What is a quotation and when should you use one?

What is a quotation?

A quotation (sometimes called a price quote) is a written proposal that explains what a seller is offering, how much it will cost, and the conditions under which the offer is made. It helps a customer compare options and decide whether to proceed. Unlike an invoice, a quotation usually does not request payment for a completed sale.

When should you send a quotation?

Send a quotation when a prospective customer asks for a price, when a project needs an agreed scope before work starts, or when the final price depends on quantities, specifications, or delivery arrangements. A simple retail purchase may not need a formal quotation, but custom furniture, maintenance, catering, and service projects often benefit from one.

Example: A business requests 10 office chairs and delivery to its premises. The supplier sends a quotation identifying the chair model, quantity, unit price, delivery charge, estimated lead time, and the date until which the quoted prices remain valid.

What should a professional quotation include?

• Seller information: Business name and suitable contact details.
• Customer information: Customer name or business and the intended contact.
• Reference details: Quotation number, issue date, and a validity date if appropriate.
• Scope: Specific products or services, specifications, quantities, and exclusions.
• Pricing: Unit prices, line totals, discounts, delivery fees, applicable taxes, and proposed total.
• Timing: Expected delivery date, lead time, or project schedule where known.
• Commercial terms: Payment schedule, deposit requirements, warranties if offered, and conditions for acceptance.
• Acceptance instructions: How the customer can approve the quotation and who to contact with questions.

Depending on your country and industry, additional details such as tax registration information or mandatory terms may be required.

Worked example: quotation for office chairs

Suppose a furniture supplier proposes 10 office chairs at $120 each, with a 5% discount and a $50 delivery charge. For illustration, assume a 10% tax applies to the discounted chairs plus delivery.

Illustrative amounts in USD — not tax advice

Check the calculation: $1,200 − $60 + $50 = $1,190; 10% of $1,190 is $119; the proposed total is $1,309. Actual tax treatment, tax bases, and rounding depend on the transaction and applicable rules.

Quotation validity and pricing changes

A validity period tells the customer how long the quoted price and terms are offered. For example, “Valid until 31 October 2026” is clearer than “Valid for a while.” Choose a period that reflects your supplier prices, stock availability, and project schedule. Explain whether prices are fixed during that period or subject to clearly stated conditions.

If a customer requests different quantities, materials, or delivery arrangements, prepare a revised quotation rather than silently changing the original. Label revisions clearly and keep the accepted version for your records.

Acceptance, deposits, and next steps

Explain how a customer should accept the quotation—for example, by replying in writing with the quotation number. An accepted quotation may form part of a binding agreement depending on its wording and applicable law; do not assume it is legally nonbinding simply because it is titled “quotation.”

If a deposit is required, state the amount, due date, and what it covers. Once the offer is accepted, the seller can arrange the work or delivery and issue an invoice at the agreed stage. BizDoc Maker's quotation workflow supports conversion to an invoice, but always check the resulting dates, amounts, and payment details before sending it.

Quotation vs invoice: which one do you need?

A quotation normally proposes prices and terms before an order is confirmed. An invoice records an amount charged or due under the transaction. A delivery note can record goods supplied, and a receipt can confirm payment. Not every sale needs all four documents.

Common quotation mistakes to avoid

• Vague descriptions: Specify model, size, material, service scope, or other important details.
• Unclear exclusions: State whether delivery, installation, or other services are included.
• Missing validity date: Make it clear how long prices remain available.
• Incorrect calculations: Recheck quantities, discounts, charges, taxes, and rounding.
• Unclear payment terms: Specify deposits and balance-payment milestones if agreed.
• Untracked revisions: Identify the version the customer actually accepted.
• Unrealistic lead times: Confirm stock or resource availability before promising delivery.

How to create a quotation with BizDoc Maker

1. Open the Quotation Generator.
2. Enter your business information and the prospective customer's details.
3. Set the quotation number, date, and any relevant validity period.
4. Add each product or service, quantity, unit price, and description.
5. Review discounts, taxes, delivery charges, and the proposed total.
6. Add clear notes about scope, delivery, payment terms, and acceptance.
7. Check the live preview, then use the available print or PDF option to share a copy.

Before sending, verify that the final quotation reflects the offer you intend to make and meets any applicable local requirements.

Frequently asked questions

Is a quotation the same as an invoice?

No. A quotation usually proposes a price before a transaction is confirmed. An invoice records a charge or payment obligation under the agreed transaction.

Does a quotation have to include an expiry date?

Not always, but a validity date helps avoid confusion when costs, exchange rates, or availability can change. Some industries or contracts impose their own requirements.

Can I change a quotation after sending it?

You can issue a revised quotation, but make the revision clear and obtain the customer's agreement to changed terms. Changes after acceptance may require mutual agreement.

Is an accepted quotation legally binding?

It can be, depending on the offer, acceptance, terms, and applicable law. For important or high-value work, consider appropriate professional advice.

Can I turn an accepted quotation into an invoice?

Yes. BizDoc Maker supports converting an accepted quotation into an invoice. Review the invoice before issuing it because billing dates, amounts, and other details may need updating.

Note: Document requirements can vary by country, industry and transaction. Use these guides as general business information and check applicable local requirements when necessary.