Most businesses that sell standardized products and services usually have an all-inclusive price list that remains the same for all their customers. However, other businesses that offer custom products or services such as tailors, plumbers, painters, and decorators have to provide their clients with a custom price list for the products or services they are looking to purchase from them. This is usually done with a price quote, also referred to as a price estimate or quotation. Price quotations are essential as they help clients determine whether to purchase your products or services or not.
In addition, a well-crafted price quote template with reasonable, accurate, and detailed estimates can help you seal the deal with your clients. This is why it is crucial to understand what a price quote is, how it works, how to craft one etc. so that you can deliver one that is guaranteed to help you close the deal with your clients.
A price quote, also referred to as a quote or quotation, is a document or verbal communication that provides a fixed price for a product and service that a seller gives to a buyer. A price quote is usually valid for a specified period and cannot be altered once the buyer accepts it.
Purpose
Besides informing clients of the prices of the products and services offered by a business, price quotes also help protect businesses from price fluctuations. The prices of the products/services usually fluctuate depending on the type of product/service being sold and different market trends. For this reason, it is essential to send out a price quote detailing the prices of the products or services being sold for a specified duration.
Price quotes also help businesses and clients to understand each other. The business understands what the clients are willing to pay for their products and services. And the clients get to understand what they are paying for and possibly bargain to get an even better deal out of it. Price quotes are commonly used in industries like construction, where each project is unique, and the prices vary.
Information to be Included in a Price Quote Template
Setting the correct prices is crucial as it can help you find a client for your products or services. For this reason, it is crucial to understand the following different items that should be included in a price quote template.
Supplier’s business details: The price quote template should include your name/business name, address, and contact information. This information is important as it helps the clients know the price quote.
Client details: The second item that should be included in your price quote template is the client’s details, i.e., their name, contact information, etc. This information helps the client understand that the invoice is directed to them. This can also help you avoid any confusion, especially when you are dealing with multiple clients simultaneously.
Quote number: The quote number is a uniquely identifiable number that should be included in each price quote template you send to your clients. This number can help you keep track of all your price quotes.
Date of issue: The next item that should be included in your price quote template is the date of issue. This is the date the price quote was generated and sent to your potential clients. The date of the issue is essential as it helps you keep track of the prices and price changes. For instance, if the price quote is only valid for 30 days, the date of issue can help you keep track of the dates and adjust the prices if the validity period has lapsed.
A list of services to be provided: The price quote template should also have a detailed list of all the services to be provided. The list should have the items, quantity, and corresponding prices. This will help the clients understand how much they will be paying for their desired product.
What services won’t be provided: Some clients usually expect that when they are paying for specific services, other complementary services will be provided as well. Therefore, your price quote template must remain as detailed as possible to help avoid any misunderstandings. Make sure to mention complimentary services that won’t be provided. For instance, if you won’t be offering installations on certain products bought, make sure to specify that in the price quote.
Breakdown of costs: After mentioning all the products and services provided, it is essential that a price quote template must include a comprehensive breakdown of all the costs. Ensure to include unit costs for each commodity to help the clients understand what they will be paying for.
The project’s total cost: After compiling the costs, the next item you should include in the price quote template is the project’s total cost. When compiling the project’s total cost, make sure that it coincides with the breakdown of the costs provided.
Variations/applicable taxes: If there are any variations to the prices based on different factors, make sure to mention them in the price quote template. Also, include any applicable taxes that the client will have to pay for when purchasing the products or services.
Timelines and completion date: To help the clients have a clear understanding of how long the project is expected to take and to help them realize value for their money, make sure to include a project completion date. Also, make sure to include a timeline, a date by which they must accept the price quote, after which it shall be deemed invalid.
Factors that may affect the completion date: It is always good to anticipate delays in project completion when dealing with clients. Making room for these delays will help you stay focused on the project and help you understand how you can avoid such delays. When preparing the price quote template, make sure to include any factors that may affect the project’s completion date.
Payment terms and conditions: The following item included in the price quote template is the payment terms and conditions. It would be best to make your payment terms clear to the client to avoid any future misunderstandings.
Payment methods: Another critical item that should be included in your price quote template is your preferred payment method. The payment method you choose must be accessible to you and your client.
Signatures: Lastly, make sure to include a section where both you and your clients will sign to acknowledge the use of the price quote for the products or services offered.
Pricing Strategy
When preparing your price quote template, it is essential to consider different pricing strategies. It is important to use a pricing strategy that will benefit you and be convenient enough for the client to afford.
