ARTIKEL DOKUMEN BISNIS

QUOTATION

DOSEN PENGAJAR :
ERNA PERMATA SARI, S.Tr.Akun.

NAMA: IFENIA KRISTINA

PRODI : LOGISTIK PERDAGANGAN INTERNASIONAL
NIM : 4132311048

FAKULTAS BISNIS DAN MANAJEMEN

POLITEKNIK NEGERI BATAM
2023
 TABLE OF CONTENT

ABSTRACT……………………………………………………………………………1
BAB I INTRODUCTION...............................................................................2
1.1. BACKGROUND.....................................................................2
BAB 2 EXPLANATION AND RESULT......................................................2
What is RFQ in procurement?......................................................2
Role of RFQ in the procurement process.....................................2
1. Gathering competitive bids............................................................................................3
2. Promoting transparency................................................................................................3
3. Facilitating supplier evaluation.....................................................................................3
4. Supporting negotiations.................................................................................................3
5. Driving efficiency............................................................................................................3
6. Ensuring compliance......................................................................................................4
Importance of RFQ in the procurement process.........................4
Types of RFQs................................................................................4
1. Single-stage RFQ............................................................................................................5
2. Two-stage RFQ...............................................................................................................5
3. Open RFQ.......................................................................................................................5
4. Closed RFQ.....................................................................................................................5
5. Reverse auction RFQ.....................................................................................................5
Critical components of an RFQ document..................................5
A step-by-step overview of the RFQ process...............................6
How to create RFQ?.......................................................................7
1. Identify the objective......................................................................................................7
2. Define requirements.......................................................................................................8
3. Structure the RFQ document........................................................................................8
4. Provide detailed specifications.......................................................................................8
5. Specify pricing template.................................................................................................8
6. Include evaluation criteria.............................................................................................8
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7. Clarify terms and conditions.........................................................................................8

8. Set a reasonable deadline...............................................................................................8
9. Review and finalize.........................................................................................................8
How RFQs differ from other procurement methods?.....................................................9
Benefits of using the RFQ process in Procurement....................9
1. Efficient and time-saving...............................................................................................9
2. Competitive pricing........................................................................................................9
3. Clear specifications.......................................................................................................10
4. Supplier engagement....................................................................................................10
5. Flexibility in supplier selection....................................................................................10
6. Simplified procurement for standardized items.........................................................10
7. Scalability......................................................................................................................10
8. Documentation and transparency...............................................................................10
Common Challenges in RFQ Processes.......................................10
1. Inadequate specifications.............................................................................................11
2. Limited supplier participation and competition........................................................11
3. Inefficient evaluation and selection methods..............................................................11
4. Complex negotiation and contract finalization..........................................................11
5. Managing changes and updates...................................................................................11
Best practices for RFQs.................................................................11
Bottom line......................................................................................12
FAQs................................................................................................12
15
I received quotations, how do I compare them?..........................................15
Another supplier, another quotation............................................15
Technical specifications.................................................................16
Unit and packing............................................................................16
Deadline...........................................................................................16
Payment conditions........................................................................17
Validity of the proposal.................................................................17
Place and conditions of delivery....................................................17
Different information.....................................................................17
How to negotiate price with a supplier – with sample email......................18
Doing your research to negotiate price well.................................18
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Use the right tone...........................................................................19

Explain your situation clearly.......................................................19
Suggest a solution...........................................................................19
Provide incentives...........................................................................20
Sample email for how to negotiate price with suppliers.............20
Simplify your small business finances with Countingup............20
DAFTAR PUSTAKA......................................................................................22
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ABSTRACT

