Everything You Need to Know About Price Quotations
11 min read by Nichita Herpuț
published 7 months ago, updated 7 months ago
Price quotes present the products and services that are given to prospective and/or current clients by a business. They are important because people need to know the cost of products and services, the terms of the deal, and what exactly they are getting for the price, but what are the most important things you need to know about price quotations?
The most important things you need to know about price quotations are:
- What they are
- What they are for
- What to include in them
- The difference between an offer and a quote
- How to make a price quote professional
This article will discuss these topics and more as they relate to price quotes. So, read on to learn everything you need to know to make reasonable price quotes.
What is a Price Quotation in Business?
Price quotations or price quotes are the fixed prices for goods and services given to a customer in written or verbal form. They only last for a given period of time, so if the offer is not accepted, it becomes void.
The customer who asked for a quote can either accept the offer given in the quote, reject the quote, or make a different offer depending on their needs. If a counteroffer is made, the offer will move forward once both parties agree on the price.
Price quotations can be made for both products and services. For the purposes of this discussion, we will focus on product quotes. Product quotes list the approximate costs for products purchased from a company so that customers are aware of how much they will pay.
What is the Difference Between an Estimate and a Quote?
Although estimates and quotes sound like the same thing, they are not. Knowing the difference between them can help you make better business deals so that your company thrives.
An estimate approximates the costs of products to help the company determine what they will need for the job and assist clients with budgeting. Estimates take the client's needs into account and can change with time and new information.
Estimates for products can also include:
- Terms and conditions for the offer
- Details that the client should know if they decide to choose your product
- Company policies regarding product purchases and returns
- Warranty information
- Where to find product specifications
Customers or clients use estimates along with other information, such as product testimonials and reviews, to help them decide if they want to purchase a product. Even loyal customers need time to decide if an offer is right for them.
A quote is just like a bid, estimate, or proposal in that it contains all the essential information customers need to know about a product. However, it is also unique because it lets potential customers know the value a product can provide for them. The client will often state what they are looking for, and the company provides a quote that meets their needs.
Quotes often include:
- Past products and how they have helped clients achieve their goals
- Detailed explanations of how the product can help the client
- Exact information about costs and what to expect from the product (no approximations)
- Information that shows the credibility of the product (images etc.)
Quotes are usually created at the start of a new client relationship to build trust and positive rapport. Clients often receive quotes, or bids, from multiple companies at once, so making your quote unique and specific to your company is really important. With a service like OptiOffer, you can craft a quote or proposal that communicates exactly what you want about your company.
Difference Between Estimates and Quotes
The main difference between estimates and quotes is that estimates are an educated guess about product costs relative to a client's budget, while quotes are pre-planned exact statements about a product tailored to the client's needs.
Both are effective ways of communicating information about a company to a potential client. It is up to each individual organization to choose what works best. OptiOffer can help you land more product sales and communicate with clients effectively.
Why Are Price Quotes Important?
Price quotes are necessary for businesses for the following reasons:
- They are one of the first documents a customer receives from a business and can give them a good or bad impression of the company
- Price quotes help the buyer and seller understand each other and clearly understand the terms of the deal
- They protect businesses from fluctuating prices because they are valid only for a specified time
- The seller learns the customer's price point and what they expect, and the customer learns what they will gain from the offer, as well as the cost
- The transparency of a quote builds rapport with customers and entices them to take what is being offered
Quotes are key to driving business in many industries. Without them, customers would not know anything about a business or what to expect quality and price-wise. If a business does not want to use quotes, they must be transparent with their customers in some other way.
How To Create a Professional Price Quote
The more professional your price quotes look, the more likely customers will be to choose your business over competitors. These are the steps you should take to make sure your price quote is a perfect fit for your business needs. Remember what we said about the Purple Cow?
Make Sure They Look Clean and Visually Appealing
When quotes look too busy and hard to read, customers have a harder time reading them and understanding the information they need. Here are some tips you can use to make sure your quotes look just the way they need to. Many people also use Word templates to save time and resources.
