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Quote template: what it is
A quotation is a priced offer made before any work or delivery: the buyer accepts it, usually with a purchase order, and the accepted terms become the contract. A priced offer with a validity date, ready to become an invoice.
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Example: a filled quotation
- The title says what the document is: a quotation.
- A reference from your own series.
- Your business name and address, and tax number if registered.
- Who it is for.
- Each line: description, quantity, rate and amount.
- Tax by rate.
- The total in the document's currency and format.
Worked example: the numbers behind the quotation above
| Item | Qty | Rate | Amount | Tax |
|---|---|---|---|---|
| Printed race banners, 3 x 1 m, PVC with eyelets | 6 | $85.00 | $510.00 | $0.00 |
| Finisher medals, 60 mm, custom enamel with ribbon | 400 | $3.10 | $1,240.00 | $0.00 |
| Artwork and proof, one revision included | 1 | $150.00 | $150.00 | $0.00 |
| Subtotal | $1,900.00 | $0.00 | ||
| Total | $1,900.00 | |||
No tax is charged on these lines, so the total equals the value of the supply.
How to fill in the quote template
- Add your business and the prospective client.
- Break the job into priced lines the client can compare.
- Set the validity date and list what is excluded.
- Save it; sign in to number it and send it.
What a good quote includes
- Your business details and the client's
- A quote number and date
- The scope, line by line
- Exclusions and assumptions, such as "price assumes clear site access"
- Prices, tax and the total
- Validity date
- Payment terms if accepted, including any deposit
- How to accept: signature, email reply or purchase order
From quote to invoice
When the client accepts, invoice the same lines at the same prices, so the price billed is the price agreed. If the scope changes, issue a revised quote or a change order rather than editing the accepted one; both sides then keep a record of what changed and why.
What to put on a quotation, field by field
| Field | What to enter |
|---|---|
| Document title | Say exactly what it is: "Quotation". The title tells the buyer and the tax authority how to treat it. |
| Number and date | A reference number of your own series and the date. Quotes and proformas do not use the tax invoice series. |
| Your business | Name, address, and tax ID if your state or client needs it |
| Customer | Name, address, and tax ID if your state or client needs it |
| Lines | Description, quantity, unit and rate. Each line carries its own tax rate. |
| Tax | Sales tax where you must collect it, at the rate for the delivery address. |
| Totals | Taxable value, tax by component and the total, in the document currency. Amounts in words are customary in India. |
| Terms | Validity period, delivery time, payment terms and what is excluded. |
United States rules for a quotation
- A quote accepted in writing is a contract. State the validity period, what is included, and whether sales tax is extra.
Mistakes to avoid
- No validity date, so an old price can be accepted months later.
- Leaving tax out of the total without saying so.
- Vague scope: list what is included and what is not.
- Not converting the accepted quote into the invoice with the same lines.
Quotation vs other sales documents
| Document | When | Asks for payment | Tax document | In the books |
|---|---|---|---|---|
| Quotation / estimate | Before the order | No | No | No |
| Proforma invoice | After the order, before supply | Advance only | No | No |
| Invoice / tax invoice | On supply | Yes | Yes | Yes: sale and receivable |
| Receipt | When paid | No, confirms payment | No (receipt voucher for advances in India) | Yes: payment |
| Credit note | After an invoice, to reduce it | No, reduces what is owed | Yes | Yes: reverses part of the sale |
Questions people ask
Is a quote legally binding?
Once the client accepts it, a quote generally forms a contract at that price for the work described. That is why it should state exclusions and how long it is valid.
Quote, quotation or estimate: what is the difference?
Quote and quotation mean the same thing: a fixed price. An estimate is an informed guess that may change. Call the document what you mean.
How long should a quote be valid?
Thirty days is usual. Use 7 to 14 days when your material prices move quickly.
Can I add tax to a quote?
Yes. Show tax per line so the client sees the full amount they will be invoiced.