This study delves into the intricate nuances of business quotations, offering a thorough
analysis of their pivotal role in corporate documentation. Focused on the realms of commerce and
industry, the research aims to uncover the intricacies surrounding the , structure, and strategic
implications of business quotations. The investigation begins by elucidating the fundamental purpose
of quotations in a business context, emphasizing their role as formalized documents that articulate
pricing details, product specifications, and terms of engagement. The structural elements of effective
business quotations are examined in detail, with a focus on clarity, transparency, and precision. The
study assesses the components that constitute a comprehensive quotation, including itemized costs,
payment terms, delivery schedules, and any relevant legal considerations. Special attention is given
to industry-specific variations and the adaptability of quotation structures across diverse sectors.
Furthermore, the research investigates the strategic significance of business quotations in
negotiations, client relations, and overall corporate image. In conclusion, this research provides a
comprehensive exploration of business quotations, unraveling their intricacies from historical origins
to contemporary practices. By dissecting their structural components and strategic implications, the
study aims to offer valuable insights for businesses seeking to optimize their documentation
processes, enhance client relationships, and navigate the evolving landscape of modern.
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BAB I
INTRODUCTION
1.1. BACKGROUND
The business world is full of acronyms that sometimes look like secret codes. RFQ (Request for
Quotation) is one such acronym in the procurement process. Now, you may wonder, “Why
should I care about RFQs? Isn’t it just another buzzword?” It’s actually not.
RFQs are an integral part of the procurement process. Understanding them can work wonders for
your business. In this article, we’ll break down the concept of RFQs and explore why they
matter. We will also look at how they fit into the procurement puzzle and the best ways to use
them to your advantage.

BAB 2
EXPLANATION AND RESULT

What is RFQ in procurement?

RFQ, short for Request for Quotation, is a vital element of the procurement process. It formally
invites suppliers to submit their pricing proposals for services a buyer requires. Think of it as a way
to gather information and compare offerings from potential vendors before purchasing.

When a company needs to procure goods or services, they create an RFQ document. Furthermore,
they outline their requirements, including specific product specifications, quantities, and delivery
timelines. The document then goes to potential service providers, who get invited to provide
quotations based on the outlined requirements.

The RFQ process allows buyers to gather competitive bids from different bidders. It helps them
evaluate pricing and quality to make an informed purchasing decision. It also allows suppliers to
showcase their capabilities and offer competitive pricing to win the buyer’s business.

Role of RFQ in the procurement process

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Request for quotation in the procurement process streamlines the purchasing journey and enables
informed decision-making. Let’s take a closer look at the key roles RFQs play:

1. Gathering competitive bids

RFQs allow buyers to gather competitive bids from bidders by inviting various vendors to submit
their proposals. Buyers can compare and evaluate different options. The competitive environment
encourages suppliers to provide the best prices, leading to cost savings and improved value for the
buyer.

2. Promoting transparency

RFQs promote transparency through buyers’ requirements and expectations. Detailed specifications,
quantities, and delivery timelines ensure suppliers understand the business needs. Transparency here
helps suppliers submit accurate and relevant quotations, reducing the chances of misunderstandings.

3. Facilitating supplier evaluation

The RFQ process enables buyers to evaluate suppliers based on pricing, quality, delivery capabilities,
and value-added services. It allows buyers to make a comprehensive assessment of each supplier’s
offering. The evaluation process helps identify the most suitable supplier to meet the buyer’s
requirements effectively.

4. Supporting negotiations

RFQs serve as a starting point for negotiations with suppliers. Once the quotations are received,
buyers can engage in discussions to refine the terms and conditions and explore potential discounts
and favorable terms. The negotiation stage allows buyers to fine-tune the procurement agreement and
achieve a mutually beneficial outcome.

5. Driving efficiency

Buyers can save time by collecting and analyzing quotations in a standardized RFQ template. The
uniformity simplifies the comparison process and enables quicker decision-making. Moreover, RFQs
help establish a structured workflow. It ensures all necessary information gets evaluated
systematically.
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6. Ensuring compliance

RFQs play a vital role in ensuring compliance with company policies. Buyers can ensure suppliers
meet specific standards and legal obligations through clearly defined requirements and selection
process. It helps mitigate risks and ensure the procured goods or services meet the desired quality
and compliance standards.

Importance of RFQ in the procurement process

The request for quotation holds significant importance in the procurement process as it facilitates
efficient and informed decision-making while ensuring competitive pricing and quality. Let’s explore
the detailed significance of RFQ through an example.

Consider that Tech Solutions Inc. seeks to upgrade its IT infrastructure by procuring new computers
for its employees. Without an RFQ, Tech Solutions would have to rely on guesswork or limited
market research to determine the prices and specifications of the computers from different suppliers.

However, by utilizing the RFQ process, Tech Solutions can request quotations from multiple
suppliers for the desired computers. It will give them detailed information on pricing, specifications,
warranty terms, and other relevant details from each supplier.

The RFQ responses will give Tech Solutions insights into the available options. It will enable them
to make an informed decision based on cost, quality, and delivery timelines. They can compare and
evaluate the quotations to select the supplier that best meets their requirements.

