How to request a quote

It’s not uncommon in a math class for the teacher to require students to “show their work.” Requesting a quote for services is basically asking for the same thing. 

A good quote details why a service or product will cost the amount in the bid. It doesn’t matter if the transaction is B2C or B2B — giving a price without including an explanation usually isn’t going to persuade a customer to use that business’s services.

The customer, particularly a smaller business or individual, will want to know the cost of labor and materials before they write a big check. These customers want a thorough quote they can compare with competing quotes.

In larger B2B transactions, the dynamic is reversed. The purchasing business has deep knowledge about what they’re looking for and knows from experience at least the ballpark amount it should cost. They detail their requirements in a request for quote (RFQ) and compare the responses they receive with their own estimate of a fair price.

You need to know what you want

The more you know about the product or service you’re looking for, the better chance you have of creating a good request for a quote. Detail the precise specifications of what you intend to build or have a provider deliver, and include the precise number of each item. It’s best to require vendors to itemize their costs so you can easily compare quotes.

To keep the process moving, set a firm deadline for bidders to respond to your quote request. Be clear about when you expect work to begin and when you want the project to be complete or the products delivered.

Don’t worry about asking for too much when you specify what you want and when you want it. If all the responses say that your timelines are too ambitious, you’ll get a clear idea of what’s practical from vendors who take you seriously. You’re unlikely to scare off potential bidders by setting aggressive deadlines.

The final price can differ from the quoted price

The quotes you receive essentially open the discussion about the project or purchase you intend to complete. Consider them honest estimates of the final price. 

Where the manufacturer’s price is firm and delivery costs are known, you can anticipate little variation between the quote you get and the final price. In other circumstances, there can be legitimate reasons why the quoted price and the final price vary.

This is particularly true for construction projects. While the final price shouldn’t be unreasonably far from the bid price, there’s always the possibility of unknown circumstances that weren’t factored into the request for quotes for new construction, renovation, or expansion projects. 

For example, the costs of materials, such as lumber and plumbing parts, fluctuate. The price when the order is placed can be different than the quote your service provider gave you. It’s equally possible that you might change your mind during the project about something, such as upgrading the mechanical systems from the original order, which will result in a higher final price.

Learn the basic elements of a quote request 

To get the best price from competing qualified bidders, you need to request a quote. Asking detailed questions helps you winnow down the list of vendors to determine which ones merit consideration and which, regardless of their opening price, aren’t qualified.

A thorough bid should

  • Specify the quality (or even specific brand) of needed parts or components. (You can set specific parameters, such as minimum required energy efficiency or length of warranty, to guide bidders on pricing.)
  • State your requirements for delivery — both the completion date for the project and, if appropriate, intermittent deadlines.
  • Either state the payment terms you’re offering or simply ask for payment terms. 

Bidders deserve to know what they have to include in order to make it to the next stage of the selection process. If you’ll consider quotes only from firms that have a certain type of experience, are bonded for specific purposes, have certain licenses, etc., state that in your request for quotes.

A highly structured process makes perfect sense for big companies working on huge projects or for government agencies hiring for massive public infrastructure projects, but does it make sense for smaller companies with proportionally smaller budgets and less expertise?

Actually, it can. Jotform has many free templates for quotes. These templates allow you to create quotes for customers seeking your products or services or for you to request quotes when you’re looking for products or services. Jotform’s quote templates make the processes of both offering and soliciting quotes more efficient — at no added cost.

The purpose of issuing a request for quotes is to generate a wide response from competent bidders who have to compete with one another to win your business. And remember — the smaller your business, the more you need the price advantages you can achieve through a careful process of soliciting quotes from qualified vendors.

Business photo created by pressfoto – www.freepik.com

This article is originally published on Sep 29, 2021, and updated on Nov 11, 2021.
AUTHOR
Peter Page is a professional writer whose career began in print. He has worked with hundreds of entrepreneurs and business leaders as an editor at Entrepreneur.com and Green Entrepreneur. He is now editor for contributed content at Grit Daily News.

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