Buying and selling
What is a quotation? Meaning, format and example
Definition
Quotation: A quotation is a seller's written offer to supply goods or services at stated prices and terms, which the customer can accept, negotiate or decline.
Also called: Quote, Price quotation, Sales quotation, Estimate, Quotation format
What a quotation is
A quotation tells a prospective customer what you will supply, at what price and on what terms, before they commit. It is an offer, not a bill: no GST is charged on a quotation and it does not go into your GST returns. If the customer accepts, it becomes a sales order.
A proforma invoice is similar but more formal. It looks like an invoice and is often sent when the buyer must pay an advance or arrange finance, but it is not a tax invoice either. A quotation usually comes earlier and is more open to change.
What a good quotation includes
A quotation the customer can act on shows:
- Quotation number and date, and how long the prices are valid, such as 15 days.
- The customer's name and address.
- Each item with description, quantity, rate, discount and GST rate, so the customer sees the total they will pay.
- Delivery time, whether freight is included, and payment terms.
- Your GSTIN and contact details.
Common quotation mistakes
The most common mistake is quoting prices without GST and not saying so, so the customer expects GST to be included. Others are leaving out a validity date when raw material prices are moving, not saying whether a rate is per piece, per box or per carton, promising delivery dates without checking stock, and retyping an accepted quotation as an order, which is where wrong quantities and prices creep in.
No law requires a quotation, but it protects both sides. The customer knows the price before committing, and you can point to the agreed terms if there is a dispute about price or freight later.
Worked example
A quotation for a salon chain
A Mumbai cosmetics brand quotes a salon chain in Thane for 300 bottles of shampoo at ₹240 and 300 bottles of conditioner at ₹260, with 5% off for the order size. That is ₹1,50,000 less 5%, or ₹1,42,500 before GST, valid for 15 days, freight included, payment 30 days from invoice. After a call, the salon asks for 400 conditioners; the brand edits the same quotation, and the new total is ₹1,67,200 before GST.
In managemate
In managemate, a quotation is a draft sales order. Prepare it with the customer, prices, line discounts and GST, then print it: the PDF is titled Quotation and shows the quote number, date, a deliver-by date or To be agreed, place of supply and the quotation total including GST, with a light Draft watermark. Edit the draft as often as needed. When the customer agrees, confirm it, and the same record becomes the sales order with the same lines and number, ready to deliver and invoice. There is no separate validity date field, so write how long the prices hold in the order's notes, which print on the quotation.
Where this shows up in managemate
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