Moreover, the RFQ process fosters competition among suppliers. As multiple suppliers participate,
they strive to provide competitive pricing and attractive offers to secure the contract. The
competition drives down costs and helps Tech Solutions obtain the best value for their investment.

Additionally, the RFQ process promotes transparency and fairness. All participating suppliers get
equal opportunities to submit their quotations, ensuring a level playing field. The evaluation criteria
are clearly defined, enabling a consistent and objective assessment of the supplier proposals.

Also, Read: Strategic Sourcing: What is it, Importance, Objectives & Steps

Types of RFQs
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When it comes to a request for quote, here are a few types that buyers can employ.

1. Single-stage RFQ

This is the most straightforward type, where buyers provide their requirements to suppliers and
request quotations based on those specifications. It’s a simple one-step process where suppliers
submit their pricing proposals directly in response to the RFQ.

2. Two-stage RFQ

The buyer divides the process into two stages here. Suppliers must submit their qualifications,
capabilities, and other relevant information in the first stage. Based on this initial evaluation, the
buyer will shortlist qualified suppliers. Only the shortlisted suppliers get invited to submit their
pricing quotations in the second stage.

3. Open RFQ

An open RFQ gets publicly advertised, allowing any interested supplier to participate. Open bids are
common for procurement needs that don’t require strict confidentiality or when the buyer wants to
attract several suppliers to maximize competition and options.

4. Closed RFQ

Unlike an open RFQ, a closed RFQ remains limited to select suppliers. The buyer invites chosen
suppliers to participate, typically based on prequalification criteria or established relationships.
Closed RFQs get used when the buyer seeks to work with trusted suppliers or has a preferred vendor
list.

5. Reverse auction RFQ

This type of RFQ introduces an element of competition and negotiation. Suppliers submit their initial
quotations, and then a reverse auction gets conducted. Suppliers have the opportunity to revise their
prices downward in a bidding process. The format encourages suppliers to offer increasingly
competitive pricing.

Critical components of an RFQ document

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A request for quotation document consists of various components that provide suppliers with the
necessary information to submit their quotations. Each part is crucial in guiding suppliers and
ensuring a comprehensive and well-informed response to the RFQ. These components include:

 Product or service description

 Quantities and specifications
 Delivery requirements
 Terms and conditions
 Submission deadline
 Evaluation criteria

A step-by-step overview of the RFQ process

The request for quotation process involves the following steps to ensure a smooth and effective
procurement journey:

1. Identifying the need

The process begins by identifying the organization’s need for goods or services. Operational
requirements, project demands, or strategic procurement objectives could drive this.

2. Defining requirements

The buyer defines the specific requirements after identifying the need. It includes
determining the quantity, quality standards, delivery timelines, etc.

3. Preparing the RFQ document

With the requirements in place, the buyer prepares the RFQ document. The document
outlines the buyer’s expectations, specifications, and terms and conditions for potential
suppliers.

4. Issuing the RFQ

The RFQ document then gets issued to selected suppliers through a direct invitation for bid or
a public posting. The invited bid provides suppliers with instructions on how to respond and
the deadline for quotation submission.
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5. Submitting supplier quotation

Suppliers review the RFQ document and generate quotations during the preparation phase.
They submit their pricing proposals within the specified timeframe, along with supporting
documentation if required.

6. Evaluating supplier quotations

Once the quotation submission period closes, the buyer evaluates the received quotations.
The evaluation involves comparing pricing, quality, delivery capabilities, and other relevant
factors in the RFQ.

7. Negotiating and finalizing contract

Based on the evaluation, the buyer may negotiate with selected suppliers to refine terms,
negotiate pricing, or discuss modifications. The negotiation stage aims to reach mutually
agreeable terms before finalizing the contract.

8. Awarding the contract

After negotiations and finalizing the terms, the buyer awards the contract to the selected
supplier(s). It involves notifying the successful supplier and potentially issuing a purchase
order or formal agreement.

9. Ensuring contract management and execution

Once the contract gets awarded, the buyer initiates contract management and execution. It
involves monitoring supplier performance, ensuring compliance with terms, managing
changes or disputes, and maintaining effective communication throughout the contract
duration.

How to create RFQ?

Creating a request for quotation document requires careful attention to detail and clear
communication. Here’s a step-by-step guide on how to make one:

1. Identify the objective

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Determine the goods or services needed, the purpose of the procurement, and the desired outcomes.

