a good example — you know exactly what the quoted cost covers, regardless of client.
- Quotes might depend on the purchase of other items (e.g., hosting, SSL, email) and a time limitation protects against the possibility of price increases.
- If you allow clients to accept a quote as a formal agreement, you’ll need to be prepared to complete the project at that price. Quotes are precise and clients will hold you to that number without deviation or negotiation.
Pro tip: Beware of those who say they just want a price. There can be a fair amount of time involved in really understanding someone’s situation and developing a solution to their problems. You don’t want to work with clients who choose solutions solely on a quoted price.
What it is: A documented response to a set of well-defined specifications, often submitted in competition with other bids.
When to use: Best when you have high confidence that you can deliver a great solution, meeting all requirements at a competitive price. However, note that winning a project you can’t execute well and profitably can be just as costly as not getting the project at all.
- You have the advantage of seeing detailed requirements and expectations before formulating a cost.
- You save the time and work of gathering requirements from the client.
- As they are based entirely on a presented spec, bids may be completed without discussions to nail down details, so your questions could go unanswered.
- Once submitted, there might not be negotiation room as bids are typically evaluated with emphasis on the presented bottom line and supporting documentation.
- Bids are often used by government agencies or other large bodies with a high level of oversight.
- With this situation comes stricter policies around submission, and potentially longer evaluation and response timelines.
Related: When and how to respond to RFPs
Pro tip: Seek needed clarification immediately. Deadlines might be in place for questions, as spec revisions could need to be issued to other bidders.
What it is: A comprehensive, detailed document presented in an effort to win business.
When to use: Perfect when you want to outshine the competition by including work samples, testimonials, and additional background.
- It’s an ideal platform to feature your portfolio of similar work, especially relevant examples of what you can provide to this client.
- It’s also the perfect place to highlight your Unique Selling Proposition (USP) and showcase your value and ability to get the work done.
- Proposals include specific details around scope, cost, timeline and deliverables, but they can also work well for projects where you have multiple options or solutions to offer. In fact, you can even craft a proposal with multiple sections addressing specific needs, where one is a quote, and another is an estimate.
- This format works well for complicated projects, giving you the opportunity to provide more information about why certain skills or approaches are needed.
- This is the most time-consuming option, in terms of gathering all necessary requirements, and then crafting the proposal.
Pro tip: A proposal might include a place for the customer to sign, indicating their acceptance — or a verbal OK on the proposal might lead to generation of a more formal contract. Be explicit in stating that a proposal is not legally binding until such time as the client signs it, or you convert it to a contract.
Experienced web pros use all of these strategies, knowing each client and project should be evaluated to determine which one will be most appropriate at any point in the discussion.
Need a quick recap to keep them straight? In review:
- Estimates provide an approximate cost.
- Quotes provide a fixed dollar amount within a specific timeframe.
- Bids are more detailed and provide the actual cost to complete the project, in response to a very specific documented set of requirements.
- Proposals are even more comprehensive than bids, provide actual costs, and additionally focus on showcasing the value that can be provided.
Now you’ll know which one to use to score that next big contract!