What Is A Price Quote + Free Template

As you’re aware, most deals (both B2B and B2C) follow the same basic structure and use similar documents. We’ve discussed how to create a professional invoice, purchase order, and estimate in the past, but the one we’ve so far neglected is the humble price quote. 

Today, we fix that oversight. In this article, we’ll cover what is a price quote, why you should use price quotation, how it differs from other documents, the challenges involved, and how to digitize price quotes for the best results. 

Key takeaways

• What it is: A formal, binding offer with set pricing.
• Key elements: Detailed costs, terms, and validity.
• Importance: Builds trust, boosts professionalism.
• Fixed pricing: Quotes lock in prices, unlike estimates.
• Efficiency: Digital tools streamline quote creation.

Introduction To Price Quotes

Are you new to the concept of price quotes? In that case, this is your best place to start. Let’s dig down into the basics of quotation and set you up for success using these vital documents.

What Is A Price Quote?

A price quote is a business document primarily used in B2B to propose pricing for a specific deal. Traditionally, it’s provided on a per-request basis, so if a prospect asks for one, the quotation meaning is that they likely want to do business with you.

As we’ll discuss in a later section, price quotes should list all of the products/services offered and their respective prices at that time. However, this means that quotation is time-sensitive, and the documents are usually only valid for 30 – 60 days.

As price quotes are not contracts, they carry no legal obligation and are accepted or rejected by clients as they see fit. However, if they wait too long and the validity expires, the prospects run the risk of prices changing. 

If you are looking for the best suitable quoting app, check out our article.

Why Price Quotes ARE NOT Quoted Prices

Although the terms may seem near-identical to the untrained eye, there is an immense difference between price quotes and quoted prices.

While a price quote is a financial business document, a “quoted price” is an investment phrase that describes the most recent price at which an asset (stock, bond, commodity, or derivative) was traded.

Quoted prices are used because the prices of assets change throughout the day, whereas price quotes remain valid for however long the document says (usually 30 – 60 days). Here are some other terms you may find that ARE NOT price quotes:

• Bid Price: The highest possible price a trader/investor is willing to pay for an asset.
• Ask Price: The lowest possible price a seller is willing to take for an asset.
  

What Should Be Included In A Price Quote?

Despite how simple quotation is, the document itself has to include quite a few items to be legally valid. So, whether creating one yourself or looking over a potential provider’s price quote, look out for the following information.

1. Supplier Business Details*: Company name, business address, and contact information to ensure accountability and legality.
2. Client Business Details*: Company name, business address, and contact information to ensure accountability and legality.
3. Quote Number*: A unique number, such as “#00001”, to specify the order in which the quote was issued and simplify accounting for both parties.
4. Date Of Issue*: The specific date when the document was issued to track validity and simplify accounting for both parties.
5. Items Provided*: A detailed list of products/services to be provided to double-check against the final invoice and ensure the deal was fully completed.
6. Items Not Provided: Only required in situations where confusion may arise to protect the supplier from incorrect litigation.
7. Costs Per Item/Type*: A breakdown of all services/products provided, including prices per piece and item type.
8. Total Costs*: The clearly visible and understandable projected total cost of the project (may differ slightly from invoice).
9. Extra Costs: Only required in situations where outside factors may change the price (changes in supply chain, volatile markets, etc.).
10. Delivery Time*: A specific due date by which the deal will be finalized. Can also include a timeline for longer projects.
11. Risk Factors: Only required in situations where outside factors may delay the delivery of the deal/project.
12. Signature*: A place for the supplier and client to sign to signify the price quote as accepted.
13. Payment Method: Only required when special payment requirements apply (upfront deposit, stage payment, etc.)

How Are Price Quotes Different From Estimates And Invoices?

To keep your company in the green and stay financially efficient, you need to understand all the tools (in this case, documents) you have at your disposal. And that includes being able to tell the difference between them.

Here’s how to differentiate between price quotes, estimates, and invoices:

• Price Quote: A non-legally binding document (until signed) that doesn’t require payment. It is delivered per request before a deal is made. It should list all the items offered, the precise individual and total price, and delivery time.
  
• Estimate: A non-legally binding document that doesn’t require payment. It is delivered before a deal is made (or per request). It should list all the items offered, the approximate individual and total price, and delivery time.
  
• Invoice: A legally binding document that requires payment within the specified timeframe. It is delivered immediately after the delivery of a product/service. It should list all items provided, precise individual and total pricing, tax, etc.

What is the Purpose of a Price Quotation?

Price quotes play a vital role in the B2B sales cycle for several reasons. First and foremost, they’re a crucial tool for communication and negotiation. Here’s why.

Because they’re supposed to be as close to the final price as possible (affected only by fluctuating prices outside the supplier’s control), price quotes communicate to the prospect what they can get, for what price, and in what time frame.