2. Define requirements

Be precise about the quantity, quality standards, technical specifications, delivery timelines, etc.

3. Structure the RFQ document

Organize the RFQ document clearly and logically. Include an introduction, scope of work, delivery
requirements, pricing information, evaluation criteria, terms, and conditions.

4. Provide detailed specifications

Include technical details, dimensions, performance criteria, or any other relevant information
suppliers need to understand.

5. Specify pricing template

Indicate the desired template for suppliers to submit their pricing. It could include itemized or
bundled pricing or any other structure that aligns with your procurement needs.

6. Include evaluation criteria

Consider pricing, quality, delivery capabilities, experience, and any specific requirements unique to
your organization.

7. Clarify terms and conditions

Outline the terms and conditions that suppliers must adhere to. It may include payment terms,
delivery terms, warranty requirements, intellectual property rights, and other contractual obligations.

8. Set a reasonable deadline

Allow sufficient time for suppliers to review the RFQ document, prepare their quotations, and seek
clarifications if needed.

9. Review and finalize

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Carefully review the RFQ document to ensure accuracy, clarity, and completeness. Seek input from
relevant stakeholders or experts to ensure all aspects get adequately addressed.

How RFQs differ from other procurement methods?

Procurement
Purpose Scope Response Format Evaluation Criteria
Method
Obtain pricing
Specific and
quotations for Suppliers provide Price, quality, and
RFQ well-defined
specific goods or pricing information. delivery capabilities.
requirements.
services.
Solicit detailed
Broader project Suppliers provide Price, technical
proposals to meet
RFP needs or detailed proposals approach, experience,
broader project
solutions. and approaches. qualifications.
needs.
Gather
Supplier capabilities,
information and Exploratory or Suppliers provide
experience,
RFI evaluate potential preliminary information and
products/services
solutions or stage. capabilities.
offered.
suppliers.

Benefits of using the RFQ process in Procurement

The request for quotation process offers the following benefits when it comes to procurement.

1. Efficient and time-saving

A focused approach saves time for both the buyer and the suppliers. Furthermore, it enables quicker
responses and evaluations.

2. Competitive pricing
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Buyers can check for the lowest prices and negotiate favorable terms by requesting quotations from
multiple suppliers. It ensures cost-effectiveness in procurement.

3. Clear specifications

RFQs require buyers to clearly define their requirements, including quantity, quality standards, and
technical specifications. The clarity helps suppliers understand the exact expectations, reducing
misunderstandings and ensuring accurate quotations.

4. Supplier engagement

RFQs provide an opportunity for buyers to engage with a range of suppliers. The engagement helps
build relationships, fosters competition, and encourages innovation as suppliers propose different
approaches to meet the requirements.

5. Flexibility in supplier selection

RFQs allow buyers to assess multiple suppliers’ capabilities, pricing, and offerings. The flexibility
lets buyers choose the most suitable supplier, considering quality, delivery capabilities, and past
performance.

6. Simplified procurement for standardized items

RFQs are particularly beneficial when procuring standardized items or commodities with well-
defined specifications. Buyers can efficiently compare suppliers based on pricing, delivery, and
quality.

7. Scalability

RFQs can be scaled up or down based on the procurement requirements. They can accommodate
large or small procurement needs, making them suitable for various projects and organizations.

8. Documentation and transparency

RFQs provide a documented trail of the procurement process, including quotations received,
evaluations conducted, and the eventual supplier selection. Transparency promotes accountability
and adherence to procurement regulations.
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Common Challenges in RFQ Processes

While the request for quotation process offers numerous benefits, it also presents the following
challenges organizations may face:

1. Inadequate specifications

Insufficient or ambiguous specifications in the RFQ can result in suppliers submitting inaccurate
quotations. Clear and detailed specifications are crucial to ensure suppliers understand the
requirements accurately.

2. Limited supplier participation and competition

It can be challenging to attract a sufficient number of qualified suppliers to participate in the RFQ
process. Limited supplier participation reduces competition, potentially impacting pricing and quality
of responses.

3. Inefficient evaluation and selection methods

Evaluating and comparing quotations from multiple suppliers can be time-consuming and complex.
Developing effective criteria and implementing efficient evaluation methods are essential for fair and
objective supplier selection criteria.

4. Complex negotiation and contract finalization

Negotiating contract terms and finalizing agreements can be complex, especially when dealing with
multiple suppliers. Balancing the needs of both parties and addressing conflicting terms can present
challenges in the RFQ process.

