One quote is guessing
At least two or three quotes, compared on the same criteria, turns a purchase into a decision.
Volume 12, Chapter 2
Getting and Comparing Quotations
Compare the whole deal, not just the number at the bottom. A lower price with a longer lead time or worse payment terms can cost more than it saves.
The Golden Rule
Compare the whole deal, not just the number at the bottom.
Getting one quote and accepting it is guessing. At least two or three quotes, judged on the same criteria, turns a purchase into a decision.
PriceThe number everyone compares first, and the easiest one to be misled by.
Lead time & termsHow fast it arrives and when you must pay change what a price actually costs.
QualityFrom trial or reputation, the criterion a spreadsheet can't fill in for you.
Price isn't the whole deal
A cheaper quote with worse payment terms can cost more than it saves.
Match effort to size
The approval ladder that decides who signs off also decides how much comparison shopping a purchase deserves.
Only compare equal offers
Different quantities or specifications make a price comparison meaningless until you adjust them to the same quantity and specification.
1
Definition
Imagine two quotations arrive for the same fabric order. One is noticeably cheaper. The other costs slightly more but offers 60-day payment terms instead of the cheaper supplier's demand for payment within 7 days. Judged on price alone, the cheaper quote wins easily. Checked against the cash flow forecast, the business simply doesn't have the cash to pay in 7 days without straining payroll that month, so the 60-day terms are worth more than the entire price difference. The number at the bottom of the page was never the whole story.
A quotation is a supplier's written offer to sell specific goods at a specific price, under specific terms. Comparing quotations means judging multiple offers fairly, on more than price alone, before committing to one.
In One Sentence
Getting one quote and accepting it is guessing. Getting at least two or three quotes, compared on the same criteria, turns a purchase into a decision. And the cheapest number on the page is rarely the same thing as the best deal, Chapter 1's approval criteria apply here just as much as to the supplier relationship itself.
2
How Many Quotes, and From Whom
| Purchase Size | Typical Practice |
|---|---|
| Small, routine | One trusted, already-approved supplier is often fine |
| Moderate | At least two quotes, both from approved suppliers |
| Large or unusual | Three or more quotes; consider a new supplier alongside existing ones |
The size cut-off for "moderate" and "large" should match your Volume 11 approval ladder, the same discipline that decides who can approve a spend also decides how much comparison shopping that spend deserves.
3
The Comparison Table
Price
The number everyone compares first, easiest to be misled by alone.
Start here, don't stop hereLead Time
How fast it actually arrives, matched against your own deadlines.
SpeedPayment Terms
7 days vs 60 days can be worth more than the price gap itself.
Cash flowQuality
From trial or reputation, the criterion a spreadsheet can't fill in.
ReputationMinimum Order Quantity
Does the supplier's minimum actually match what you need?
Fit| Criterion | Supplier A | Supplier B | Supplier C |
|---|---|---|---|
| Price | |||
| Lead time | |||
| Payment terms | |||
| Quality (from trial/reputation) | |||
| Minimum order quantity |
Memory Trick
Compare the whole deal, not just the number at the bottom. A lower price with a longer lead time or worse payment terms can cost more than it saves, exactly Volume 07, Chapter 9's payment-terms lesson, from the buying side instead of the selling side.
4
Example Story: The Quote That Looked Cheapest
Here's the full version of the two-quotations story from the start of this chapter.
Two quotations arrived for the same fabric order: one noticeably cheaper, one slightly higher but offering 60-day payment terms instead of the cheaper supplier's 7-day requirement. Measured on price alone, the cheaper quote won easily. Measured against Volume 07's cash flow forecast, the 60-day terms were worth far more than the price difference that month, the business simply didn't have the cash to pay in 7 days without straining payroll. The full comparison, not just the price column, made the right choice obvious.
5
Across Industries
Precision Print & Press
Comparison factor beyond priceMinimum order quantities that don't match actual job sizes.
Green Fields Farm
Comparison factor beyond priceDelivery timing aligned with the planting season, not just cost per bag.
Rapid Auto Works
Comparison factor beyond priceGenuine parts availability versus a cheaper but slower-arriving alternative.
6
Common Mistakes
Common Mistake #1: Comparing on Price Alone
As the example story shows, the full deal (terms, lead time, quality) can matter more than the sticker price.
Common Mistake #2: Only Ever Getting One Quote
Removes any real comparison at all, even a quick second quote provides a useful reference point.
Common Mistake #3: Comparing Quotes That Aren't Actually Equivalent
Different quantities, specifications, or delivery terms make a price comparison meaningless, adjust them to the same quantity and specification first.
7
Quiz Yourself
Quiz 1
Why is comparing quotes on price alone risky?
Because lead time, payment terms, and quality can matter more than the price difference, a cheaper quote with worse terms can cost the business more overall.
Quiz 2
How many quotes should a large or unusual purchase typically get?
Three or more, potentially including a new, not-yet-used supplier alongside existing ones.
8
Practice Exercise
For your next moderate-or-larger purchase, request at least two quotes and complete the comparison table in Section 3 before deciding.
9
Quick Summary
Quick Summary
- Get at least two or three quotes for anything beyond a small, routine purchase.
- Compare the whole deal, price, lead time, payment terms, quality, not price alone.
- Ensure quotes are actually comparable (same quantity, specification, terms) before judging them.
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