What is the difference between a quotation and an estimate?

A quotation is a fixed price you are offering to be bound by. An estimate is an approximation that can change as the job becomes clearer.

Is a quote legally binding?

Once the customer accepts it, in most jurisdictions it forms a contract at that price. That is why the exclusions and the expiry date matter.

How long should a quote be valid?

Thirty days is common. Say so on the document, or you may be held to an old price.

Should a quote include tax?

Either is fine as long as it says which. Not saying is what causes the argument.

What happens if the job turns out bigger than quoted?

Price the extra work separately and get it agreed in writing before you do it. A variation agreed afterwards is a negotiation, not an instruction.

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A quotation is an offer you can be held to

A quote states a fixed price for defined work. Once the customer accepts it, in most places you have a contract at that price, and discovering the job was harder than you thought is your problem rather than theirs.

An estimate is a considered guess and is expected to move. If you cannot see the whole job, say estimate on the document and say what could change the figure.

This is the distinction that costs trades money. Writing quote at the top of a document you meant as an estimate is an expensive habit.

What to put on it

The word quotation, the date, and a reference number.
Your details and the customer's.
A description of the work specific enough to argue from later.
The price, broken into lines rather than given as one figure.
What is excluded, which matters more than what is included.
Whether the figures include or exclude VAT or GST.
How long the quote stands, for example thirty days.
Payment terms, and any deposit required before work starts.
A space for the customer to accept it in writing.

The exclusions paragraph

Most disputes are about work someone assumed was in the price. A short exclusions list prevents nearly all of them.

Name the things a reasonable customer might expect: making good, removing waste, parking or congestion charges, scaffolding, materials at the price quoted on the day, work needed once something is opened up.

Add the condition that changes to the scope are priced separately and agreed before they are carried out. Then actually do that.

How long a quote should stand

Put an expiry date on it. Without one, a customer can accept a price you gave before your material costs moved and you are bound by it.

Thirty days is the usual period. Where prices are volatile, shorter is fair as long as you say so plainly.

If the quote is accepted, keep it. When the invoice goes out, reference the quote number on it: the invoice becomes far harder to argue with when it matches an offer the customer signed.

Questions

What is the difference between a quotation and an estimate?: A quotation is a fixed price you are offering to be bound by. An estimate is an approximation that can change as the job becomes clearer.
Is a quote legally binding?: Once the customer accepts it, in most jurisdictions it forms a contract at that price. That is why the exclusions and the expiry date matter.
How long should a quote be valid?: Thirty days is common. Say so on the document, or you may be held to an old price.
Should a quote include tax?: Either is fine as long as it says which. Not saying is what causes the argument.
What happens if the job turns out bigger than quoted?: Price the extra work separately and get it agreed in writing before you do it. A variation agreed afterwards is a negotiation, not an instruction.