Price quotation (quotation) is a document (generally written) which seller provides to buyer for offering goods and services at stated price subject to terms and conditions specified therein.
Price quotation is a fix price which can’t be changed once accepted by the customer. Based on the relationship, mutual understanding between the parties, the final price agreed can change which as compared to the quotation.
Quotation is generally a written document, though at times it is verbally discussed between the parties. This is generally on the letterhead of the seller or duly stamped and signed by seller. It states the fix price of the goods/services and any additional cost i.e. generally the additional cost maybe in nature of freight, taxes etc. The additional cost if any are generally on the basis of actuals.
The quotation should also specify the period up to which the price stated in the price quotation is valid. The terms and conditions along with the details of the product/service forms an integral part of quotations.
Quotations should not be confused with estimates. Estimates are the best possible prices at which the seller is ready to provide goods/services. Final price can undergo minimal or substantial change vis-a-vis estimates provided based on the fixed cost and variable cost incurred by the seller, unforeseeable circumstances etc. On the contrary, in case of quotations the price are fixed irrespective of the fact that the cost incurred by the seller increases at a later stage of time.
Once the quotation is accepted by the buyer, then a legal agreement is drawn duly executed by the buyer and the seller stating the price, validity, detail terms and conditions, terms for cancellation, extension of agreement etc.