For a quote to look good in Word, make sure to:
- Use non-curly, easy to read fonts size 12 or bigger
- Avoid adding too much color to limit distraction
- Bold or highlight important information, so it stands out
- Keep information appropriately spaced to avoid customer confusion as they read
Provide Company Information
For this part of the quote, make sure that your company name and logo are easily visible. This way, the customer looking at the quote remembers what company it is from. In addition to the name and logo, include this other company information in the quote.
- Contact information
- Company description
- Company slogan
- Description of qualifications and array of services
Information About Goods and Services Sold
The purpose of a quote is to sell something, so it is important to remember to add information about what you are working to sell. To ensure a more successful quote, include the following information so that the customer is aware:
- Description of the goods and services being quoted
- Quantity and quality information on quoted items
- Product codes/SKUs and photos
- Make sure to clearly show if a certain item is an accessory for the main product
- Price per unit and total price
- Costs of services that are not included in the product - like extra warranty
Terms and Conditions
In most cases, quotes do have terms and conditions. Here is some related information you should include:
- Payment terms and conditions
- Shipping and delivery conditions
- Warranty information
- Return or cancellation policies
This may feel very structured or like legalese, but these are the details that keep you and your customers in long-term relationships.
How To Create a Quote for a Product
Creating the right quotes for products can be a challenge because there are a lot of details involved. The first thing any company should consider before making a quote is doing background research so that the quotes they provide fit their clients' needs.
Figure out the following before preparing a quote:
- If you are not the first company to provide a quote, figure out what your competitors are pricing for products and set a competitive rate that will suit your customer base
- The needs and demographics of your customer base
- How to relate your business strategy and vision to the way your quotes look
- Know exactly what your customer is looking for so that you can provide them with the best products and services
- If you have the resources to perform the product or service so that your company does not overcommit, and therefore, need to pay out of pocket for the cases where the payment is delayed
Once you have these details decided, you can put your quote together. All quotes should include the following information:
- Business details and contact information required by law
- Total costs
- Cost breakdown
- Terms and conditions
- Customer and client signature space
- Client and customer contact information
- Quote expiration date
- Accepted types of payment information
- Product pictures
- Product description and technical specifications
How To Create a Quote For a Service
Creating a quote for service is roughly the same as creating a quote for a product. You still want to plan ahead and make sure that you can provide the exact service the customer is looking for. In addition, business information should be included in every quote.
However, here are some points that should be included in a service quote that is not in a product quote:
- Images of a team performing the service
- Variances in service (such as eliminating clippings for lawn services) and how they change the price of that service
- Service descriptions
- Total and cost breakdowns for the service
- Explanation of how the costs of services are calculated
- Timeline for service completion
- Signature space
- Quote expiration date
Once you have all of these elements, you will have a professional and easy-to-understand price quote that will also be tailored to fit the individual needs of each customer. Remember that quotes are a source of communication between customer and client. So, the contents of the quote dictate how well both parties will be able to communicate.
What Not to Include in a Price Quote
The things that are important to include in a price quote have been discussed so far, but are there also details that should be avoided? The quote will be less overwhelming for both the business and client if the following information is omitted:
- Information errors (always check your work!)
- Any information that is not related to the product or service being offered
Leaving out this information will make sure that new and old customers know exactly what to expect. This way, they will be more likely to accept the deal, and everyone will be better off.
Tools To Create Price Quotes
If you are unsure how to create a price quote and need to make one, there are many tools you can use to help you. Some are more effective than others. Let's take a look at some of the options available.
Making Quotes Manually in Microsoft Excel
This method is not recommended because it is tedious and time-consuming. However, if you want to use it because you prefer it over using software, use the following steps to guide you.
