How to Compare Supplier Quotes and Price Your Offer

When a customer sends you a request for quotation, the work has two halves. First you collect prices from your suppliers and compare supplier quotes to work out which ones to use. Then you turn those costs into a price for your customer. Most mistakes in a quote happen in the gap between the two: a supplier price read in the wrong currency, a discount counted twice, a markup that turns out to be a smaller margin than you thought.

The short answer: make the quotes comparable first, compare them line by line rather than by total, then price each line with a markup you've checked against the margin you need. This guide walks through each step with a worked example.

1. Ask every supplier for the same thing

Comparison starts before the quotes come back. If each supplier answers a slightly different question, you'll spend your time translating rather than comparing.

Send each supplier the lines you want them to price, with for each line:

• the item: name, part number, and any required brand or specification;
• the quantity and unit of measure, exactly as your customer asked (40 pcs, 120 m, 12.5 kg);
• what you need back: unit price, currency, any discount, lead time, how long the price is valid, and the delivery terms.

You don't have to send every supplier every line. A supplier who only carries cables doesn't need your request for anchor bolts. Sending each supplier only the lines they can actually quote gets you faster, more complete answers.

2. Make the answers comparable

Quotes rarely come back in the same shape. Before comparing, bring every answer to the same basis.

Units and quantities. One supplier quotes per meter, another per 100 m reel; one quotes 40 pieces, another only sells boxes of 50. Convert to the unit your customer asked for, and note any line where the quoted quantity differs from the requested one: it changes both the price and what you can promise.

Discounts. Some suppliers quote a list price with a line discount, others a net price. Compare net prices: the unit price after the supplier's discount.

Currency. If one supplier quotes in EUR and you're selling in USD, convert at the rate you'll actually pay, not at today's headline rate. Comparing a EUR price with a USD price as if they were the same number is one of the easiest ways to pick the wrong supplier. More in multi-currency quotes.

Other costs. Freight, packaging, duties, handling, a minimum order charge. If one supplier includes delivery and another doesn't, their unit prices aren't comparable until you account for it. See landed cost for how to work it out.

3. Compare line by line, not by total

The natural reflex is to compare the bottom lines: Supplier A $5,292, Supplier B $5,293, pick A. But a quote is a list of separate prices, and the cheapest total is rarely the cheapest set of lines.

Example (illustrative figures): your customer asks for four items for a warehouse fit-out. Three suppliers reply.

By total, A and B are practically tied, and C looks unusable because it didn't quote every line. Line by line, the best cost is B for the frames and decks and C for the beams and bolts: $5,122.40, which is $169.60 (3.2%) below the cheapest full quote, before you've added a cent of markup.

Two things to keep in mind:

• A partial quote is still useful. Supplier C couldn't price the decks, but it has the best price on two other lines.
• Splitting has costs too. Two suppliers means two orders, two deliveries and possibly two freight charges. Sometimes the cheaper set of lines isn't worth the extra shipment. Compare line by line, then decide whether to consolidate.

Our guide to comparing supplier quotes line by line covers the method in detail, including how to set it up in a spreadsheet.

4. Look beyond the price

The lowest price on a line is where the decision starts, not where it ends. Before you commit, check for each chosen line:

• Lead time: can the supplier deliver in time for your customer's deadline?
• Validity: will the price still hold when your customer accepts your offer?
• Specification: is it the exact item, or an equivalent? If it's an equivalent, will your customer accept it?
• Quantity: did they quote the full quantity?
• Track record: has this supplier delivered on time and as quoted before?

If a cheaper line fails one of these, the next-cheapest line that passes is your real best price. Our guide on how to evaluate supplier quotes goes through each check with an example.

5. Price each line for your customer

Now turn your costs into your offer. Most distributors price "cost plus": take the cost of the line and add a percentage on top. That percentage is a markup.

• Cost $44.50, markup 12% → sell price $44.50 × 1.12 = $49.84.

A markup is not the same as your margin. Margin is the profit as a share of the selling price, so the same line gives you $5.34 ÷ $49.84 = 10.71% margin. If your business targets a 12% margin and you add a 12% markup, you fall short on every line. Our guide to margin vs markup has the formulas and a conversion table.

A few practical rules:

• Set the markup per line. Commodity items with well-known prices usually carry less; specialty items, small quantities and urgent requests can carry more.
• Apply customer discounts after the markup, and remember that a discount comes straight out of your profit: a 12% markup followed by a 5% discount leaves 6.4% markup.
• Keep sales tax or VAT out of your profit calculations. It's added on top of your price and passed on; it isn't revenue.

6. Check the whole offer before you send it

Line-by-line pricing can hide surprises in the total. Before sending:

• Look at the overall margin, not just each line's markup. A few large low-markup lines can pull the whole offer below your target.
• Check the profit in money, not only in percent. A 25% markup on a $40 order may not cover the time it took to quote.
• Re-read quantities and units against the original request.
• Make sure your prices add up: unit price × quantity should equal the line total you show. Customers notice when they don't, and it comes back as a question on the invoice.

7. Keep the record together

Once the customer accepts, the same numbers travel on: into your purchase orders to the suppliers you picked, into your invoice, into the delivery. If the quote lives in one spreadsheet, the orders in emails and the invoice in your accounting software, every copy is a chance for a number to change. Keeping each line's chain in one place, from the request to the supplier's offer, your proposal, the purchase orders and the invoice, is what lets you answer "what did we quote, and what did it cost us?" months later.

Doing this in RFQ Manager

RFQ Manager is built around this workflow:

• Import the request. Upload your customer's RFQ as an Excel (.xlsx) or CSV file, map its columns, check the preview, and the lines are in. No retyping.
• Send each supplier only their lines. Create a Sub-RFQ per supplier with the lines you want them to price, and export it to a formatted Excel sheet to email them.
• Record their offers against each Sub-RFQ: the lines are pre-filled, you enter each supplier's unit price and discount, with the offer's own currency.
• Compare in Proposal Studio. For each line, every accepted offer side by side, with the lowest converted cost marked, after the supplier's discount and your conversion rate. Lines where a supplier quoted a different quantity, or in another currency, are flagged.
• Price per line. Pick an offer for each line and set the markup and any customer discount; the summary shows the total, your profit, and your overall margin before you send.
• Send and follow through. Export the proposal as a formatted Excel file with your selling prices (your costs stay internal) to send your customer. When they order, record their purchase order from the proposal and invoice from it, and order from each supplier from their offer. The RFQ Overview shows each line from request to delivery, on both sides.

You can try it free.

Summary

1. Ask every supplier for the same lines, units and terms.
2. Make answers comparable: net prices, one currency, the same units, all costs included.
3. Compare line by line; the cheapest total isn't the cheapest set of lines.
4. Check lead time, validity, specification and quantity before deciding.
5. Price each line with a markup, knowing the margin it gives you.
6. Check the whole offer's margin and arithmetic before sending.
7. Keep the chain from request to invoice in one place.