quote vs invoice

Quotes vs. Invoices: Understanding the Key Differences

Discover the key differences between quotes and invoices in eCommerce. Understanding these distinctions helps streamline the sales process, ensuring clear communication and accurate billing.

Getting confused over quotes and invoices is a common thing. However, both documents have different purposes in the business world. As a store owner, you must know the function of each billing document.

Understanding the difference between quotes and invoices can help you decide when to send those bills to clients.

In this article, you will learn the basics, ways of handling, and a few tips to implement the best quotes and invoices for your eCommerce store.

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Key Takeaways:

  • Invoices and quotes are two important documents in eCommerce that streamline the sales process.
  • Quotes provide estimated costs to customers before purchase, while invoices are official requests for payment after the transaction.
  • WebToffee WooCommerce Quotes and PDF Invoice plugin will help you create invoices and quotes for WooCommerce stores.

What Is a Quote?

A quote is a document issued by a seller to the buyer that outlines the estimated cost of a product or service before a purchase is made. It mentions the product description, quantities, price, and terms and conditions to give customers a clear idea of the purchase order.

Quotes are commonly used in wholesale and B2B businesses, where negotiation takes place between the seller and the customer.

Quote sample image

What Is an Invoice?

Invoices are official documents issued by a seller to a customer detailing the products or services purchased and requesting payment. They serve as proof of purchase and can be used to claim warranties, request replacements, or facilitate returns.

Invoices contain essential details about the purchase, including the order date, items purchased, addresses, and contact information for both the buyer and seller, as well as the invoice and order numbers. This ensures clear communication between both parties and provides a record of the transaction.

Sample PDF Invoice

What Are the Differences Between Quotes and Invoices?

Quotes and invoices are essential documents in eCommerce business, serving distinct purposes despite their similarities. Understanding these differences is crucial for effective financial management.

Here are the key differences between quotes and invoices:

Timing

The primary difference between quotes and invoices is the time of bill generation. The quote is sent to the customer before the beginning of work. It includes a product/service price list, taxes, terms and conditions, payment processes, and more. It is a legally binding agreement. This document is of a high standard and has accurate details.

The invoice is sent to the customer after the work is completed. It includes a product or service list, cost acquisition, taxes, payment method, due date, and more. The seller can provide a payment agreement for the buyer.

Content

Quotes mention the projected costs for labor, materials, and other expenses involved in producing the products. The pricing mentioned in quotes is subject to change with respect to the negotiation between the buyer and the seller. Quote documents also do not include payment terms as it does not request payment.

Invoices contain the details of products or services provided by the seller to the buyer. It specifies the total due amount, including taxes and any discounts. Invoice does outlines payment terms or contain payment links requesting payments from the customers.

Legality

Quote documents serves as an estimate of the cost of products or services. It only becomes valid and legally binding if accepted by the customer (especially if signed by the customer).

Whereas an invoice is a legally binding document that obligates the customer to pay the specified amount within the outlined terms. Failure to pay can lead to legal consequences for the customers.

Types

There are different types of quotes and invoices, so let’s look at them.

Types of Quotes:

  • Estimated Quotes: Provide a rough cost estimate for initial discussions.
  • Detailed Breakdown Quotes: Offer a comprehensive estimation of costs for transparency

Types of Invoices:

  • Standard Invoices: Issued for one-off transactions. It serves as a formal request for payment after goods or services have been delivered.
  • Recurring Invoices: Issued for recurring products or services billed at regular intervals.
  • Proforma Invoices: These are similar to quotes but issued after initial agreements have been made.

How to Set a Quoted Price in eCommerce?

Setting ideal pricing strategies in eCommerce helps the store owner understand how much customers are willing to pay. You have to choose your pricing quote in a way to balance your sales margin.

Here, you will find some pricing strategies to offer the best deals for your eCommerce customer.

