Quotation Meaning: Format, Example and Checklist

A quotation is a seller's written offer to supply specified goods or services at a stated price and under defined terms. It tells the buyer what is included, the quantity, the price, the delivery conditions and how long the offer remains valid. In business, quotation and quote usually refer to the same document.

Reviewed 8 September 2026. This guide includes an illustrative manufacturing quotation, a reusable checklist and the handoff from an accepted offer to a confirmed order.

Quotation meaning in business

A useful quotation answers two questions: what exactly will the customer receive, and what conditions apply to that price? A single number in a message may leave the material, quantity, freight or delivery date unclear. A quotation puts those details together so the buyer can evaluate the offer and the seller can check what was promised.

A request for quotation, or RFQ, comes earlier: the buyer asks suppliers to submit offers. The seller replies with a quotation. ERPNext's RFQ documentation describes this buyer-to-supplier request. The quotation itself is the response, not the request.

What should a quotation include?

Section	Information to record	Manufacturing check
Document identity	Quotation number, revision, date and validity	Can everyone identify the exact version sent?
Parties	Seller and buyer names, contacts and relevant addresses	Is the delivery location the same as the billing location?
Scope	Item description, quantity and unit of measure	Record part number, drawing revision, material, finish and inspection requirements where relevant.
Price	Unit rates, line amounts, discounts and total	Separate recurring part cost from one-time tooling or setup charges.
Additional charges	Tax treatment, packing, freight and other charges	State what is included and what requires a separate calculation.
Delivery	Lead time, delivery schedule and responsibilities	State when the lead-time clock starts and what depends on customer approval.
Commercial terms	Payment milestones, exclusions and acceptance process	Identify customer-supplied material, tooling ownership or special tests if applicable.

These are practical operating fields, not a universal legal form. For example, ERPNext's quotation documentation groups items, prices, validity, delivery expectations and commercial terms in the offer. Your own document should reflect the actual transaction and approved business terms.

Manufacturing quotation example

Illustrative example, not an AICAN customer quotation: a workshop is asked to supply 500 machined brackets. The following figures demonstrate the calculation only; they are not market prices or a recommendation for a tax rate.

Line	Quantity	Unit rate	Amount
Machined bracket, drawing BR-12 revision C, material and finish per approved drawing	500 pieces	₹240	₹120,000
One-time fixture setup	1 job	₹6,000	₹6,000
Packing for this order	1 lot	₹2,000	₹2,000
Subtotal before tax and freight			₹128,000

The arithmetic is 500 × ₹240 + ₹6,000 + ₹2,000 = ₹128,000. Applicable taxes and freight must be resolved and shown before the final commercial offer is issued; the subtotal above is not the final payable amount.

A useful accompanying note might say: “Lead time: 15 working days after written acceptance, receipt of the agreed advance and approval of drawing revision C. Delivery: one lot to the agreed address. Offer validity: until 22 September 2026. Any drawing or quantity change requires a revised quotation.” These are example terms to adapt, not promises about your factory's capacity.

Before sending this offer, the estimator should check that the material specification is costed, the fixture is available or included, the inspection method is understood and the production planner can support the proposed date.

Quotation, estimate, invoice and purchase order: the difference

Document	Main purpose	Question it answers
Estimate	Indicative pricing while scope or inputs may still change	What might this cost?
Quotation	Offer for a stated scope and commercial terms	What are you offering, at what price and on what conditions?
Purchase order	Buyer's order specifying what it intends to purchase	What is the buyer ordering?
Sales order	Seller's operational record of the confirmed order	What has the seller agreed to fulfil?
Invoice	Billing document requesting payment under the transaction's billing terms	What amount is being billed?

Document labels alone do not settle every commercial question. Read the scope, acceptance conditions and agreed terms. Software terminology also varies: Zoho Books documents quotes and their conversion after acceptance. Avoid assuming that an estimate and a fixed-price offer carry identical conditions simply because a tool groups them together.

A quotation checklist you can reuse

1. Confirm the requirement. Match the latest drawing, quantity, unit, material, finish and inspection request. Record open questions before pricing.
2. Check the cost. Use the relevant material price and operations route. Identify setup, subcontracting, packing and freight separately.
3. Check the delivery assumption. Ask the planner about material readiness, machine availability and outside processing.
4. Review the commercial terms. Check validity, payment milestones, exclusions and the approval needed for exceptions.
5. Check the calculation and version. Recalculate totals, review the PDF and confirm that the filename and document revision agree.
6. Record the outcome. Track whether the quote is awaiting a response, needs revision, is accepted or has been lost.

For an order-specific format and additional sales-process detail, continue to the sales quotation guide. Keep the definition page and the working sales process connected rather than duplicating the same material across both.

What happens after a customer accepts?

Compare the customer's acceptance or purchase order with the quoted version. Check quantity, price, drawing, delivery date and payment conditions. Resolve discrepancies before releasing work. Then give production, purchase and dispatch the same approved requirements.

ERPNext's sales-order documentation shows how a confirmed order provides a reference for fulfilment and billing. The operating principle also applies to a spreadsheet process: preserve the accepted version and make changes traceable.

For example, if the buyer changes the bracket quantity from 500 to 800, do not silently replace the old PDF. Recheck capacity, material and pricing, issue the next revision, and record which version the buyer accepted.

Connecting quotations to factory work

A quotation is useful beyond sales when its specifications and delivery assumptions reach the people fulfilling the order. During an Optiwise sales and CRM walkthrough, use one real enquiry to examine the path from customer details and quotation to the confirmed order. Then check the associated production workflow. Ask the team to demonstrate the capabilities and configuration your process needs.

Frequently asked questions

What is a quotation in simple words?

A quotation is a seller's written offer explaining what it will supply, how much it will charge and which conditions apply. It normally includes the items, quantities, prices, delivery terms and validity.

Is a quotation the same as an invoice?

No. A quotation presents an offer for consideration. An invoice bills an amount under the agreed transaction and billing terms. An accepted quotation can provide a reference for later order and billing records.

How do you calculate a quotation total?

Calculate each line as quantity multiplied by unit rate, then apply the agreed discounts and additional charges. Show the applicable tax and freight treatment clearly. In the example above, the subtotal before tax and freight is ₹128,000.

How long should a quotation remain valid?

There is no single operating period that suits every offer. Choose an explicit expiry date based on your pricing inputs, capacity assumptions and approved commercial policy, and review the offer if the customer responds after that date.