Some of the pricing strategies that you should include are:
- Cost-plus pricing strategy entails calculating your costs and then setting a range for your profit margins.
- The second pricing strategy included is competitive pricing, setting your prices based on your competitors’ actions.
- The following pricing strategy is value-based pricing; this entails evaluating what clients consider the monetary value of the products/services.
- It would be best to consider another pricing strategy, known as price skimming. This entails starting at a high price and slowly regulating it to fit market trends.
- Lastly, you may consider using the penetration pricing strategy. This entails setting low prices as you start and raising them later on. This is commonly used when entering highly competitive markets.
Price Quote vs. Estimate
People always confuse price quotes with price estimates. Although they all show the prices of products and services offered, they serve different purposes. The main difference between a price quote and an estimate is that a price quote is simply a document or verbal communication that provides a fixed/exact price for a product or service that a seller gives to a buyer. In contrast, a price estimate is simply a guess at what a product or service may cost. Price estimates are usually issued at the early stages of the buying process.
Price Quote vs. Invoice
A price quote is a document or verbal communication that provides a fixed/exact price for a product or service that a seller gives to a buyer before the commencement of any work. At the same time, an invoice is a comprehensive breakdown of the total costs of all the items that the client must pay for, for the work done. Invoices are usually sent after work has been completed.
Price Quote Template
It is always good to be equipped with a price quote when dealing with clients. If appropriately crafted, a price quote can help you seal the deal with your clients since they will have all the information, they need to decide on whether to work with you or not. However, it is not always easy to come up with a price quote from scratch, mainly if you deal with multiple clients. This is why it is recommended that you use a professionally designed premade price quote template. A price quote template will help you save time and help portray a higher level of professionalism for you and your business.
The price quote templates given here are professionally designed to help you define your net price, helping your clients understand how much they will be paying for. The templates will also help you provide a detailed list of the products/services you are offering to your clients. Other than that, you can specify the coverage of your quotation and any exclusions and provide detailed terms and conditions to help you seal the deal with your clients.
How Should it be Formatted?
A typical quote has to be formatted, thus:
Letterhead
This is to give the price quote an official character and make it legally acceptable by multiple parties to the job. The use of this letterhead is also a sure way of making the document legally binding.
Logo
As part of the letterhead, the business logo also has to be placed there. The logo uniquely identifies a business from the others that deal in more or less similar merchandise or operate within the same sphere of influence.
Address
The business’ address has to be incorporated as a point of contact between the business and the clients. This address has ideally to be physical rather than postal.
Terms of references
These are the rules that govern the sales of the stated merchandise. It is important to delineate these terms clearly to the advantage of everyone who beholds them. That is to make it plain for the potential buyer and to minimize conflicts thereafter.
The validity of the quotation
How long is the quotation bound to last? Does it have an expiry date, or is it wholly open-ended? You have to address all these vital pieces of information in the price template. This, again, is necessary to minimize conflicts and unnecessary litigations.
Tips for Making a Price Quote
Here are some tips that you should consider when preparing your price quote:
Make sure it is constructed well: Ensure that your price quote is well crafted with an easy-to-read and comprehend layout. Also, make sure that the language used in the price quote is transparent and direct with no jargon that may confuse the client.
Automate through software: You may also consider using different software to help you automate your price quotations. For example, you may integrate the software with other contract management systems to help you keep everything updated and real-time if the customer accepts the offer.
Follow up: After issuing the price quote, it is essential to follow up with your clients to determine their prices. Ensure that you give them enough time to go through the price quote and follow up to remind them of the deadline.
Analyze: Clients are usually attracted to quality products and good services. If you are getting more clients and sending out several price quotes with few to no conversions, you should consider reviewing your prices to ensure they align with the market’s dictates.
Frequently Asked Questions
It is essential to understand what the client requires of your business to be able to offer them value for their money. By understanding what they want, you will be able to offer them precisely what they need, thereby increasing your chances of working with them again in the future or gaining referrals.
Before taking on any project, it is important to ask yourself whether you will meet your client’s requirements. Then, go through the list and see if there are any possible challenges you may stand to face once to take on the project. If there are none, then you should consider taking the project. However, if some problems may hinder you from offering quality products/services, you must inform the client and consider not taking the project.
Before creating a price quote, it is vital to go through your price quote and see if they are up to date. Ensure that your prices are in line with the current market trends. Do not overcharge or undercharge your clients, but make sure that you profit in the process.
Your prices should be linear enough to ensure that you and your client are getting value from it. Ensure that you go through your prices and evaluate each item you include in the price quote.
