Every business strives to remain relevant and have a competitive edge over others. However, this remains a huge challenge for many business owners as they struggle to gain new clients and entice them to become customers. Therefore, you can provide your clients with a business quotation letter as a service provider.
A business quotation letter is a formal contract between you and the buyer. Therefore, you can give a price quote based on the purchase requests of the buyer. You may also highlight any extra transactional costs such as taxes, cost of labor and raw materials, and any other items that need to be quoted. Apart from mentioning the items and their prices, you can also suggest payment methods that align with your company’s transaction policies.
In this article, you will learn more about the following:
- What a business quotation letter is
- Its importance
- Different types of quotation letters
- How to create a quote and the tips to consider when creating it
What is a Quotation Letter?
A quotation letter is a formal document a company uses to quote the exact prices of different items, that is, products or services.
The seller usually provides the letter whenever a customer requests a quotation. It also contains company offers like discounts and delivery dates. A quotation letter can also be referred to as a service, sales, or pricing quote.
The quotation is meant to meet and satisfy the demands of both the seller and the customer. Therefore, the quote combines the costs of each item and service provided alongside any other additional cost and sums up the total cost. Once the quote has been agreed upon and documented by both the seller and the client, it cannot be altered unless both parties agree to alter and change the quotation details.
Business Quotation Letter Templates
Why Is it an Important Document?
A quotation letter is crucial to an organization as it gives the client an overview of your products or services and their prices. Therefore, it can help you attract and gain more clients, which will help boost your company’s profits. A price quote is also necessary for any business because of the constant market change of goods and services.
It helps your customers and potential clients to understand the price variations. Remember that a quotation is created before your client makes the order. That means it will be a reference point for clients examining your items and their prices. Moreover, a quote is created to reflect the value of your products and services.
Tip: The letter should be written in a formal and professional tone. A formal letter creates a good impression and helps protect your reputation with your clients. Conversely, each letter should be customized to meet the requirements of each client. In most cases, this letter should be one page long.
Types of a Business Quotation Letter
There are different types of quotation letters that you can use; these quotations are designed based on your company type and the kind of transaction you are making.
Here are different types of quotations you can send to your customers:
An offer
An offer letter is used by an organization to offer or sell its products and services to a particular client or organization. It should contain your business’s name, the client’s details, the description of the products and services, the price of each product, and any other important information related to the transaction.
Business travel offers business
A travel quotation documents a business trip’s travel, transportation, and accommodation charges. In most cases, it is sent by a travel agency to an interested client or a company that uses their traveling services to attend meetings or other business-related events abroad.
Purchase order
This official document allows a customer to buy your products and services and pay later. The buyer uses the purchase order to outline the products or services they need, the quantity, and the price they are willing to pay for the offered products and services.
Sales offer letter
This is a document you send to the client to summarize their order; this includes a list of all products and services ordered by the client. Additionally, it mentions the costs of completing the orders.
Corporate event offerings
This is a document an event planner uses to outline and provide the client with accurate details of the cost of a corporate event. Note that various products and services are required for arranging an event, for instance, the chefs, the decorations, the MC, and any other person. Therefore, the corporate event offer combines the costs of all the products and services that will be required to make the event a success.
Quotation Letter Vs. Other Similar Documents
Different types of financial documents are used by businesses, such as invoices or proposals. The distinctions between a quotation, an invoice, and a proposal are as follows.
Quotation letter v/s invoice
The seller uses a quotation letter to provide details about the costs of their products or services. In most cases, it is provided to the customer before a transaction takes place. On the other hand, an invoice is a document prepared by the service provider to make payment requests. This financial document is sent after a transaction has been completed. The invoice mentions the amount owed by the client and the completion date of the transaction.
Quotation letter v/s proposal
A quote shows the prices suggested by the seller for specific products and services. When a customer requests a quotation, it is their responsibility to clearly state the scope and the specification.
In contrast, when a customer asks for a proposal, they want to know how you would deliver a solution for them. The proposal is not only about price but also about how effective it will be.
A proposal is typically a document submitted as part of a competitive process designed to get more business. These documents are presented by various companies to try and win a bid for a potential project.
In most cases, a proposal is submitted together with a price quote to show how much the client should pay for the proposed project. Proposals are suitable for large and complex projects.
Creating a Business Quotation Letter
As a service provider, you need to prepare an effective letter to present your sales quote in order to be able to turn a potential client into a real customer. That means you need to know how to create this document properly.
Below is a step-by-step guide to creating a quotation letter:
Choose a professional template
Start by choosing a professional template. A template will make your work easier since you can easily edit the document and include the necessary information.
You can access professional templates of quotation letters on this website. These templates are free to download, easy to use, and can be customized to suit your business needs. Once you download the template, ensure that you include your company name, logo, and the term “quote” on the top part of the page.
Mention your quote number
The next step is to include your quote number. This is a unique number you allocate to each of the quotations you send to your potential customers. It is usually 3-5 numbers long and can include the customer’s name or initials for easier identification. It can be alphanumerical, that is, it can include both letters and numbers. The quote number should be placed at the top of the document for easier visibility. This number helps to organize and track your quotes.
Write customer information
Write the customer’s information next, such as the client’s name, address, phone number, or email address. These details make it easier to identify and organize these documents in your records.
Add product/service description
The next part is a list of products or services and their descriptions. This includes the quantity, product number, price per unit, and total prices. If it is a project, you can list the products or services for different stages of the project. However, ensure that the labor and material prices and payment details are listed separately.
