What is a Software Development Quotation?
A software development quotation is a project cost estimate, usually sent with a software development proposal before you start the job. This document is more important than an invoice because your prospective client must agree to the software quotation and terms before proceeding with the project.
The software development quotation will include everything you discussed with your client during the briefing session(s). Your quote must provide a clear picture of your products/services and pricing.
If your client accepts the software quotation, they'll sign off and ask you to proceed with the project.
If your client is not satisfied with the software quotation, they might request amendments or negotiate to get a better deal. Some agencies and freelancers anticipate negotiations and build 10-20% into the quote.
It's a good idea to ask your client for their budget during the briefing, as this will help you create a software development quote that meets expectations and constraints. Keep in mind that some clients will be reluctant to share a budget, wary of it being over your estimate.
Note: We’ve seen hundreds of software development quotations over the years, and we’ve put together a quotation template that has it all. Sign up for free here to be directed to the template, which is free to edit, download, and send to your client.
What to Include in the Software Development Quotation Template
Every professional quote must include basic information of the parties and relevant data to help the recipient make a decision. A software quotation might consist of a few essential line items or be more detailed and comprehensive, depending on the nature of the project.
Here are several items we recommend including in your software development quotation template.
Your Information
You must always include your full company/personal details with your software development quotation, including:
- Company's legal name/personal name
- Company registration number (if applicable)
- VAT or TAX number (if applicable)
- Address
- Website
- Email address
- Phone number
You might include your logo or custom quotation header to make your software development quotation template more professional.
Client Information
Many companies use quotations to generate a purchase order, so make sure you get the correct business information from your client, including:
- Company's legal name (usually ending with LLC, LTD, etc. depending on where they registered the business)
- Company registration number (if applicable)
- VAT or TAX number (if applicable)
- Business address
- Email address
- Phone number
- Contact person
Date & Reference Number
The date is an essential part of a software development quotation because you usually stipulate the expiry of the estimate (see Quotation Terms below).
The quotation's reference number is usually for your records and particularly helpful if you have multiple projects with a client. Some people use an arbitrary number or a specific reference like the client's name, date, and revision number, e.g., ACME-20221002-2.
Introduction or Project Summary
Although it's not mandatory, some people include a couple of paragraphs summarizing the project or quotation. The summary is an opportunity to reinforce your understanding of the project or provide context for your pricing.
You can also stipulate what the quotation doesn't include but is essential for the project—for example, "As per project brief, this quotation doesn't include hosting. Client to provide access to the hosting plan."
Line Items and Pricing
Your software development quotation must include a breakdown of your products/services and applicable pricing. Each line should consist of:
- Product/service description
- Quantity
- Rate
- Discount
- TAX/VAT
- Line Total
In the quotation template total section, break your pricing down to Subtotal, Discounts, TAX/VAT, and Total Cost so your client can see how you calculate the final figure.
Also, make sure to stipulate the quantity in your description, so your client knows how you calculate the line item—for example, Software Engineer (billed per hour).
Quotation Terms
You usually place your service and payment terms in the quotation's footer. Some software companies add an expiration date—for example, "This quotation is valid for 30 days." Here are some other terms to consider for your quote template:
- Payment terms
- Legal terms (governing law, disputes, etc.)
- Delivery date
- Shipping (if your software quote includes hardware)
- Prices and taxes (for quoting in a foreign currency)
This list is not exhaustive and will depend on your prospective client and the nature of the project.
How to create a software development quotation
Here are some tips for creating a winning software development quotation.
Find out exactly what the client wants
The first step is to meet (or have a call) with your potential client to determine their precise software development requirements and expectations to include in your quotation.
Highlight what sets you apart
Use the quotation introduction to briefly highlight your software company's strengths and how you plan to execute the project successfully.
Account for hidden costs
When creating a software quotation, always prepare for hidden costs and surprises as these could eat into your profits. Some points you might want to consider:
- Tools
- Hosting (including software program and package management)
- Specialist freelancers/contractors
- Transaction fees (credit card, PayPal, international transfers)
- After-sales maintenance and support
- Revisions
- Attending meetings (time you and your team are not productive)
Be realistic with your quotation
Don't oversell your services or capabilities; this will only get you in trouble and could permanently damage your software company's reputation. Also, don't price your quote too cheap to win the job. Know the value of your business and the service you offer.
Creating a Software Development Quotation is Simple with Bonsai
Why waste valuable time creating a software development quotation in Microsoft Excel or Google Sheets, or Google Docs when you can customize one of Bonsai's free quote templates?
With Bonsai, you can get customers to sign your software development quotation and other documents electronically to make them legally binding contracts. Clients can download copies for their record keeping.
Bonsai also offers free templates for software invoices, proposals, scope of work, agreements, and more. With all your documents in one place, you're always on top of your digital paperwork with Bonsai.
How do you get started? Simply:
- Sign up to Bonsai for free
- Choose your software development quotation from our template gallery
- Edit the blank spaces to suit your project
- Send your quotation and wait for the read receipt notification. Job done
Software development quotation FAQs
Why do you need a software development quotation?
You should always send a quote to your prospective clients before starting a new job. The quotation must include all the necessary information, including deliverables, terms, and costs, so your client knows what to expect—avoiding any disputes when it comes time to invoice.
Does a software development quotation template need payment details?
Quotations don't typically include payment details, but you might stipulate your payment methods in the terms. For example, "Invoices can be paid via bank transfer, credit/debit cards, or PayPal." You can provide payment details with your software development invoice.
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