Indicative quote: naming a price before the functional spec is done

A quote given before the functional spec. It shows firm and open items separately, with assumptions and ranges, and states when and how the binding quote will follow. Usually that is once the functional spec has been approved. The term comes from practice, not from a standard. Indicative here means a guide price that is not yet binding.

For the total price, usually not, and it should say so explicitly: it gives the status of each item and states when the price becomes binding. How far individual items bind depends on the wording and on the contract. So state clearly that it is an indicative quote. This is not legal advice. Agree the exact wording with your lawyer.

There is no figure that applies everywhere. Without a functional spec, a binding fixed price is only possible with generous safety margins, and in a tender a quote that is too high is quickly ruled out. Making the uncertainty visible works better than a bigger buffer: as an assumption, as a range or as an open item with a paid analysis.

The specialist literature also advises against planning time and budget as a silent buffer, because a team tends to fill whatever time is available. There, priorities serve as the buffer: it is agreed with the client in advance which requirements matter less and can come later if necessary. The most important things are delivered first.

Then give one, and be open about what it covers and that it comes out higher by the buffer for the open points. For every line you cannot estimate with confidence, write your assumption into the quote: “We assume that …”. For real unknowns, offer a separate “analysis” package at a fixed price, and set out in the quote how changes will be charged. If the basis is too thin, the book advises walking away from the project when in doubt.

Thorough enough to assign every item one of the four statuses. Nothing more is needed at this point. The specialist literature on requirements engineering also splits analysis into two stages: a rough one for the quote and planning, and a detailed one after the order, as part of the project. The indicative quote is the result of the first stage, the functional spec the result of the second.

From the bottom up, as in the box at the top: break the project down into epics and work packages, each with a testable result, and estimate the packages one by one. You get to the effort via questions and options. Whatever cannot be estimated yet gets a status instead of an invented figure. The page on requirements analysis shows how to break it down.

In many tenders, questions are only allowed in writing, often only up to a fixed deadline. Use that route: collect your questions, for example from the checklist, and submit them in writing in good time. Whatever stays open afterwards goes into the quote as an assumption: “We assume that …”. The book calls this the most important sentence in a quote on a weak basis. Where the tender conditions allow it, show items with a status, or offer an analysis as a separate item for real unknowns. Whether ranges and reservations are allowed is set by those conditions; in public tenders they are often stricter. This is not legal advice. If the client refuses any conversation and the spec is obviously full of gaps, the book counts that among the warning signs of a tender you can hardly win without losing.

On the ideal route, the client, as a separate service before the project (see the two routes above). On the usual route, the analysis is a separate item in the quote, as in the example above.