Comparing supplier quotations fairly

Why quotes rarely compare out of the box

A unit figure carries hidden assumptions: which material, which finish, how it is packed, where the goods are handed over, when you pay and how long the offer lasts. Each supplier fills gaps in your request with its own assumptions, usually the ones that make its figure look best. Comparing headline figures without unpacking them rewards whoever left the most out.

1. Hold the specification constant

Send every supplier the same version of your requirements brief and ask each to confirm that version in writing. Where a supplier proposes an alternative material or construction, keep it as a separate line rather than mixing it into the main comparison. If a quote is silent on a required item, treat that item as not included until confirmed.

2. Normalise the delivery term

The International Chamber of Commerce publishes the Incoterms® rules, which clarify the tasks, costs and risks involved in delivering goods from seller to buyer^[1]. The current edition, Incoterms® 2020, has eleven rules^[2]. The Trade Commissioner Service notes that many Chinese manufacturers quote ex-works or Free on Board (FOB), which may leave you to arrange the main carriage through a freight forwarder^[3].

A quote at a factory gate and a quote on board a vessel at a port are different offers. Ask all suppliers to quote the same rule with the same named place and edition, for example FOB at a named port under Incoterms® 2020, or, for cost comparison only, add your forwarder's estimate of the missing costs to reach an estimated comparable cost to the same named port. Keep each quote's original Incoterm: adding estimated costs to an EXW quote does not change the seller's obligations or the transfer of risk into FOB terms. Cost comparison and contractual terms are separate questions^[2]. Where insurance is included, check the level: ICC notes that CIF and CIP default to different levels of cover in the 2020 edition^[2].

3. Add the costs the quote leaves out

To compare offers on what the goods will cost you at the destination, list the items each quote excludes: inland transport, export handling, main freight, insurance, destination charges, duties and taxes, testing and inspection. In Canada, CBSA's guide to importing commercial goods explains that duties and taxes depend on tariff classification and value for duty^[5]. Ask your customs broker or forwarder for estimates; do not guess classifications. Keep these estimates in separate, labelled columns so the factory's figure stays visible.

4. Align quantity, tooling, samples and lead time

• Minimum order quantity: compare at your real quantity, not at each supplier's preferred tier.
• Tooling or moulds: one-off charges change the first order; confirm in writing who owns the tooling you pay for.
• Samples: charge, lead time, and whether the charge is credited against the order.
• Lead time: from which event (deposit, sample approval) and to which event (ready for inspection, loaded).
• Validity: how long the offer stands, and which inputs, such as raw material or exchange rates, can reopen it.

5. Read the payment terms and the counterparty

Payment terms move risk. A lower figure with a large advance payment and the balance due before you can inspect may be worse for you than a higher figure with the balance released after a pre-shipment inspection. Check that the beneficiary named for payment is the same legal entity as the company on the quotation and contract, and treat any later change of bank details as suspicious until confirmed through a contact you already hold, not by replying to the same email.

Know who you are buying from. A trading company can be a sensible choice, especially for small mixed orders, but it changes who controls production and who can fix a defect. For suppliers in mainland China, the National Enterprise Credit Information Publicity System (gsxt.gov.cn) publishes enterprise credit information; a Shanghai government portal notes, for example, that enterprises listed for abnormal operations are announced through it^[6]. The system is listed among the online services on the website of the State Administration for Market Regulation^[7]. Whether a company manufactures the product is a separate question that records alone rarely settle.

6. Grade the evidence behind each quote

Finally, put each supplier's key statements through the same test.

A comparison matrix that shows these grades beside the figures makes the trade-offs visible. The cheapest offer with the most Unresolved items is often not the cheapest outcome.