5. Managing changes and updates

Changes or updates to the RFQ specifications or timeline can create confusion and require effective
communication with suppliers. Managing changes efficiently while maintaining transparency and
fairness ensures a smooth RFQ process.

Best practices for RFQs

It’s essential to follow these best practices to ensure a successful request for the quotation process:
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 Establishing effective communication channels with suppliers: Maintain open lines of

communication with suppliers throughout the RFQ process. Promptly address inquiries,
clarify, and convey all information clearly.
 Setting realistic deadlines: Set realistic and achievable deadlines for the RFQ process,
including submission of quotations, evaluation, and contract finalization. Allocate sufficient
time for suppliers to prepare their quotations while allowing for a thorough review by the
buyer.
 Conducting thorough evaluation and due diligence: Implement a robust evaluation process
that carefully assesses supplier quotations based on predetermined criteria. Consider pricing,
quality, delivery capabilities, past performance, etc.
 Negotiating fair and competitive pricing: Engage in constructive negotiations with
suppliers to arrive at fair and competitive pricing. Seek opportunities for cost savings, value-
added services, or volume discounts while ensuring the final pricing aligns with the desired
quality and requirements.
 Documenting the process for future reference: Maintain comprehensive documentation of
the RFQ process, including all communication, quotations received, evaluation results,
negotiation outcomes, and final contract agreements. The documentation is a valuable
reference for future procurement activities, audits, and legal purposes.

Bottom line

Understanding the importance of RFQs will help you unlock a world of possibilities. You can attract
competitive pricing, select the best suppliers, and optimize your procurement outcomes. You’ll be on
the path to procurement success with the correct practices.

Remember, the RFQ process is not just about paperwork and quotations—it’s about building
relationships. Cultivating open lines of communication, engaging in constructive negotiations, and
fostering a spirit of collaboration will strengthen your supplier partnerships and set the stage for
future successes.

FAQs

1. What are RFQ and RFP?

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RFQ stands for Request for Quotation, while RFP stands for Request for Proposal. RFQ helps obtain
price quotes for specific goods or services, whereas RFP solicits detailed proposals to meet broader
project needs.

2. What is RFQ bidding?

RFQ bidding is the process of submitting quotations in response to an RFQ. Suppliers participate in
the bidding process by providing pricing information and other requested details outlined in the RFQ
document.

3. What is the difference between RFI and RFQ?

RFI (Request for Information) helps gather information and evaluate potential solutions or suppliers
at an exploratory stage. On the other hand, RFQ focuses on obtaining pricing quotations for specific
goods or services with well-defined requirements.

4. What is the RFQ tool?

An RFQ tool is software that facilitates the management and execution of the RFQ process. It
provides features such as document creation, supplier communication, quotation management, and
evaluation capabilities.

5. Who prepares RFQ?

The buyer or the procurement team within an organization typically prepares the RFQ. They define
the requirements, create the RFQ document, and issue it to potential suppliers.

6. When is an RFQ used?

An RFQ finds use when there is a need to obtain competitive pricing for specific goods or services. It
is common for procurement activities where the requirements are well-defined and the focus is
primarily on getting quotations for comparison.

7. What information should be in my quotation?

Your quotation should include relevant pricing information, details about the goods or services you
offer, delivery timelines, and applicable terms and conditions.
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8. How are supplier quotations evaluated?

Supplier quotations get evaluated based on price, quality, delivery capabilities, and other factors
outlined in the RFQ. The evaluation may involve scoring or ranking the quotes to determine the most
suitable supplier.

9. How will I be notified of the RFQ outcome?

The RFQ outcome typically gets communicated to suppliers through notification emails or official
correspondence. The buyer will inform you whether your quotation has been accepted or rejected or
if further negotiations are required.

10. Can I submit a revised quotation after the deadline?

Generally, RFQs have strict deadlines for quotation submissions. It is advisable to submit your
quotation before the deadline. However, a revised quote is unlikely to get accepted after the deadline
unless stated otherwise in the RFQ document.

11. How long is an RFQ valid?

The RFQ document includes the validity of an RFQ. It indicates the duration for which the buyer
considers the quotation valid. It is vital to adhere to the validity period mentioned to ensure accurate
pricing and availability.
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I received quotations, how do I compare them?

