Cost Estimate: The Complete Guide
Everything you need to know about cost estimates — what to include, legal implications, and how to create them in 5 minutes instead of 2 hours.
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Contents
What is a Cost Estimate?
A cost estimate is a non-binding approximation of expected costs for a service or project. Unlike a binding quote, a cost estimate gives the contractor some flexibility with final pricing — though only within reasonable limits.
What to Include in a Cost Estimate
A professional cost estimate should contain specific information. Missing these can lead to disputes later.
- Complete contact details of your business (name, address, tax ID)
- Client contact information
- Date of creation
- Detailed description of services
- Itemized breakdown with individual prices
- Total amount (with and without tax)
- Note indicating it's an estimate ("Estimate" or "Non-binding")
Are Cost Estimates Legally Binding?
A cost estimate is generally non-binding — but not unlimited. The final price should only exceed the estimate "substantially" if you inform the client in advance. As a rule of thumb: deviations of 15-20% are typically acceptable. Beyond that, you should inform the client and get approval before proceeding.
Cost Estimate vs Quote: The Difference
The key difference: A quote is legally binding, an estimate is not. With a quote, you commit to delivering the service at the stated price. With an estimate, you can — with limitations — deviate from it. For IT projects with unclear scope, an estimate is often more appropriate. For clearly defined services, a binding quote is recommended.
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How to Create a Cost Estimate
4 simple steps to a professional cost estimate
Enter Client Details
Company, contact person, address — guided and structured.
Describe Services
Line items with quantity, unit, and price. Automatic calculations.
Choose Design
Classic, Modern, or Elegant — with your branding.
Export PDF
One click and your cost estimate is ready to send.
Cost Estimate FAQ
Can I charge for creating a cost estimate?
Yes. Whether you can charge for creating an estimate depends on your industry and agreement with the client. In many industries, it's common to charge a fee for detailed estimates. Just communicate this clearly upfront.
How long is a cost estimate valid?
You can set your own validity period. 2-4 weeks is common. For IT projects with volatile prices (e.g., cloud costs), you should choose shorter timeframes and note this in the estimate.
Can I withdraw a cost estimate?
Yes, as long as the client hasn't accepted it yet. Since a cost estimate is non-binding, you can revoke it at any time — unlike a binding quote.
When should I use a quote instead of an estimate?
Use a binding quote when the scope is clearly defined and you can calculate the price with certainty. An estimate is better for projects with unclear scope or when changes during implementation are likely.
How much can the final price deviate from the estimate?
There's no fixed legal limit. Deviations of 15-20% are generally considered acceptable. For larger deviations, you must inform the client in advance. Always document changes in writing.
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