Quote to Cash · step 3 of 11
Reviewing and issuing the quotation
Turning a cost into an offer: setting the price, having someone other than the estimator check it, writing down what the price depends on, and sending it before the deadline.
Also called: Quote review · Bid submission · Offer · Tender submission
- Owned by
- Account Manager
- Also involved
- Estimator / Cost Engineer, Inside Sales / Sales Coordinator
- Documents
- Quotation
- Measured by
- Quote Conversion Rate, Gross Margin
What it is
The quotation is the company's formal answer: this is what we will supply, for this price, on these terms, if you accept by this date. It is the first document in the chain that carries commercial weight, and in most jurisdictions it is an offer capable of being accepted — which means everything written on it can become a contract without anyone signing anything.
The step has two halves that are often collapsed into one and should not be. First a decision: what price, given the cost, the customer, the competition and how much you want the work. Then a check: does the document say what the company can actually deliver, and is anything on it a promise nobody has agreed to keep.
The review is the last cheap moment in the chain. After this, a mistake costs a concession, a credit note or a late delivery.
Why companies do it
An estimator's cost is not an offer, and the person who built the cost is the worst person to sanity-check it — they have been inside the assumptions for two days. Review exists to put a second pair of eyes on the delivery promise and the commercial terms, to make sure the price clears the company's floor, and to make sure the assumptions the cost depends on are visible to the customer. A quote issued without review is a contract nobody read.
Inputs and outputs
What has to be there first
- The cost breakdown — Costing the job
- The assumption list — Costing the job
Batch size, revision, lead time, delivery terms, tooling.
- Capacity and realistic lead time — Production Planner
- Customer history — prices, volumes, payment behaviour — CRM and finance
- Standard terms and conditions of sale — Commercial
- Credit status and proposed payment terms — Credit Controller
What it produces
- The quotation document — Customer purchasing
- A logged quote with value, date and validity — Inside Sales / Sales Coordinator
- A follow-up date — Account Manager
- Approved price and margin record — Gross Margin
How it is done
01Set the price
Take the cost, apply the intended margin, then adjust deliberately for what the work is worth: strategic value, competition, capacity you need to fill, risk you are carrying. Record the reason for any adjustment. An unexplained discount becomes the new expected price on the repeat order.
02Check the delivery promise against reality
The lead time on the quotation is a promise the company will be held to. Confirm it with whoever owns the schedule, and include outside process queues and material lead time — the two things routinely forgotten because they happen somewhere else.
03Apply the approval limits
Most companies set thresholds by value and by margin. Below the floor, or above the value limit, someone senior signs. The limits only work if they are checked before the quote goes out, which means the review has to be a step in the process rather than an interruption to it.
04Write the assumptions onto the document
Quantity the price is based on, drawing revision, material specification, delivery terms, packaging, tooling ownership, what is excluded. This is the difference between a quotation that protects you and a number in an email. Every one of these is an argument you are choosing to have now instead of in four months.
05Set a validity period that matches your exposure
The quote should expire before your input prices do. If the steel price is held for 14 days, a 90-day quote validity is a bet you did not intend to place. Where a long validity is demanded, add a price adjustment clause rather than absorbing the risk silently.
06Attach the terms of sale
Reference or attach your conditions explicitly. If you do not, and the customer's purchase order carries theirs, the customer's terms are usually the ones that end up applying — the last set of terms sent before performance tends to win.
07Issue it and log it
Send it through the route the customer asked for, by the deadline, and record the value, date, validity and who it went to. Set the follow-up date at the same time — the value of a quote decays quickly and unfollowed quotes are the largest single source of lost conversion.
What needs approval
Approvals only work when they happen before the commitment. Retrospective approval is a manager being told what has already been promised.
| Trigger | Approver |
|---|---|
| Margin below the company floorThe most commonly breached limit, and the one worth logging every time. | Sales manager |
| Order value above the delegated limit | Commercial or managing director |
| Non-standard payment terms requested | Finance and credit control |
| Customer's terms and conditions to be accepted instead of yours | Whoever can bind the company |
| Lead time shorter than standardA promise that displaces other customers' work is an operations decision, not a sales one. | Operations |
The same cost, three different prices
A worked example with real numbers.
The brackets from the costing step have a total cost of £13.45. The review meeting produces three different prices for three different situations, and all three are defensible.
For a repeat customer with steady volume, the quote goes out at £18.70 — the standard 28% margin, no adjustment. The relationship is the value.
For a competitive tender where the company has idle capacity on the mill, the price is set at £16.15 — a 16.7% margin. It sits £3.81 above the £12.34 variable cost, so every part contributes £3.81 towards fixed costs that would otherwise be covered by nothing at all. The reason is recorded, and the quote states that the price is specific to this tender.
For a new customer with unknown payment behaviour and a demanded 60-day term, the price is £19.85. The extra covers 30 additional days of financing on the invoice and the risk premium on an unproven account. Credit control has capped the exposure at £15,000 until two invoices have been paid on time.
All three quotations carry the same assumption block: 250 off, drawing revision C, ex-works, 4 weeks from receipt of order, price valid 30 days.
| Situation | Price | Margin | Reason recorded |
|---|---|---|---|
| Repeat customer, steady volume | £18.70 | 28.1% | Standard margin |
| Competitive tender, idle capacity | £16.15 | 16.7% | £3.81/part contribution on an otherwise idle mill; tender-specific |
| New customer, 60-day terms | £19.85 | 32.2% | Financing cost and unproven credit; £15k exposure cap |
The point
The margin varied by 15 points on identical work, and none of it was accidental. What makes that acceptable rather than chaotic is the recorded reason — it is what stops the tender price becoming the standard price on the next order.
