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Key takeaways
- A quotation is a seller's priced offer, valid until a stated date. It is not an invoice and not a demand for payment.
- Buyers compare quotations line by line, so use the same units, the same lead-time wording and a clear total with tax shown.
- Always state a validity date, delivery terms, payment terms and what is excluded.
- Once the buyer accepts, the purchase order usually becomes the binding document. Keep both.
Free PDF and Excel: Quotation template and comparison sheet. Get it below
What a quotation is
A quotation is a written offer from a seller that states the price of named goods or services, with the terms on which the seller will supply them, and is valid for a limited period.
It answers a buyer's request, whether that arrived as an enquiry or as a formal request for quotation. The buyer's side of that exchange is in our RFQ template. This page is for the person writing the quotation.
A packaging supplier receives an email asking for 5,000 corrugated boxes. It replies with quotation Q-2026-118: box size and board grade, 5,000 pieces at 18.40, total 92,000, GST at the applicable rate shown separately, delivery in 12 working days after advance, price valid for 15 days.
The buyer compares it against two others. The only quote that stated validity and delivery in days, and listed what was excluded, is the one it can trust to evaluate. The buyer issues a purchase order the next week.
Fields to include
| Field | What goes in it | Why it matters |
|---|---|---|
| Title and number | Quotation, with a number such as Q-2026-118. | Lets the buyer quote it in the order. |
| Date and valid until | Issue date and the last day the price holds. | Protects you from stale prices. |
| Seller and buyer details | Names, addresses, tax registration numbers, contact person. | Needed for a clean purchase order. |
| Reference | The buyer's enquiry or RFQ number. | Ties the reply to the request. |
| Item lines | Description, specification, quantity, unit, unit price, line total. | The part the buyer compares. |
| Tax | Tax rate and amount shown separately, or stated as extra. | Avoids a surprise at invoice. |
| Delivery | Lead time in days from order or advance, delivery place and incoterm. | Often the deciding factor. |
| Payment terms | Advance, credit days and method. | Affects the buyer's cash. |
| Inclusions and exclusions | Packing, freight, installation, training, warranty length. | The most disputed area later. |
| Acceptance | How to accept: sign and return, or send a purchase order. | Makes the next step clear. |
Free PDF and Excel
Quotation template and comparison sheet
A quotation layout you can send, plus a sheet to compare three quotations on price, lead time and terms.
- Quotation layout with validity and terms
- Field guide
- Three-quote comparison table
- Excel quotation that adds up the lines
Total with tax
Enter the pre-tax total and the rate your item carries. The tool shows how tax is split for a supply inside one state and between states.
Quotation versus the neighbours
| Document | Sent by | Purpose |
|---|---|---|
| Quotation | Seller, to a buyer | Offer a price and terms |
| Proforma invoice | Seller, after interest | Preview of the final bill for advance payment or customs |
| Purchase order | Buyer, after accepting | Order the goods on stated terms |
| Invoice | Seller, after delivery | Ask for payment |
Weak quotations lose orders
- No validity date, so the buyer cannot decide when to compare.
- Lead time written as soon or quickly. Say 12 working days.
- Tax missing, so the total the buyer sees is lower than the total it will pay.
- Different units from the enquiry, forcing the buyer to convert.
- No exclusions, so the buyer assumes everything is included.
- Number, date and validity are on it.
- Units and item names match the buyer's enquiry.
- Tax is shown or clearly stated as extra.
- Lead time is in days, with a start point.
- Payment and delivery terms are written.
- Exclusions are listed.
- Acceptance method is stated.
Frequently asked questions
Is a quotation legally binding?
It is an offer. If the buyer accepts it within the validity period on the stated terms, a contract can form. The details depend on your law. Say clearly that terms apply.
How long should a quotation be valid?
Thirty days is common. Use fifteen when raw material or exchange rates move quickly.
What is the difference between a quotation and an estimate?
A quotation is a firm price for stated work. An estimate is an approximation that can change.
Should a quotation include GST?
Show the tax or state clearly that tax is extra. A buyer compares the amount it will pay, so a missing line means an unfair comparison.
What happens after a buyer accepts a quotation?
The buyer normally issues a purchase order that refers to the quotation number, and the seller confirms.