At the same time, price quotes help maintain transparency and add validity to a supplier’s asking price by breaking down the total costs by each item and service.

Finally, it helps businesses move prospects through the sales funnel by giving them all the information they need to decide or negotiate a custom pricing model.

Why Are Price Quotes Good For Business?

As explained above, quotations are very important in business for various reasons. Here are a few price quote benefits to help convince you of their value for your company:

• Transparency In Deals: Quotes clearly outline the subject and contents of each deal, helping maintain clear communication and record-keeping.
  

• Help Build Trust: Businesses can build better relationships with their customers by being completely transparent with the details of their pricing structure.
  

• Look More Professional: Readily issuing a professional-looking price quote per request helps reinforce your position as a trustworthy provider.
  

• Protection From Lawsuits: Price quotes can be used by both parties in litigation to cross-reference final deliveries and invoices and uncover broken agreements.
  

• Foundation For Negotiation: If businesses are willing to negotiate their pricing, price quotes are a great starting point to align both parties and kick off discussions.
  

• Competitive Advantage: A clear and well-designed price quote can help you outshine your competitors and convince customers to choose you.
  

• More Efficient Transactions: Quotation is the cornerstone of larger projects, allowing stakeholders to align with just one document.
  
• Help Structure Pricing: Price quotes can also help the business better understand its pricing structure and improve it for future deals.

What Are The Challenges Of Price Quotation?

There’s not too much that can go wrong with a good price quote. However, there are still a few risks and considerations you should account for when offering or receiving quotations. Here’s what you should keep in mind:

• Changes In Project Scope: Sometimes, businesses underestimate the real requirements of a project. This can lead to inaccurate quotations regarding price or timeline and cause friction between the supplier and buyer.
  

• Variable Costs: As we’ve mentioned several times, price quotes can never be 100% precise due to external influences, such as market changes, currency exchange rates, and inflation. Nevertheless, you still need to account for them as best you can.
  

• Maintaining Profitability: Finding the right balance between competitive pricing and profitability is a neverending struggle. This is especially pronounced in price quotes, where you want to entice the buyer without losing money.

How To Make A Price Quote?

We’ve discussed everything a price quote should include in an earlier section, but how are you supposed to assemble the information? Here’s a quick 6-step guide to creating price quotes:

1. Identify the Document: To avoid confusion and simplify tracking, every document you create should have a name and an ID.
   – Name: This can be specific to the client or deal, but usually, it’s enough to identify the type of document you’re creating (i.e., Invoice).
   – ID/Number: This unique number determines when (or in what order) a document was issued, like “#0001”. We’ll discuss how to assign a quote number in the next section.
2. Add Company Information: For a quote to be valid, it must include both your and the client’s company information. This consists of the name, physical address, business ID, and contact person and helps ensure it reaches the correct recipient.
3. Add Products & Descriptions: To be valid, your quote has to detail all the products and services promised, along with their amounts and descriptions (if possible).
4. Specify Relevant Dates: Quotes are time-sensitive documents usually only valid for 30 to 60 days, so they should include several dates to help avoid confusion. These include:
   – Issue Date: Details when the quote was created and sent to the customer.
   – Delivery Date: When all the products/services are expected to be delivered.
5. Include Pricing: As the name suggests, pricing is a key component of a price quote. There are two specific numbers your quotations should include:
   – Item Price: Specific to each product or service supplied. You can also add a “per unit” price if the client ordered several units of the same thing.
   – Total Price: Add all the partial item prices described in the invoice into one.
6. Detail the Payment Terms: For some deals, you may require a different payment structure than a one-and-done invoice (ex., stage payments for long-term projects). In such cases, you should include when and how the customer should pay.

How To Assign Quote Numbers?

As mentioned, quotes can also be important in resolving disputes and keeping your bookkeeping nice and tidy. However, to efficiently use them in this capacity, you need to be able to track them. This is where invoice numbers or invoice IDs come into play. 

As the name would suggest, invoice numbers are numerical sequences that identify when an invoice was issued. Most businesses and accounting software use the default pattern of “#0001”. 

However, for added accuracy, you can use a: 

• Dated System: Track the order of invoices issued in a year, quarter, or month (#2023001)
• Client-Based System: Assign a unique ID to each client and track how many invoices you issue to them specifically (#01001). 

Doing this helps avoid unnecessary confusion and makes finding a specific quote much easier. Better yet, quotation systems like Billdu let you create ID presets and assign corresponding IDs to your newly created documents without you having to lift a finger. 

The 5 Ways to Create a Professional Budget Quote

We’ve discussed how to generally create quotes, but that doesn’t address the technical aspect of the process. So, let’s discuss the 5 ways to make a professional sales quote and the tools involved. 

