What is a quote in business?

Sales quotes are essential documents for most companies, whether they’re big enterprises, start-ups, or small businesses. If you sell anything at all, whether products, services, or a mix of both, then you’ll almost certainly have received and sent quotes.

But are you aware of the different types of quotes and the circumstances in which to use them? Do you know what distinguishes a bad quote from a good quote? And, more importantly, are you wasting time and money with an outdated quote management system?

If the answer to either question might be yes, here’s a quick rundown of some key terms along with a few tips for improving your current workflows.

What is a quote?

Quotes in business generally fall into one of two categories – estimates and detailed price breakdowns.

Estimates are common because service packages often don’t have fixed costs. This is due to the fact that certain details will be variable – like the prices of physical goods, the input of team members, and the duration of a project. In scenarios like these, estimates provide potential buyers with a ballpark figure. The quote acts as an aid to buying rather than as a definite price.

Detailed breakdowns, on the other hand, are provided when the products/services requested have a fixed price. For example, say a company wishes to purchase a new IT system. It’s possible to provide item-by-item prices along with the cost of labor for the whole project.

It’s also worth noting that there is a lot of overlap between quotes and other documents. The defining lines aren’t always clear. Often, quotes will act as invoices and include payment options. Equally, a quote may form part of a sales proposal.

What is a request for quotation?

A quote sent in response to a “request for quotation” (RFQ) will not be the same as a generic quote. Companies often use RFQs to evaluate suppliers prior to making a purchase, and usually, ask for quotes to be delivered in a highly structured format.

In a nutshell, an RFQ is a document sent to numerous suppliers or hosted on a supplier marketplace like alibaba.com, that asks for a very specific quote for a project. The RFQ will usually include instructions about how to format the response, deadlines for submission or expiration date, and details about how respondents will be evaluated.

How to write a quote

Quotes should be tailored to the needs of the prospective buyer. That said, the structure described below will be sufficient for most circumstances, and is relevant for both specific and estimated prices.

Use the following outline to write a quote:

Introduction

Include a short introduction that provides context for the quote – mention any previous interactions, briefly describe your company, and outline what the quote involves.

Client and company details

Include the company names, addresses, and contact details of both your company and your potential client’s. This section acts as a reference point for the recipient while also eradicating any doubt about who the quote is intended for.

Pricing

When providing pricing, it’s best to use an item-by-item table format. Use this structure irrespective of whether you’re providing a fixed market price or a rough estimate.

Legal documentation

Any legal documentation should be included towards the end of the quote. If a potential customer has the option to approve the quote, it will be essential to add a contract, payment terms, warranty information, etc.

How to write a quote using PandaDoc

Smart sales apps like PandaDoc can significantly reduce the time it takes to write winning quotes. Features like drag-and-drop electronic signature fields, payment options, follow-up tools, and detailed analytics also improve the efficiency of your workflow.

To create a business quote with PandaDoc, follow the steps below:

  1. Log into your PandaDoc account.
  2. Click the “New Document” button.
  3. Type “Quote” into the top-right search bar and choose the best template from the results. If you already have a template, you can upload it by clicking the Upload tab.
  4. Follow the on-screen prompts and click Start Editing.
  5. Input all the appropriate information, along with any rich media, electronic signature fields, and payment buttons, and click Send.

Conclusion

Most if not all businesses have to work with quotes. Yet many also waste hefty amounts of time and money by relying on outdated processes. Quoting software solutions like PandaDoc overcome this problem by providing a suite of tools that enable businesses to streamline their workflows, boost conversions, and save hours of employee time every week.

If you would like to give PandaDoc a try, sign up for a 14-day free trial.