Estimate, bid, proposal, or invoice? What each one is, and what goes in it.
Contractors use estimate, bid and proposal almost interchangeably, and the invoice is often an afterthought written from memory. Here is what each document does, what belongs in it, and how the four connect on one job.
Ask three contractors what they send a customer and you will hear three words: an estimate, a bid, a proposal. On the jobsite they mean roughly the same thing, the number and the work behind it. To a customer, and sometimes to a court, they carry different weight. And there is a fourth document, the invoice, that most contractors write last, from memory, weeks after the first three. It is worth knowing which one you are actually handing over, and how they are supposed to fit together.
An estimate is an educated guess
An estimate tells the customer what the work is likely to cost. It is your best judgment from a walk-through, and everyone understands the final figure may move once the walls are open. Estimates are the right tool early, when the customer is deciding whether to do the job at all.
The risk is in the word "likely". If your estimate reads like a firm price, the customer will treat it as one.
A bid is an offer
A bid is more formal: an offer to do a defined scope of work for a set price. When the customer accepts it, you have an agreement. That is why a bid needs the scope written down, not just the number. The price is only as firm as the description of what it buys.
A proposal is the bid, plus the story
A proposal wraps the price and scope in the details that help a customer say yes: how the work will go, what is included and excluded, the timeline, payment terms, and who you are. For remodels and larger jobs, the proposal is usually what wins the work, because it answers the questions the customer was going to ask anyway.
An invoice is the bill for what was agreed
An invoice is different in kind from the other three. They are offers; the invoice is a demand. It says what the customer owes, by when, and how to pay it, and it only holds up if it can be traced back to what they signed.
That is where most invoices go wrong. The estimate lived in a spreadsheet, the proposal was a PDF, the changes were agreed by text, and the invoice gets typed fresh from memory a month later. A number that does not match the contract, or a change the customer never saw priced, is how a job that went well ends in an argument about the bill.
Most jobs need more than one invoice, and each has a job to do:
- The deposit invoice goes out the moment the contract is signed, for the deposit you asked for, with a due date. It is what turns "yes" into money on the schedule.
- A progress invoice bills part of the balance while the work is under way, for any amount you and the customer agreed makes sense.
- The final invoice bills whatever is left: the signed contract, plus approved change orders, minus what has been paid.
The names vary. The contents shouldn't.
Whatever you call it, the document your customer signs should carry the same things every time:
- Scope. What you will do, in enough detail that "done" is not up for debate.
- Line items and totals. Labor and materials, with the markup, tax and total worked out for them.
- Payment terms. The deposit you are asking for, in your own words, and when the balance is due.
- How long the price is good for. Material prices move; a quote without an expiry is a quote you may have to honour next spring.
- Your credentials. Business name, license number, bonded and insured. It is the first thing a careful customer checks.
- A way to accept. A signature line, or better, a link where they can sign from their phone.
And the invoice should carry the same things again, plus three of its own: what it is billing against (the signed contract, and any approved change orders), the amount due and the due date, and how to pay you. An invoice that names the contract it comes from is one the customer cannot dispute; an invoice that does not is a number they have to take on faith.
What happens after they say yes
The moment a customer accepts, the estimate stops being a guess and becomes the contract. From there, changes should not be edits to the original. They should be change orders: the extra work, priced, approved separately, so the original agreement stands and the customer sees exactly what was added. That one habit prevents most of the arguments at the end of a job, because the final invoice can point at each change and the customer's signature on it.
The deposit is the other thing to settle at signing, not after. If it is on the contract, invoiced the day they sign, and due a week later, it is a normal part of the job. If it is a text message two weeks in, it is a favour you are asking for.
Call it whatever your trade calls it. Just make sure the scope is written, the price has an expiry, the customer can sign it without printing anything, and every invoice points back at what they signed.
DeftBid builds the documents this way by default. The proposal carries line items with live totals, your terms and credentials, a quote-valid-until date, and a link the customer signs from their phone. Change orders get their own signature on the same link. Your deposit, your own number per bid, is invoiced the moment the contract is countersigned and goes out with the signed copy. Progress and final invoices are drawn from the signed total and approved change orders, with the ways you accept payment printed on them, and you record each payment as it arrives. See how the estimating side works, how invoicing works, or the FAQ.