Quotation – What is a quotation?

A quotation is a document that a seller provides to a buyer to offer goods or services at a stated price, under specified conditions.

Also known as quotes, sales quotes or sales quotations, quotations are used to let a potential buyer know how much goods or services will cost before they commit to the purchase.

Quotations are usually not legally binding unless they’re part of an official contract. However, it’s generally accepted that a customer has committed to a sale, and a specific price, if they accept the quote.

When to send a quotation in business

Quotations are normally sent at the request of a customer who wants to know more about certain goods or services before they make a purchase.

It’s important that you send a sales quotation as soon as you’re able to. Customers often shop around and request quotes from several businesses, so sending a sales quotation quickly will help you get ahead of your competitors.

On the other hand, you should give yourself enough time to accurately work out your costs and calculate your profit margin. While quotes are not legally binding, you should do your best to avoid sending sales quotations that contain mistakes or offering a price that you can’t actually commit to.

How to write a quotation

There are several different ways to write a quotation. You could use online software, a quotation template for Word or Excel, or even write your quote by hand.

When deciding how to write a quotation, there are a few different factors to consider. 

Firstly, think about how to best communicate with your customers. As mentioned, it’s important that your quotation reaches your client promptly, so many businesses choose to create quotations with invoicing software as this lets you write quotes quickly and send them directly via email, text, or even Facebook or Whatsapp.

Secondly, think about which method looks the most professional. While you're not required to use a specific quotation format, layout, or template, sending an unprofessional, amateur-looking quote can give the wrong impression about your business and the quality of your work.

What to include in a quotation template

However you choose to write a quotation, it's important to have a complete and professional quotation template that you can fill in whenever you need to send a quote.

Unlike invoice templates, which have many legal restrictions and regulations, there are very few set rules on what a quotation needs to cover. However, using a quotation template that includes the following information gives potential customers get a better idea of what they’re committing to:

• The price: your quotation template should include the total amount due for the client's order, as well as the price of individual products or services. You might also consider breaking down how you reached the final price by including the cost of labour, materials, and VAT (if applicable).

• An expiration date: each quotation you send should indicate how long the quotation will remain valid. This lets your customers know how long they have to accept or decline the quote.

• Your company details: a quotation template should include the full contact details of your business, including your business name, address, email address, phone number, and (if applicable) VAT registration number or business registration number.

• Your customer's details: their name, phone number, email address, etc.

You might also choose to include your payment terms and a rough time schedule – i.e. how long the project will take to be completed or how long it will be until goods are delivered.

How to format your sales quotations

There are no legal regulations to determine how a sales quotation should be formatted. However, it’s a good idea to follow some basic formatting guidelines when sending quotes in business, and most businesses have quotation formats that are similar to their invoice formats.

Your quotation template should have the word ‘Quote’ or ‘Quotation’ clearly visible at the top of the document so that your customers can easily distinguish the quote from other documents. It’s also common to have the date, document number, and customer contact details at the top of your quotation template, followed by the products and total price. 

Your quotations should be easy to read, with a clear font and layout. If you’d like to customise or personalise your quotation format, you could add a company logo or choose colours that reflect your business’s brand.

Even if you send your quotations via email, be aware of how your quotes will look when they’re printed, as some customers prefer to keep physical records. You should try to fit the quotation format within an A4 sheet of paper, and attach separate files if necessary. 

Quotation vs. proforma invoice

A proforma invoice is a non-official invoice that’s sent to a customer before the final details of a sale are confirmed. They’re often used at the same point in the sales process as a quotation; however, quotes and proforma invoices serve slightly different purposes.

A quotation would normally be sent if a customer makes an enquiry, or if they want to find out more about a product or service. A proforma invoice is sent if a customer has committed to a purchase, but can’t be sent a true invoice because the final details of the sale are not certain.

Quotation vs. estimate

Like quotations, estimates are sent to customers who enquire about a product or service. However, a quotation requires clear paraments (time, labour, raw materials, etc.) and relatively stable costs, which means that some businesses cannot give quotations because it simply isn’t possible to give a fixed price.

Instead of issuing a quotation, these businesses would issue an estimate, which is a non-binding approximation of what a job is likely to cost.

Create quotations with SumUp Invoices

Send professional, personalised quotations with SumUp Invoices. With our automatic quotation templates, creating and sending quotes is fast and simple. Simply fill in your customer’s details, add your products and prices, then click send!

If the customer accepts your quote, you can then turn it into an invoice with just a few clicks.