A quotation is the first point of business communication with your client because they are sent before an invoice. With that, a better quotation gives you a higher chance of success and the opportunity to convert that into an invoice. Additionally, when there is a request for a quotation, your prospective client intends to make a purchase. Hence, quotation making is an important skill to learn if you have a business. Continue reading this article to know more about business quotations and their benefits.
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What Is a Quotation?
A quotation, also known as a quote, is a document similar to a service invoice as it contains the same information. But, it has a different purpose. A quotation provides the client with a detailed list of the product or service being proposed before confirming an order. Normally, the quotation is based on certain conditions set out by the client. On the other hand, if there are fixed rates for the product or service, there would be no need for a quotation.
How to Create a Quotation
When suppliers send a quote to a potential client, it means they are committing to the proposed price. Since a quotation is binding, it is quite different from an estimate. For this instance, a quotation must consider all the costs associated with the job. And for the business to make a profit, the quotation costs will be calculated with a markup. Below is a list that will help you create your quotation. Continue reading below.
1. Negotiate with the Client
Before drafting a sales quotation, make sure to talk with the client first. You can capture their interest more when you communicate with them. This is also your chance to find the common ground that you and the client can start negotiating because setting out the conditions is the quotation’s most crucial part. This way, you tailor the quotation based on your client’s demands to meet their needs.
2. Include Important Details
Begin your quotation with the right details. It is easier to collect relevant information firsthand to ensure that the quotation contains your client’s correct data. More so, add a business quotation title to set it apart from other documents. Losing it in a pile of papers is the last thing you would want to happen. After that, include some of your business’s information, such as company name, address, and contact details. Do not forget to indicate the customer’s contact details too.
3. Add Payment Terms
Money is contentious and most conflicts rise above it. That is why getting the numbers right is important. Your way around this is indicating the payment terms in the quotation. Be as specific as possible. Waiting for 20 to 30 days is no longer a given because you are entitled to set the payment terms for your quotation. Thus, having a seven-day payment term is perfectly reasonable. Furthermore, be transparent with the quotation total costs, applicable tax, and discount if there are any.
4. Describe the Offered Product or Service
The description of the product or service your client will be paying for should be included in your quotation. This is very important because it gives your client ideas on what to expect. Do this by adding tables to your quotation. You can divide the table into several columns. Then allocate one column for each description, quantity, price, and total price.
How is a quotation important in business?
Like a sample estimate, a quotation is used to let your client know how much a product or service costs before making a purchase. In that case, a quotation is essential not only for a business but for customers as well. Aside from that, it helps clients decide whether to continue to do business with a company or not.
What is a request for a quotation?
A request for quotation (RFQ), also known as an invitation for bid (IFB) is a process in which an organization solicits chosen suppliers or contractors price quotes and bids to fulfill certain project plans. It is an important process mostly for businesses that need a consistent supply of standard products or services.
Why do you need a quotation template?
Every quotation differs as it is affected by different variables. Although you can create a quote without a template, it is easier if you do not have to start from scratch. A template will help you come up with a quotation that is complete and easy-to-customize.
Every successful business transaction begins with a working document that will talk a customer through what your business can offer. Making empty promises does not guarantee you positive business returns. That is why you have to grasp every interest a client shows with a comprehensible quotation. Download a template now and start responding to RFQ today!
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