Price quote

What it means

A price quote is a written proposal in which a supplier states exactly what it will deliver to the customer, for how much, by when and on what terms. It can be a simple email or a detailed document with an itemised breakdown, a schedule and attachments.

Legally it matters whether the quote meets the requirements of an offer: it must be sufficiently definite and show an intention to be bound. If so, and the customer accepts it without reservation, a contract is formed, such as a purchase contract or a contract for work. Acceptance with reservations is a new offer.

That is why a quote should state how long it is valid. Without that, a customer could accept months later, after material prices or capacity have changed. It is also common to state that the quote is non-binding and that a contract arises only when a purchase order is confirmed.

How it works in practice

A good quote rests on costing: direct costs, a share of overheads, a risk reserve and margin. We help clients set up a simple costing model so that quotes are not guesses that end in a loss on larger jobs.

The quote should state clearly whether prices include VAT, in which currency, what is excluded, how extra work is charged and the payment terms. On larger jobs an advance is agreed and an advance invoice issued, which protects the supplier from non-payment.

For companies with recurring work we recommend logging quotes and tracking how many turn into orders. That win rate is one of the best indicators of whether pricing is set correctly or the company is losing jobs on price.

What to watch out for

A quote that refers to terms and conditions without attaching them is risky. If the customer did not receive them before the contract was concluded, they may not be binding, and the supplier loses the protection it counted on, such as late payment interest or a liability cap.

The second mistake is a fixed price on a long job with no price adjustment clause. If input prices rise sharply between quote and delivery, the supplier bears the whole difference. On longer projects it pays to agree indexation or pricing by stage.