What is a quote in business?
- By Book Keeping Pros
- Sources checked 16 Oct 2026
Definition
A quote is a document a business gives a potential customer before a job goes ahead, setting out the goods or services it would supply, what they would cost and the terms that would apply, such as when payment is due and how long the quoted price is available. It is also called a quotation.
Sending a quote creates no entry in the books, because nothing has been sold and nobody owes anything yet. The entries come later, from the invoices and payments that follow.
Quotes still matter to the bookkeeping. Keeping each accepted quote with the job's records lets the final invoice be checked against what the customer agreed to, and any change made along the way can be traced to a revised quote or a written variation. On the buying side, a supplier's quote is what its bill is checked against before it is paid.
Comparing quotes with what jobs actually cost also shows whether the business is quoting enough. A type of job that keeps costing more than its quote points to costs left out of the quoting, such as travel time, materials that were wasted or extra visits.
In Australia
business.gov.au describes a good quote as one that is clear, specific and complete, telling a potential customer what you would charge for what they need, and on what terms. It suggests putting quotes in writing to head off misunderstandings and protect the business against disputes and work that goes unpaid, and pricing each quote to make a profit, not just to secure the work, with all the costs and a fair margin built in.
It lists the minimum a written quote should contain. Among the items are the business name, the customer's name, contact details for both, a clear account of the work or service, costs broken down item by item with a total, any variations or revisions already discussed, payment terms, such as the due date and any penalty for late payment, how the customer should pay, when the work starts and finishes, when the quote expires, and space for the customer to sign and date their acceptance.
Worked example
| Line | Quoted (AUD) | Invoiced (AUD) | Note |
|---|---|---|---|
| Labour | 1,200.00 | 1,200.00 | As quoted |
| Materials | 850.00 | 910.00 | Variation agreed in writing |
| Rubbish removal | 150.00 | 150.00 | As quoted |
| Total | 2,200.00 | 2,260.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Giving a price over the phone without writing it down, so there is nothing to check the invoice against later.
- Leaving out an expiry date, so a customer can come back months later expecting the old price.
- Invoicing more than the quote for extra work with no written record that the customer agreed to the change.
- Not comparing quotes with what jobs really cost, so the same costs keep being left out.
Related terms
Related service
Accounts payable and receivable
Bills and invoices tracked, with you approving every payment.
Sources
- Prepare quotes
business.gov.au, Australian Government. Current at 16 October 2026, released 1 August 2025. Checked 16 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.