Quotations are an important part of any business. They are either written as a response to a request for a quotation or as a record of the goods or services required by a buyer from his supplier within a set period of time. It can also contain terms of sale and payment warranties for the knowledge of the customer.
The act of accepting a quotation from a seller is also considered an informal agreement that is binding on both parties, which is why quotations are treated as more than just a document necessary for inventory.
Elements of A Good Quotation
Business Details. An important part of every good quotation is your ABN and contact information. Aside from being a legal requirement, these details can also give credibility to the document.
Total Cost. The quotation should give details on the services rendered, the products ordered, and how much they cost. There should also be a note made on any additional service, such as delivery, that is not part of the total amount on the quotation.
Breakdown of Costs. The products or services purchased must be itemized for the customer’s clearer understanding.
Variations. Your quotation is also an effective tool for upselling. For example, your customer has purchased a lawn mowing service. Let them know that clippings will cost them an additional 15% so they can choose whether or not to take your additional offer as well. Even if they don’t, at least now they know that the option is available for next time.
Revisions. There should not be an official quotation unless you are sure that the customer is done purchasing your products or services. While they aren’t, keep revising the document to make sure that you are able to keep up with any changes.
Payment Terms and Conditions. Indicate when you will require the payment for the purchase. For example, lump-sum, periodical payments, half up front, and another half on completion.
Quote Expiry Date. Clearly note the date you need the quote accepted by, especially if the prices change quickly in your industry.
Customer Acceptance Signature. Include a “sign here” statement to fix the agreement, such as “I, [name], accept the above terms and conditions. Signed _____. Date _____.”
Payment Methods.Indicate your preferred method of payment if you are taking a deposit at quote stage.
Quote in writing. Written quotes, like every transcribed document, help avoid confusion. Written quotes can help avoid communication errors and misunderstandings.
Look professional. Your quotation should look official. It should have your company letterhead, an opening quote with a greeting, a thank you to your customer for choosing you for the transaction, and proper spelling and punctuation.
Add value. Although your quotation is not a marketing tool, it is still important to make it distinguishable by creating a unique selling proposition. Your customers receive at least four quotations for their product so make sure yours can stand out from the rest.
Meet your customer’s needs. You need to earn your customers’ trust, and the only way to do that is by making sure that you never quote anything unless you’re certain about your customer’s exact requirements. There should be no room for ambiguities on your quotation.
Confirm arrangements. Once your quotation is accepted by your customer, make sure you ask for a written confirmation from your client.
Know your obligations. Quotes are considered a legally binding statement of the terms and costs that you commit yourself to in providing goods and services, so make sure that you ask for recommendations from your industry and ask for information on how to properly prepare quotes.
How To Make a Quotation
Accurate, well-written quotations will help you win, and learning how to make winning quotations can only help your business. Quoting well involves:
make sure that you offer competitive prices that will help you win over your competitors;
itemize any materials or resources needed to fulfill the services or products purchased from you;
detailing your costing and taxes;
give a clear definition of the terms and conditions of your quote;
a professional and polished approach in presenting your quotation.
1. Prepare a price list.
Every business will need to prepare a price list at some point, and if you offer a fixed range of products, this is the only pricing you’ll ever need. This price list can also serve as your guide for any special orders.
2. Prepare a written estimate.
Even while just giving an estimate of the amount of the total purchase, you still need to give your customer a written copy which should include a full breakdown of costs. It should include the overall price, a list of the components of the price, the terms and conditions of the purchase, and the payment terms.
3. Prepare a price for a tender.
If you provide goods or services to other businesses or any public organizations, you may be against some sort of competition, which means that you would have to improve your game by submitting a tender. The most important component of any tender is the price bid that it will contain.
Types of Quotation
The following are the main types of quotations:
Loco Price Quotation. Loco stands for “On the Spot” and Loco Price Quotation refers to the cost of goods at the factory of the seller. Once these goods are out of the factory, all the expenses that will be sent thereafter will be shouldered by the purchaser.
Station Price Quotation. Station Price Quotation includes the cost of carriage for the goods purchased. The delivery will be made by the seller of the goods but the expenses will be borne by the buyer, such as freight and insurance.
Cost and Freight Price Quotation. Cost and Freight Price Quotation discusses the cost of the goods plus the cost of transporting it to the buyer, such as unloading and cartage.
Cost Insurance and Freight Price Quotation. This type of quotation is important especially for cases where the goods purchased will be transported. Perishable goods, for instance, has a certain risk in transporting, which is why insurance is necessary. Traditionally, it is the buyer’s job to secure insurance for the goods that are now, technically, his, unless the seller says that the business will cover it.
Franco Price Quotation. The Franco Price Quotation is considered as the quotation that charges the highest. But this doesn’t discourage buyers from choosing it among all the other types of quotations because it also offers the additional service of having the goods purchased delivered to the buyer’s doorstep, which relieves the buyer from the stress involved in transporting his purchases from the seller’s store.
Free Alongside Ship Price Quotation. Free Alongside Ship Price Quotation includes the cost of the goods as well as all the expenses in delivering them.
What is a quote from a company? A quote from a company includes the last price at which the buyer and seller have agreed and closed the deal.
What is the difference between a quotation and an invoice? A quotation is often an answer to a Request for Quotation, and it is usually answered by a Purchase Order from the buyer to the seller. An invoice, on the other hand, is more of a financial document. It is a request for payment from a work that has been completed or as a deposit for a work that is currently ongoing.
What is a price quotation?
A price quotation is an official document sent to a potential customer. It is used to offer goods or services and the special prices offered only to the recipient of the quote.
Now that you understand the importance of a quotation to your business, use the tips you have learned in this article to create one for yourself.