Quotation · Quote Management
Quotation / Quote Management
What is a quote?
- A document that states terms and exclusions along with items and amounts
- Discounts stay under control only with approval authority and a numbering system
- Offer options, and the negotiation shifts from price to scope
The moment you hand over a quote, the sales conversation changes. Until then you trade “what would it take?”, but once the document is out, the customer stops reading the price and starts reading the conditions attached to the price. That is why a well-written quote is not a price list but the boundary line of accountability. When it states who pays shipping, whether installation and commissioning are included, and what happens if delivery is late, the conversation that follows moves from “lower the price” to “drop that item”.
In practice, quotes fall into two types. A rough-estimate quote, which gives only an approximate figure for budgeting, must include wording such as “This quote is for reference only; a firm quote will be reissued once drawings are finalized.” A firm quote states its validity period and approver. Validity periods typically run 15–30 days, shortened to 7–14 days for items with volatile raw material costs or exchange rates, with a price-adjustment clause attached. State whether VAT is included or excluded right next to the total, and number revisions as Rev.1, Rev.2 so it is obvious at a glance which document is current. A proposal explains why you; a quote states how much and exactly what is included. The moment the customer sends a purchase order, the quote’s terms carry straight over into the contract terms.
The most common misconception is that “a quote is just for reference and has no legal effect.” If a customer receives a quote with no validity period and places an order at that price four months later, it is very hard to refuse, even if raw material costs have risen 20%. A quote that doesn’t list exclusions has the same result. You assumed installation, training, and travel costs were extra, but the customer read them as included in the total, and in the end you cover the gap out of your margin. An unapproved “just this once” special price is even riskier. That figure hardens into the baseline price for the next deal, and you can’t walk it back even after you recalculate your costs.
John KimAuthor of B2B Marketing Design and CEO of Nanum Consulting
Jaehyuk ParkHands-on instructor in B2B technical sales and AI-driven sales strategyIt comes from the commercial practice of an offer, in which a seller presents terms to a buyer. Legally, a quote is generally interpreted as an offer or an invitation to make an offer, and it becomes binding when the other party accepts and a contract is formed, so stating the validity period and conditions is important.
Let’s look at a hypothetical case: Company A, an industrial valve manufacturer with 47 employees and annual revenue of about KRW 18 billion (≈ US$13,467,000). Its 6 salespeople each issued quotes from their own Excel files, until it came to light that two of them had sent the same distributor quotes with 12% and 22% discounts. The distributor’s CEO complained, “Which one is the real price?” Over the next 3 months, the company rebuilt its quoting system.
- When Manager Kim of the sales management team gathered the 412 quotes issued over the past 6 months, there were 9 different formats, and only 137 of them stated a validity period. “We ourselves don’t know how long this is valid.”
- They added an exclusions field to the standard template and printed shipping, installation, commissioning, and on-site training fees as excluded by default. The sales director put it bluntly: “You have to write down what you won’t do, or you’ll end up fighting about it later.”
- Discount approval was tiered: team leader up to 10%, sales director for 10–18%, and the CEO above 18%, with a rule of replying within 3 hours via e-approval. Verbal special prices were void without a quote number.
- They changed the quote number to the format Q-2025-0312-Rev.2, fixed the validity period at 30 days, and set up an alert prompting the account manager to reissue 5 days before expiry. When the valve material is stainless steel, the period is shortened to 14 days.
- Six months later, the average discount rate had fallen from 17.4% to 12.1%, the quote-to-win rate had risen from 28% to 34%, and post-delivery scope disputes had dropped from 5 per quarter to 1.