  • Product Value – This product value pricing focuses on calculating the expense based on materials or any items used.
  • Competitor-based – Follow up with competitors to prepare a better pricing model for your business.
  • Bottom price value – This price value allows the store owner to set lower costs to capture customer attention and increase conversion. You can gradually increase the product price.
  • Customer Market value – It’s customer demand pricing. Reach the target audience with the price they are expecting.
  • Ascending pricing – Set the price low initially and later increase gradually to boost store sales.

To implement the quoted price, you can create a pricing model for your business. Discover what your target audience really wants. Build the pricing funnel to apply price quotes reasonably for customers.

If you are a WordPress user, you will be glad to know that it’s easier to set up a fully functional quotation system using our WebToffee WooCommerce Request a Quote plugin.

Refer to our detailed guide on How to Add ‘Request a Quote’ Button in WooCommerce? for more information.

Pricing Strategies for eCommerce Quotes

The above pricing technique for eCommerce involves finding suitable price quotes for the selling goods. Apply some unique ways for pricing quotes to establish your own market value for your brand.

To do a pricing evaluation, you may also need to find the product gap in the market. You can discover on-demand products with less competition and set a new price to stand out.

Analyzing the quote budget can vary based on the business model like a franchise, recurring model, direct sales, and more. You can set the estimation of the product in a different way to establish an unbeatable pricing scale for your eCommerce store.

For instance, creating a product-selling campaign before Black Friday is the best deal to entice more eCommerce customers. Since there’ll occur huge sale during that event. You can attain high profits and increase the number of loyal customers.

How To Create eCommerce Invoices?

For creating invoices you don’t need any fancy or advanced tool to build from the scratch. For instance, as a beginner, you can use Google docs or Microsoft Word to create invoices. It has numerous pre-built templates. This tool can be suited for local business one-to-one dealers.

If you are operating your online business in WooCommerce, our PDF Invoices and Packing Slips plugin is a excellent tool to create PDF invoices for your WooCommerce store. It also supports additional documents such as credit notes and packing slips.

Essential Tips for Generating Invoices in Your eCommerce Store

Store owners record transaction documents to handle the finance flow of online stores. Invoicing will be one of the key processes to keep track of customer order data from store inventory. Find some of the best tips to generate invoices in an eCommerce store below.

  1. Choose a suitable platform for your online store to build invoices effortlessly.
  2. Add necessary components to the invoices, such as brand logo, invoice details, customer details, product list, price details, payment link (optional), signature, invoice barcode, and more.
  3. Notify customers with downloadable and printable PDF invoices.
  4. Customize WooCommerce pdf templates that represent your branding.
  5. State the clear terms and conditions policy to complete the payment.
  6. Optionally, to retain customers, you can offer discounts based on early payment completion.

Frequently Asked Questions

What are the primary purposes of quotes and invoices?

A quote provides an estimated cost for services or products before the work begins, helping customers make informed decisions. An invoice serves as a formal request for payment after the completion of goods or services, detailing the total amount due.

What is the difference between proforma invoices and quotes?

Proforma invoices and standard quotes serve different purposes in business transactions. A quote is an informal estimate of costs provided before an agreement is made. A proforma invoice is a formal document issued after a customer intends to purchase, detailing expected costs without demanding payment. While both include pricing information, proforma invoices typically offer a more detailed breakdown, including taxes and shipping. 

Are quotes legally binding?

Quotes can become legally binding if accepted and signed by the customers. It entirely depends on the laws and regulations where the business operates. 

When should I use a quote instead of an invoice?

You should use a quote instead of an invoice when providing estimated pricing and terms to a potential customer during the initial inquiry or negotiation phase before a sale is finalized.

Conclusion

Both quotes and invoices in eCommerce are sort of similar documents for obtaining payment from clients. The difference in generating quotes and invoices is stated distinctly in this post.

In simple terms, the quote will help clients to ask for product prices that they wish to purchase. Invoice will allow customers to know the exact payment after placing an order in an online store.

As per the store’s requirement, you can offer those documents in your online store. Don’t forget to produce punctual order billing for the customers. It will help to increase the standard of your eCommerce store.

Article by

Dynamic content writer at WebToffee. She's outdoorsy and a tech geek.

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