Common mistakes
MistakeSending a price with no assumptions attached
Why it happens: It is faster, and the customer only asked for a number. Four months later the order arrives for a quarter of the quantity at a later revision, and there is nothing to point at.
What to do instead: Quantity, revision, lead time, delivery terms and validity on every quotation, even the one-line email ones. It is six lines and it is the whole of your protection.
MistakeQuoting a lead time nobody checked
Why it happens: The customer asked for four weeks and sales did not want to lose the enquiry. Production sees the date for the first time when the order is entered.
What to do instead: Lead times come from whoever owns capacity. If that person cannot be reached before the deadline, quote the standard lead time and offer to improve it on request.
MistakeLetting the quote expire silently
Why it happens: Validity passes, the customer orders anyway, and order entry accepts it because the price is in the system. Every input cost has moved since.
What to do instead: Check validity at order entry, not at quote issue. An expired quote is an opportunity to requote, and customers accept that far more readily than a price increase after acceptance.
MistakeDiscounting without recording why
Why it happens: A 7% reduction is given to close the order. Nobody writes down that it was for a 12-month commitment. The next order comes in at the discounted price with no commitment attached.
What to do instead: Every price concession gets a stated reason and a stated condition on the quotation itself. If the condition disappears, so does the discount — but only if it was written down.
MistakeNot following up
Why it happens: The quote was sent, the deadline passed, and chasing feels like pestering. Meanwhile a competitor asked one clarifying question and adjusted their offer.
What to do instead: Set the follow-up date when the quote is issued and treat it as a commitment. The purpose is not to ask 'any news' but to learn why — and losing reasons are the only free market intelligence you get.
MistakeBurying tooling inside the part price
Why it happens: It makes the quote look simpler. Then the customer orders a third of the volume and the tooling is never recovered.
What to do instead: Quote tooling as a separate line with its own payment terms, or state explicitly the volume over which it is amortised and what happens if that volume is not reached.
Where the work happens
- Quotation or CRM system
- ERP for pricing history
- Customer procurement portals
- Document templates carrying the terms of sale
Terminology
- Offer
- A proposal capable of being accepted to form a contract. A quotation usually is one, which is why its wording matters more than its appearance.
- Validity period
- How long the quoted price stands. After it expires the quotation is no longer an offer and can be withdrawn or revised.
- Battle of the forms
- What happens when your terms and the customer's terms both claim to apply. Broadly, the last set sent before performance tends to prevail — which is why acknowledging an order matters.
- Price break
- A table showing unit price at several quantities, so the batch size assumption is visible to the buyer instead of hidden in your costing.
- Incoterms
- Standard three-letter trade terms — EXW, FCA, CIP, DAP, DDP — defining who arranges and pays for transport, insurance and customs, and where risk passes.
- Amortisation
- Recovering a one-off cost such as tooling across an agreed volume of parts rather than charging it up front.
Common questions
›Is a quotation legally binding?
Generally a quotation is an offer, and it becomes binding when the customer accepts it — often by sending a purchase order — without needing a signature. That is why validity periods, stated assumptions and referenced terms matter so much: they are the limits on what you have offered. An estimate, by contrast, is normally treated as an indication rather than an offer, but only if it is genuinely labelled and worded as one.
›How long should a quotation be valid for?
Long enough for the customer to decide and no longer than your input prices are held. Thirty days is the common default, but if a supplier is holding a material price for 14 days, quoting 30 means absorbing the difference. Where a customer demands a long validity, a price adjustment clause is the honest answer.
›What should always appear on a quotation?
Quantity, unit price and total, the specification or drawing revision it is priced against, lead time, delivery terms, payment terms, validity period, and a reference to your conditions of sale. Everything else is presentation.
›Whose terms apply if the customer's purchase order contradicts the quotation?
Usually whichever set was sent last and then acted on — which is often the customer's, because their purchase order arrives after your quote. Acknowledging the order on your own terms, and objecting in writing to anything you do not accept, is how suppliers keep control of that. Doing nothing is a decision to accept theirs.
›Should the price breakdown be shown to the customer?
It depends who is asking and why. Large buyers increasingly demand an open-book breakdown, and refusing can cost the opportunity. But a breakdown invites line-by-line challenge, and once a labour rate is public it is public forever. A common middle path is to show major elements — material, process, finishing, tooling — without exposing rates.
›Who should approve a quotation before it goes out?
Someone other than the person who built the price, with authority proportionate to the value and the margin. The point of the check is not arithmetic — it is the delivery promise and the commercial terms, which are the two things the estimator was not thinking about.
Tools for this
Downloadable, self-contained, and yours to keep — they run in a browser with no account and no data leaving your machine.
- Quote & Estimate BuilderFreeBuild professional quotations and estimates for any service or product business. Cost build-up by labour, materials, subcontractors, equipment and travel; overhead recovery, target-margin solver, tiered packages, tax and multi-currency. Runs entirely in your browser. No installation, no account, no
- CNC Quote BuilderFreeBuild machining quotes with quantity breaks: operations, material, outsourcing, tooling amortization, overhead and margin. Runs entirely in your browser. No installation, no account, no upload.
- Gross Margin CalculatorFreeWork out true gross margin, markup and contribution per product or job — including the direct costs people forget. Runs entirely in your browser. No installation, no account, no upload.
Reviewed 2026-08-15. Nothing here is legal, tax or accounting advice — contractual and tax practice varies by jurisdiction.