Quotes are part of the purchasing process of all companies. As you probably know, first you receive
a demand from one of the company’s departments. Then, you must contact the suppliers.

The quotations are used so that the contractor can understand under which conditions the supplier
will work, such as the price charged for the product or service, deadlines, technical specifications of
delivery, payment methods and more – learn here about supplier compliance.

It is through quotations that the purchasing department chooses the supplier. Although it seems like a
very simple process, the quotes have some peculiarities that can make all the difference in the final
price of the product or service.

It is very important to learn how to compare quotations, know which information is relevant and how
you can put suppliers in competition. The stage of quotations is one of the first steps in the
purchasing process, and one of the most important to the success of the purchase in the Industry
4.0!

Another supplier, another quotation

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Each supplier presents its quotations in their own format. This means that your company’s
purchasing department will receive hundreds of different quotations for the same product or service,
which will not always contain the same information or be under the same conditions.

Some suppliers, for example, include the freight cost in the quotation; others will allow the customer
to search the products directly from the factory or the distributor. Some offer low prices, but they
determine minimum amounts to guarantee this value; others will always work at the same price, but
offer other advantageous conditions.

Because of these distinctions, it is crucial to know what to check to compare quotes. We have
outlined some points that you cannot fail to check in a quote, and which criteria you should use to
choose between suppliers

Technical specifications

Always check the technical specifications of the quote. This includes all information about the
product, such as weight, color, size, and other data. It is important that the quotation specifies the
conditions under which the product will arrive on delivery, if assembled or dismantled, and whether
the supplier provides equipment for assembly, for example.

Unit and packing

Speaking of conditions, it’s fundamental to check the unit and packing specifications. Some products
are purchased in large quantities, such as small spare parts, tools, screws, nails. Others are bought
only in case of need or in small quantities, like engines. The quotation must specify in which unit the
product will be purchased (for example, by pounds or kilos, hundreds or thousands), as well as the
packaging in which it will be delivered.

Packaging is really important because it has a direct influence on price! Some inputs are transported
in pallet boxes, others in plastic bags with bubble wrap or pieces of foam for protection, and this
makes all the difference in the final price.

The transport and Incoterm should also be evaluated. Air freight is faster, but more expensive, while
transportation by highways or railways may be cheaper (despite the greater risks of accidents and
longer lead time). Transport by ships involves port tariffs, in addition to the time of loading and
unloading, demanding a thorough analysis of the price and estimated deadline.
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This leads us to the next point.

Deadline

The delivery time is perhaps the most fundamental information of the quote – after the final price, of
course. The delivery time must be in line with what the company specifies in the purchase order, and
the supplier must undertake to meet this deadline, except in extreme circumstances such as accidents
or strikes, for example.

Payment conditions

Each supplier receives payment in the way that best suits them. Some offer the option of installments
with a deposit, while others do not request one payment, others offer discounts for cash payment, and
so on. The payment conditions must be very well discriminated in the quotation, since it is a prime
factor for the choice of supplier!

Validity of the proposal

All quotes have an expiration date. Watch out for this! Make sure that the quote that was sent to you
is valid for enough time to make the purchase under those conditions, since the pricing and supplier
selection process can be a little time-consuming.

Place and conditions of delivery

The quotes from the suppliers usually indicate the place of delivery or pick up of the product. It can
be in the company itself, in the factory, in the distributor’s warehouse, in the port, in the airport, in
the carrier, at the border. Identify the location and what is embedded in the price by the acronym CIF
(cost, insurance and freight) for insurance and freight costs included, and FOB (free on board) for
merchandise that will be withdrawn by the buyer. Make sure these delivery terms meet the needs of
your business before evaluating the final price!

Different information

If two quotes for the same product or service present different information, the best thing to do is to
break the quotation down, point by point. Take each category that we mentioned above and put
together a table. Then, divide each quote into those points, fill in the individual price of each item,
and enter the specifics as they appear.
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For example: if a supplier offers free shipping and a fee to assemble the equipment, and another
supplier considers freight and assembly a single fee, you must enter this information separately in the
table, but add the values from the first supplier, to make a correct comparison with the second.

By doing so, you will be able to compare quotes that seem to be completely different! You can also
leave the task of comparing quotations and choosing the best suppliers with a company that is
specialized in all types of industrial materials such as Soluparts. Soluparts is able to offer quotations
from the most relevant manufacturers in the world

How to negotiate price with a supplier – with sample email

If you sell pre-made products for your small business, you likely rely on wholesale suppliers. It’s
important to maintain stock of your goods to satisfy customer demand and sustain profitability.

