How to consider the supplier’s quotation?

By justchinait
October 14, 2020

The inquiry is a daily work of buyers, and the quotation is the feedback of suppliers to your inquiry. Through the exchange of inquiries and quotations, the buyer can figure out some basic conditions of the supplier. The supplier can be judged by three points: the speed of quotation, the composition of the quotation, and the validity period of quotation.

1. Quotation speed

If this supplier makes a quick quotation, it can be seen that this supplier is a product expert and is extremely familiar with such products. Their company often does business on this product. On the contrary, if the supplier’s quotation is delayed for a long time, the more it can be seen that the supplier is very unfamiliar with the product and cannot accurately assess product materials, labor and other factors. If the supplier quoted the price many days later, you can only guess that the quote was obtained by them using various means. They should be middlemen who don’t know the market. Do not cooperate with such suppliers.

2. Quotation composition

An accurate quotation is composed of raw material prices, labor costs, packaging and transportation costs, and management fees, taxes and profits. If the supplier can make a quotation like this during the negotiation process, it shows that the supplier is sincere and true and is an industry expert.

You encounter a supplier with such a quotation. You can compare it based on the cost items of similar goods, or consult others to determine whether the quotation is reasonable. If it is found that some costs items are not reasonable, the two parties can negotiate about it. Instead of just saying “too expensive”, bargaining without any factual basis is useless.

For some suppliers who only quote the total price, this sub-item composition will be unclear. Even if the total price does not seem high, it also increases the difficulty of future cooperation opportunities and creates hidden dangers for future cooperation. For example, the supplier will raise the price of the product under the pretext of increasing the price of raw materials. .

3. Validity period of the offer

For some products, the cost of raw materials accounts for a large proportion of the total product cost. If the price of raw materials fluctuates significantly, the total cost of the product will also fluctuate greatly, and it will even affect the reasonable profit of the supplier.

Many experienced suppliers will indicate “the quotation is valid for * days” when quoting. Because the period from quotation to order placement and purchasing of raw materials is long and the procedure is complicated. If the price of raw materials changes significantly during this period, the cooperation between the two parties will be affected.

If the supplier indicates the validity period of the quotation, it means that the supplier is paying attention to the raw material market, and the supplier is willing to make the money that he should make. The money for the raw materials is not his expected source of profit.

If the supplier does not indicate the expiration date of the quotation, once the market raw materials fluctuate during the period and the supplier asks for a price increase, you will definitely feel upset that the supplier is cunning and not keeping promises, causing misunderstandings on both sides.

Try to weigh and consider your supplier’s quotation from these three aspects!

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