1. Standard Document Creators (Excel, Google Sheets, Word, etc.) If you’re just about to create your first quote, it’s natural to start with the software you already have access to, like Excel, Google Sheets, or Word. And it’s not a bad place to start, either!
   They’re usually very affordable (or even free), can be accessed on almost any device, and offer many customization options. However, they’re far from perfect.
   Creating a professionally branded template in any of these solutions is almost impossible since their graphic editors are limited. On top of that, if you’re unfamiliar with the system, even creating a single quote can take a lot of time.

   You can limit these downsides and save time by using a premade template; luckily, we have several.
   All you need to do is choose a template for your preferred system, pick your favorite design, and start creating! For example, you might opt for a contractor quotes template.

2. Customizable Online Templates Are you always on the move? Would you prefer not to go blind from straining your eyes to see the minuscule letters and numbers on your mobile doc creator app? In that case, customizable online templates are the quotation solution for you.
   You can use online templates to create quotes and other business documents anytime and anywhere directly on your favorite smart device (laptop, tablet, smartphone, etc.).

   Our templates are made with the mobile environment in mind, meaning you can comfortably use them on a screen of any size. They come in various designs and options and are fully customizable so you can brand them accordingly.
   Online templates come with various design options, letting you choose the color scheme and layout that fits you the best.

   On top of that, they’re fully customizable, so you can reinforce your branding with logos, legally protect yourself by adding payment terms, and more.
   However, that’s not to say you must do everything yourself, as you would in Excel, Word, or Google Sheets.

   Billdu’s online quote templates offer a fair degree of automation, including automatically adding up price subtotals and totals and filling in quote numbers to save you time and trouble.
   

3. Specialized Online Quote Maker If you’re completely new to invoicing or operate a small business and need to create a lot of quotes quickly, try a Free Online Quote Generator.
   
   It’s a quick, on-the-go solution with premade sections for everything important, including logos, contact information, dates, prices – the works! That means all you have to do is fill in your information, click “generate”, download the PDF, and send.
   You don’t have to worry if you’re a little pickier about your quotes or have special requirements.
   At the top of our quote generator, you’ll find a menu with useful options to tailor your document to your needs. That includes language, currency, tax labels, quote design, and color.

   Finally, the Billdu Quote Generator is completely safe to use, as we don’t save any of your data and even offer the option to password-protect your finalized document.
   

4. Accounting Software Investing in automated quotation software can seem slightly overkill if you’re running a one-person operation or an SMB with few employees and clients. Still, it’s hard to argue with the fact that it offers a lot of benefits.
   For example, once you input your client’s information in your accounting software, you can automatically fill it into any document (quote or estimate) you create, making quote generation a complete breeze.
   On top of that, the system also tracks dates, quote numbers, calculations, and more on your behalf. In one centralized environment, you can create, duplicate, delete, and send documents with just a few clicks.

   But systems like Billdu have even more advanced features to simplify your life, including automatic payment reminders, card payments, expense records, and accountant collaboration.

   If you value your bookkeeping highly enough, run a growing SMB, want to future-proof your financial operations, or want to see what accounting software can do for you for 30 days completely free, we highly encourage you to try Billdu!

5. Manually Finally, we reach the option right for every artist out there. You can create your quotes by hand if they are 100% on-brand.
   Of course, we don’t mean drawing them on paper – that’d be time-consuming, difficult to replicate, and not very digital-friendly.

   When discussing manual quote creation, we mean designing your quote sample or template in a digital editor like Canva. Naturally, this also comes with its fair share of limitations.

   First, it takes a lot of time to design the template manually and create every new document. On top of that, you’ll also need to do all your table management and calculations.

   This makes fixing mistakes more of a headache and doesn’t scale well as your operations grow. However, as we said, it does give you total control over the look of your documents.  

What Is Necessary For A Price Quote?

Now that you know how to create a quote, you may think you’re done. But don’t celebrate just yet. Despite their simplicity, sales quotes are formal documents that require due consideration. 

Here are just a few things you need to do before sending a quotation:

• Consider All Aspects Of The Deal
• Choose Your Pricing Strategy

Consider All Aspects Of The Deal

Since price quotes become legally binding once a client signs off on them, you must get them right the first time. Otherwise, you may find that you’re either unable to fulfill your end of the deal or lose money.