But the products also need to be affordable for you to charge customers reasonably and still earn a
profit. To do this, you may need to negotiate with suppliers through email to reduce or adjust the
cost. But if you’re unsure of your negotiation skills, we can help.

This guide covers how to negotiate price with suppliers (plus a sample email), including:

 Doing your research

 Using the right tone
 Explaining your situation clearly
 Suggesting a solution
 Providing incentive
 Sample email

Doing your research to negotiate price well

If you want to know how to negotiate price with a supplier, you’ll first need to do a bit of research.
Make sure you know the full situation and your argument. So start getting to know your supplier,
what they offer and who they are. The more you understand them, the easier it will be to appeal to
their interest in your negotiation.

Then, conduct market research to get a good idea of the average price points for your product. How
much does it cost to produce? If you ask for too low a reduction that the supplier doesn’t earn
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anything, they won’t accept. Comparing the supplier’s pricing to others will help you negotiate
fairly, making it easier for the supplier to agree.

Plus, find statistics about how much you can sell products for, considering competitors and demand.
This information can help you understand how the business expense will affect your profits. While
you research, keep in mind how to persuade suppliers or what incentives will win them over. Is there
a cheaper option to leverage or a deal you can put forward?

Use the right tone

Once you get a complete idea of the supplier and your negotiation standing, you can start writing an
email. But you’ll need to consider your tone throughout the message. Be sure to remain respectful,
friendly, and professional in your request. Instead of insisting on it or blaming the supplier, take an
upbeat angle.

Take the time to wish the recipient well and compliment the business. Then, outline the situation
clearly and firmly without sounding harsh or vague. Instead of writing, ‘I wondered if’ write
something like ‘I can offer you.’ You want to form a deal that works on both ends, and ideally, create
a lasting relationship with the supplier.

Explain your situation clearly

An essential part of how to negotiate price with suppliers is explaining your situation and request
clearly. Be sure you include the critical information of the negotiation. Why do you need to reduce
the current pricing? For example, their current quote might be out of your budget. Or you may
negotiate a payment plan because your cash flow won’t cover an upfront payment.

Suggest a solution

Then, explain how much of an adjustment you need precisely and what you will pay. For example,
maybe you need a specific percentage decrease. Or you may want to suggest a price for a particular
order size. If you ask to pay an order in instalments, outline how often you’ll pay, how much each
payment will be, and when you plan to pay the total invoice by.
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This is the section where you outline your negotiation terms, so make sure you do so in an organised
and concrete manner. If you’re vague about your negotiating terms, it’ll be hard to reach a quick
agreement.

Provide incentives

Finally, outline what you can offer the supplier, so they’re more likely to accept your terms.
Providing incentives within your negotiation balances the agreement to show it’s a two-way street. If
the supplier helps you, you’ll help them in return.

For example, you could suggest a contract to exclusively use this supplier for your business. This
way, as your business grows, the supplier can earn from you continuously and increasingly.
Alternatively, you could promote or refer their products to other buyers.

Sample email for how to negotiate price with suppliers

Dear Leah at Wholesale Coffee,

I hope your week is going well. I wanted to reach out to say that I look forward to doing business
with you. My customers have loved the coffee beans we’ve purchased from you so far. Your 5 kg
bags are slightly more expensive than larger companies. But there’s no doubt in the quality and I
prefer to serve the best at my shop.

With that said, my current budget at the Beanery Coffee Shop cannot cover your current pricing. For
this reason, I ask that you reduce the pricing by 10%. If you agree to this pricing, I would like to use
your wholesale coffee services as my exclusive supplier. This would lead to consistently high quality
for my shop and continuous investment in your business.

Thank you for taking this under your consideration, and I look forward to hearing from you. If you
agree to the 10% reduction, I’m happy to put in an order this week.

Thank you,

Mary at the Beanery Coffee Shop

Simplify your small business finances with Countingup

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Countingup is the business current account and accounting software in one app. It automates tasks
and helps you closely monitor your profits to negotiate with suppliers smartly.

For example, the app generates cash flow insights, allowing you to track what you spend and earn
and how well you cover financial obligations. With this information, you can stay on top of your
finances and make better business decisions.

Save yourself hours of accounting admin so you can focus on growing your business.

EXAMPLE
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