What is Sales Quotation? Definition, Meaning, Creation & Presentation

August 14, 2017 Topics :

According to Wikipedia

A Sales Quotation allows a prospective buyer to see what costs would be involved for the work they would like to have done.

Also referred to as a price quote, it is a document prepared by a potential seller in response to a request for quotation (RFQ) from a prospective buyer. Creating sales quotations are an important component of work for any product/service providing company. Those who are in sales will know how important quotes can be to the sales process. A sales quote that is created using the information provided by the potential buyer, mainly consists of a number of products/services along with the price list.

Sales Quote Process

  • Purpose of a Quote

The primary purpose of a sales quotation is to sell the products or services at the price quoted. This aim is to get a documented confirmation of what has been decided between you and your prospective buyer. Often the quotation has to be sent to the purchasing department for processing the order. A sales quote acts as a confirmation tool for placing the order. It is often used for administrative purpose to keep a track of items that have been purchased by a specific customer. Sometimes quotes are needed for your customer’s ISO process.

  • Things to Consider Before you Quote

Things to Consider Before you QuoteFirst and foremost, know your buyer’s exact requirements. If need arises, you can make a call or even setup a meeting to get to the bottom of what the customer is looking for. Clarity in information about what you will be adding in the sales quote is important. Assess your prospect’s needs and analyze whether you can deliver the products and service in the timeframe requested.

It goes without saying that you should never quote unless you are confident that you will meet your buyer’s needs. It doesn’t sound sensible to make promises that you cannot fulfill. Once the quote is accepted, you enter into a legal contract with the buyer. Hence, if you are unable to fulfill quoting requirements, your company can be even sued for breach of contract.

Also, if you want to build a long term relationship with your prospect, make sure your sales quote a price that the buyer can realistically afford. Quote a price that is competitive and affordable to fit into your buyer’s budget. You can even find out what your competitors would quote for the same request. In any case, ensure that the transaction does not undervalue your products or cut your margins.

  • Things to Include in a Sales Quotation

Things to Include in a Sales Quote

Firstly, provide your contact information in detail so that the buyer can revert to you in case he is interested in your deal. Next add customer name along with his contact details in the quote. List the products along with their quantity and description. Include the total cost as well as the itemized cost of each of the products and services that you will be providing to the buyer. Few companies also include product warranties as well in the quote. Do not forget to mention tax details associated with the transaction.

Your sales quotation will also contain delivery date, payment terms and conditions that convey your preferred payment methods, when payment is expected, incentives for early payments etc. Also, place an expiry date indicating validity period for quotation. This will imply that the buyer has to take a decision within the specified time frame so as to get the same deal that has been quoted.

  • Quote Presentation

How you present your sales quotation can make or break your chances of getting the deal. A sales quote conveys a lot about your company. Your prospective buyer is sure to form an opinion about your company after viewing the quote. So you need to put a quote that looks great so that it makes your brand standout from the competition.

It goes without saying that your sales quotation should have a logical structure. The quote you present has to be clear, simple and understandable but at the same time grabs the attention of the prospective buyer. It is essential that you present your quotes in a professional format to attract new customers.

Company letterheads are often used to impart a professional look to the quote. You can begin your quote with a formal greeting using the name of the recipient and thank him for giving an opportunity to quote. Ensure that there are no spelling mistakes in products names or errors in pricing as it can leave a very bad impression on your prospective buyers. Sales reps usually prefer to give product and service information in a tabular format. The sender and recipient’s name, and their contact details appear on the top of quoting template.

  • Different Ways of Quote Creation

    • Manual Quoting Using Excel Spreadsheets

    Traditionally, many business organizations have been using Excel spreadsheets for sales quote management. Startups and small businesses that have simple operations can use Excel sheets for quoting process. However, manual quoting on Excel has its own set of limitations. For instance, as business grows and quoting activity increases, it can become difficult to manage quoting process with this old fashioned method that is prone to errors. Excel is inefficient when it comes to creating complex configurations or handling large number of RFQs.

    • Quote Creation Using Sales Quoting Software

      Use of sales quoting software is the best practice when you have to deal with large number of sales quotes. It essentially automates sales quoting activities that are otherwise done manually. It provides an accurate and a more efficient way to generate quotes and is considered an invaluable tool to improve sales process. With this software tool, you can also send interactive quotes that have drop-down menus so that the buyers can choose the quantity and other options as per their needs. Moreover the quotes created can be sent in various formats including PDF and HTML format.

      Most sales quoting tools have features like online mode of working which further simplify, save your time and money in quoting process. With Web-based quoting software, you can create and send quotes from any device as long as it is connected to the Internet. Mobile quoting apps are also designed which enable you to use your smartphones and tablets for managing quotes. Using these apps, you can create quotes on the spot for your buyers, thereby increasing your chances of winning the sale.

  • Follow-up the Quote

sales quotation follow-up is considered to be one of the best strategies to close deals faster and generate more revenue. Many companies promote their products on various advertisement channels in order to reach a prospective buyer. So getting a potential customer can be an expensive proposition. Hence, one should never forget to follow-up on the quotes. So after sending the quote if there is no response within a stipulated period, follow-up your prospect 3-4 times to move the deal forward. A follow-up usually involves sending an email or making a phone to the prospect. However, if the buyer is your existing customer, a follow-up is usually not needed.

  • If Sales Quote is Rejected?

The sales quotation submitted in response to RFQ can be either accepted or rejected by the buyer. In case the quote is rejected, you may have to provide a revised quote to get confirmation. Quote revision is a standard practice followed to avoid losing a potential sale. However, seek assistance from the higher authority before revising the quote. When reworking the quote, evaluate whether it would be economically feasible for your company to make variations in the quote. If quote revisions are causing loss of revenue for the company, then it is probably not worth it. Keep in mind it is unacceptable to make a deal that is not a profitable endeavor for you.

  • If Sales Quote is Accepted?

When the buyer accepts the quote, the seller converts the quote into a sales order (SO), which indicates that the quote has been confirmed and the buyer is ready to purchase products from the seller. Sales order (SO) is usually an internal document for the company and commonly used to keep a track of sales process. sales order is then converted to a purchase order (PO), which is an external document and used for further processing the order.