Sales

Quotation / Price Estimate

A formal offer stating the price and terms for goods or services

Definition

A quotation, also called a price estimate, is a formal document sent by a seller to a potential buyer stating the price, quantity, and terms for goods or services offered. It is usually the first step in the sales cycle and is issued in response to a buyer's enquiry. A well-structured quotation includes item descriptions, unit prices, applicable GST, validity period, payment terms, and delivery timeline. In Indian business practice, quotations are essential for competitive bidding, government tenders, and B2B transactions. Unlike a proforma invoice, a quotation does not imply a confirmed order. The buyer may negotiate, accept, or reject it. Once accepted, the quotation typically converts into a sales order or directly into a sales invoice. Sending professional quotations helps build credibility and increases your chances of winning business over competitors.

How It Works

  1. 1A potential buyer enquires about your products or services, and you prepare a quotation listing items, quantities, unit prices, GST, and total amount.
  2. 2The quotation is sent to the buyer with a validity period (typically 7-30 days) and payment terms like advance percentage or credit days.
  3. 3The buyer reviews, negotiates if needed, and either accepts or rejects the quotation.
  4. 4Once accepted, the quotation is converted into a sales order or directly into a sales invoice, carrying forward all the agreed details automatically.

Example

A corporate office in Bangalore requests a quote for office furniture. You send a quotation: 20 office chairs at Rs. 3,500 each = Rs. 70,000, 10 desks at Rs. 8,000 each = Rs. 80,000, Subtotal = Rs. 1,50,000, GST @18% = Rs. 27,000, Grand Total = Rs. 1,77,000. Validity: 15 days. Payment: 50% advance, 50% on delivery.

How Stock Register Handles This

  • Create professional GST-compliant quotations with your business logo, terms, and conditions in minutes
  • Convert accepted quotations to sales orders or invoices with one tap — no re-entering of item details
  • Track quotation status (sent, viewed, accepted, rejected) and follow up on pending quotes to improve conversion rates
  • Share quotations instantly via WhatsApp or email as PDF directly from the app
Learn more about Quotation Management →

Related Terms

Proforma InvoiceSales Invoice / BillSales Order

Related Guides

Create Quotation Guide

Frequently Asked Questions

Is a quotation legally binding?

No, a quotation is not a legally binding contract — it is an offer to sell at stated terms. It becomes binding only when the buyer formally accepts it and you confirm the order. This is why quotations include a validity period after which the prices may change.

Should I include GST in the quotation price?

Yes, always mention GST separately in your quotation. Show the base price, applicable GST rate and amount, and the total inclusive of tax. This avoids confusion and disputes later. Stock Register auto-calculates GST based on the item's HSN/SAC code.

How is a quotation different from a proforma invoice?

A quotation is an initial price offer, often sent to multiple buyers. A proforma invoice is more formal — it is usually sent to a specific buyer who has shown intent to purchase, and it closely resembles the final invoice format with payment instructions.

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