Write your business information
For the next section, you need to include your business information. This will make it easier for clients to contact you if they have questions or want more details about your products or services. Your business information includes your business name, logo, address, phone number, and email address. Ensure that your company’s contact details are accurate and visible on the letter.
Mention the issue date
Ensure that your quote document contains the issue date. You should also include a deadline (or expiration) date to indicate how long the prices will remain valid. This will ensure that the client has accurate pricing details that enable you to profit if they decide to purchase. After the expiration of the quote (usually, after 14 to 30 days), you are no longer liable to adhere to the exact prices mentioned in it.
Explain your terms and conditions
The terms and conditions of the potential transaction should also be included to complete the quote. Some of the terms and conditions you should include are the following:
- Payment terms: This includes the deposit the client should make before receiving your services, acceptable payment methods such as checks or credit cards, and the period allocated for payment.
- Additional work payment: Ensure that you add the costs for additional work. The client should be aware that any extra work apart from what has been agreed upon will be charged. Such details create transparency in the transaction.
- Unforeseen elements: You must mention those elements which are beyond your control and can affect the prices or the duration of the project, for instance, weather, access to material, taxes, etc. This will enable you to create a buffer in your prices to manage unforeseen circumstances.
Include additional information
Finally, if needed, include additional details such as a potential price reduction due to seasonal demands or referral discounts, a signature section, a purchase order number from your potential client, and a gratitude note for the client interested in working with you. Once the client contacts you, it is essential to send them the quote within 24 hours.
Note: When preparing a quote, start by listing all items. With a clear list, you will have an idea of what you want to include in your letter. This means there will be fewer chances of making mistakes or forgetting something.
A Sample Letter of Quotation
Arian Furniture Store
Furniture Quotation
123, Zimmerman Road
Middletown, MA Issue date: 3/11/2022
+15 333-222-666Quote No.: 346 C.J.
[email protected] Expiration date: 20/11/2022
Quotation For XYZ:
Priscilla Johnson
097, Highway Rides
777-777-7777
Dear Mrs. Johnson,
Thank you so much for contacting our furniture store. We specialize in providing our clients with outstanding, unique, and durable furniture. Our store aims to manufacture furniture that complements the aesthetics of your home, office, or any other space. That means we offer both ready-made and customized furniture.
Arian Furniture Store also has both indoor and outdoor furniture at great prices. Located along Highway Rides, we have served customers for more than 15 years, and we are glad that you contacted us. Below is a detailed quotation that contains all the details regarding your office furniture.
Product Description
Product Number – Quantity – Description – Unit Price – Total Price
01. – 5 – Office Chairs – $200 – $1000
02. – 3 – File Storage Units – $550 – $1650
03. – 1 – Conference Table – $1760 – $1760
04. – 7 – Office Desk – $950 – $6650
Terms and Conditions
Payment Terms: Payments can be made using a check or credit card.
Additional Work Payment: There are extra charges to be paid for delivery.
Please contact us at our provided email address or phone number for further discussions. You can also visit our showroom to see our variety of furniture. Thank you once more.
Sincerely,
[Signature]
Best Practices to Consider
There are tips that you should consider if you wish to have a proper and detailed document. Some of those essential tips include the following:
Know the customer’s requirements
Make certain to take the customer’s requirements and demands into consideration to draft a proper and effective quote. You can learn more about the client’s needs by reviewing their RFQ (Request for Quote).
Focus on the formatting
Use a simple layout, proper fonts, and clear headings to make your quote readable. Ensure that the tone you use is formal and respectful. Also, you can incorporate your company’s colors in the document to represent your brand. For printing purposes, make sure your document will fit on an A4 sheet of paper.
Double-check your calculations
Another essential tip is double-checking your calculations to ensure that the client receives accurate details. Once you have completed the document, review your quote to confirm that all the details, especially the prices, are correct.
Check your spelling and grammar
Before sending your quotation to the client, review it for spelling and grammar mistakes. Inaccurate information will confuse the client and create a negative impression of your business. Also, avoid using complicated language, as this will reduce your chance of turning a prospect into a real customer.
Include a disclaimer (if needed)
If needed, include a disclaimer. Make sure that your potential client is fully informed about the items for which you will not be liable. Because each industry is different, you may need to include specific disclaimers related to the services you provide.
Be clear and considerate
Always be clear and brief while writing your price quotation. The idea is to quickly and effectively communicate with a prospective client. That means you should write your content to be exhaustive but also avoid adding unnecessary information. In addition, ensure that your content is accurate and the document is professionally formatted.
Focus on transparency of the details
Finally, ensure transparency regarding the details of your company policies. Hidden terms and conditions will result in the client not trusting you or your business. developing trust is essential to gain a real customer. Transparency and good conduct develop goodwill and will result in positive reviews from your clients leading to growth in business.
Frequently Asked Questions
What is the purpose of a quotation letter?
A price quote is meant to provide the client with details of the cost of your products or services for them to review. It is required before a buyer purchases any items from you.
How can a quotation email be written?
An email containing a sales quote should contain the subject line, a body, and a proper sign-off. These emails should always be clear and professional. It is important to include key details in the subject line so that anyone can see that it is a quotation email, who it is from, and what it relates to.
Are quotation letters legally binding?
A quote is not a legally binding contract. According to contract law, a quote is not considered an offer, and only the acceptance of offers makes for a legally binding contract (see for further details 48 CFR § 13.004 – Legal effect of quotations).