- Add business information below the heading: company name, logo, contact information, legal information to show that the business is run in accordance with the law
- Enter the products to be included in the quote in the first column of the worksheet
- Type the following column headings on the next few columns: product or service description, unit, service, or model number, service or unit cost, color and packaging details for a product
- Enter the name of the quote and the product or service it covers in the document header so that you remember what it is for
- Add the signature section, the terms and conditions, and any other information needed to the quote sheet
Mistakes When Making Quotes in Excel
Here are some common mistakes people run into when making quote sheets in Excel and how to fix them:
- Forgetting to put zero in for blank data on the spreadsheet - if you forget to put zeros in, any mathematical calculations made will be off because of the way that the program computes numbers
- Merging cells to make the format of the spreadsheet better - will cause you more trouble than good because although the spreadsheet looks good on the computer screen, merging cells makes the printed format look very different. Keep the original format as much as possible
- Crowding cells with too much information - cells are made to handle one piece of information at a time. If you overload one cell, the format will be difficult to read, and the spreadsheet functions you are using will malfunction. This means that the spreadsheet data will contain errors
- Typing names like you would in Word - Excel has a specific format for data, and in order for words to work how you want them, they need to be entered in a specific way through formulas
Automated Software for Product Quotes
Many different software help businesses create quotes for their products, like OptiOffer.
What is OptiOffer?
OptiOffer is a price quoting app. The purpose behind it is to streamline the product quoting process so that businesses can redeem their time back and get more done. No more:
- Copying and pasting information
It was created by Nichita Herput and Bogdan Bota to revolutionize the quoting process for businesses everywhere.
How Does it Work?
OptiOffer has the following features to make sure that businesses never waste the almost two hours it takes to make a quote on average ever again:
- The app stores your product information in one place so that you do not have to waste time searching for the various pieces of data
- The app prevents you from having to run around with a pen and paper when making a sale because everything is on your mobile device
- Communication with clients becomes easier because you can show them products right on your device. They can view products themselves and choose what they want, so they do not feel like they are being forced to buy something
- Log every step of the quoting process through the app so that you don't get lost
- The app gives reminders to follow up on quotes and other parts of the process that are key to making a sale
- Send custom messages to clients to establish a closer relationship
- Clients can modify the amount of each product they want (coming soon)
- Quotes can be accepted online to save time on both sides (coming soon)
What are the Overall Benefits of the App?
OptiOffer makes everything about running a business and making sales easier and more efficient. When you use OptiOffer, you'll experience all of these benefits and more for your business.
With OptiOffer, you will be ahead of other businesses because your clients will not have to wait long for quotes, be confused by what the quote you are offering entails, or feel like they have no say in the deals they are engaged in.
OptiOffer also makes sure you:
- No longer need to put so much effort into quoting
- Spend the time saved from the quoting process on other important aspects of running a business
- Have access to easier quote management
- Can ensure better interactions with customers, therefore resulting in better business relationships and more chances of making a sale
- Have increased earnings from every quote
- Experience maximized cross-selling potential
- Have reduced errors when writing quotes
- Leave a lasting impression on your clients
- Communicate with less confusion and more transparency
- Give the client control over the entire purchase process
- Have access to an awareness of client interactions so that the company knows what works and what does not
- Have better management of quotes with the virtual assistant
- Make faster and better decisions
How Do I Get Started Using OptiOffer?
To get started using OptiOffer, simply register an account. It only takes about 30 seconds, and then you can start sending quotes to your customers 100% free. There is also a quick form on the website you can fill out with your email and name to get in touch with a representative and start using everything OptiOffer can provide your business.
Automated Software for Service Quotes
There are automated software solutions for quotes as well because products and services are two different things. Just like with the product quote software, we will focus on one solution for service quotes: Quotient
What is Quotient?
Quotient is a digital service and product quote creation space available on the web and through an app. It was developed in 2011 by a team that always had a passion for software development.
How Does It Work?
Quotient is essentially a service quoting app that lets you design thousands of quotes from one unique, clean-looking template. Within the template, you can add images, a signature section, calculate costs, and more. The template gives you a chance to showcase all the services your business has to offer and reach more customers.
How Do I Get Started Using Quotient?
To start using Quotient for your business, make an account on their website, and choose from one of the following plans:
- $25/ month for one team member
- $45/ month for 2-5 team members, and any additional members are $6 extra each
You can cancel or change your plan at any time, and if you are not sold on using Quotient, they have a 30-day free trial so that you can test it out.
Price quotations allow a business to communicate the costs of a product or service to a customer to help them decide if they would like to purchase it. They include company information, a cost breakdown, and more. Estimates are generalizations, while quotations are specific. There are many apps and tools on the market that help companies save time on quote-making. Check out OptiOffer to streamline your process today.
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