When proposing a deal via a price quote, consider the following:

• Do you understand the requirements?
  The quote has to account for all the work and resources required to finish a project. Do you have a good idea of everything you’ll need to do, as well as the people and tools/materials you’ll need to do it? What about the prices?
  If you can’t answer any of those questions with certainty, it’s always best to go back to the prospect and clarify.
• Can you meet the deadlines?
  As explained earlier, timelines and deadlines are vital aspects of budget quotes. Consequently, you need to accurately predict your company’s/staff’s capacity and anticipate potential problems weeks or even months into the future.
  Don’t fall into the trap of overpromising and underdelivering. Rather, ask for more time to give yourself the wiggle room to overcome unexpected issues and fully deliver the project.
• Are your prices up to date
  The market is constantly changing, and if you don’t account for that, you may quickly lose money on your deals. Consider your employee’s hourly rates, the cost of materials, taxes, and exchange rates.
  Always double-check the current prices on the market before committing to a deal and adjust your asking price accordingly.
• Did you account for a worthwhile price margin?
  Many business owners (especially new ones) become overexcited at the first sign of a potential deal and do everything they can to get it. Often, this comes down to promising incredibly competitive prices to win the prospect over.
  However, in doing so, you may do a job for essentially zero gain or even lose money in the process. Below, we’ll discuss some pricing strategies you can use to avoid that.

Choose Your Pricing Model

A business’ inherent purpose is to make money. However, it can’t fulfill that goal if you don’t choose a pricing model and strategy that fits in with your work. Ultimately, you’re looking to balance competitive cost and net gain.

Here are some of the most common pricing models to consider:

• Cost + Margin: The most basic model of them all – just calculate your costs and add a margin you feel is right (ex., 20%).
• Competitive Pricing: Set your prices based on what your competitors do and undercut them if you can afford to do so.
• Value-Based Pricing: Gauge what your solution/product would be worth to a particular customer and base your pricing on that. It can be highly complex and time-consuming because it requires an individual approach to each deal.
• Price Skimming: Start at a high price and slowly lower it as the market evolves. This can create a sense of high value and exclusivity associated with your brand and entice new customers with limited-time sales.
• Penetration Pricing: The inverse of price skimming – start at a low price and slowly raise it as your company becomes more well-known. The experience and reputation you obtain can help validate the growing costs.

Tips For Writing And Sending Price Quotations

So, we’ve covered most of what there’s to know about price quotes, but we can give you a few more tips to help ensure they make the best impression possible.

• Send Your Quote ASAP: Nowadays, patience is a virtue few people have. In a market with lots of competitors, you should always strive to send your price quote in the 24 hours following a direct request, or risk losing the deal.
  

• Don’t Rush The Important Things: However, it’s always better to deliver a great quote later than a poor one first. Spelling and numerical errors, and unattractive design can be even more harmful to your deal than an extra day of waiting.
  

• Go Into Detail: As we’ve explained previously, quotations aren’t estimates and require much more information. Make sure to include clear breakdowns of services rendered with individual and total prices to make communication as clear as possible.
  

• Set Yourself Apart With Design: Like in any interaction, the first few seconds are vital in creating a good first impression. Your document’s design should reflect this with custom colors, logo, and engaging layouts.
  

• Automate The Quotation Process: If you have your pricing strategy all figured out and get multiple quote requests every month/week, you may want to incorporate an automatic quotation generator on your website to streamline the process.
  

• Follow Up With The Prospect: After sending a budget quote, it’s always good idea to email the prospect (ideally within 2 days, 14 at the latest) and ask for feedback, even if they don’t choose you, to improve your process into the future.

How To Ask For A Quote?

Let’s say you’re on the other side of the fence and need to request a quote from another supplier. After all, it helps you easily compare business partners and streamline budgeting, so it can be invaluable if you need some work done yourself.

Here’s how to efficiently request a price quote in 4 easy steps:

• Consider Your Needs: Creating a good quote is a two-sided effort. When preparing to contact potential suppliers, you need to have a good idea of what you need done, when, and how much you’re willing to spend.
• Research The Market: Next, you’ll want to do some light googling and find companies that might be able to fulfill your request. Ideally, you’ll want to write them down in a sheet and remove over-priced or poorly reviewed suppliers.
• Request Quotes: Once you have your shortlist ready, reach out and request the quotations. Make sure to explain what your company does, why you need their help, what it’ll require, and all the other relevant information.
• Compare And Choose The Best Provider: Ideally, this’ll be the easiest step of the process. Once you receive the price quotes, go over them with a fine-tooth comb and find offers that fulfill all (or at least) most of your needs. Once ready, just sign off.

Final Thoughts On Price Quotes

And there you have it – almost everything you could ever want and need to know about price quotes. But before we let you go, we’d like to once more highlight the importance of these financial documents.

As you’ve seen, clear and precise quotation is key for the success of both the supplier and buyer in any sales cycle. It removes confusion from the buying process and ensures that the two parties get what they need at a price they’re comfortable with.

Being in charge of ensuring this process goes smoothly can be stressful and time-consuming. So, if you’re not dead-set on creating your price quotes by hand, we’ve got an alternative.