Differentiate between tender and quotation

FinanceFinance ManagementBanking & Finance

Quotation is the fixed price offered to customers in response to render notice. It has legal binding and when a customer accepts, it can’t be changed. Whereas, tender is the response to an invitation of tender which is submitted by a prospective supplier.

Invitation of tender is the open request form which is published in printed media (local news newspaper). It can be issued for construction contractor, machinery supplier, information technology, etc. the whole process starting from inviting tender, submitting tender and filling quotation is part of tendering process

Quotation

Quotation is the formal document or document of promise given by supplier to supply goods & services to buyer at stated price under some specific conditions.

Quotation consists of terms of sales, payment, warranty, price to charge for product/services, time, date, delivery location, validity period. It also helps buyers in knowing the cost of goods/services before purchase. Generally government enterprises float the tenders.

Tender

Tender is the response to an invitation of offer. This invitation provides services/products at quoted price at specific quality (with specific conditions). Generally tenders are floated by government undertakings, corporate players, and financial institutions.

They want goods at large scales in order to meet the production requirements. In most cases, in order to meet the requirement they can't deliver on their own and they have to go to a third party supplier to meet the requirements. For these reasons they invite bids from third party suppliers.

Differences

The major differences between a tender and a quotation are as follows −

TenderQuotation
Supplier bid on goods/services.Document of estimated cost for supplying goods/services.
Find out the best price.Offering fixed price.
Response for request for tender.Response to request for quotation.
Price and quality are the components in Tender.Price is the component in quotation.
Large scope.Narrow scope.

Conclusion

Government companies or corporations will go for tenders or quotations to meet their large requirements. They manage their resources in the best way and provide value for their money.

Tender is the process of asking suppliers to bid on products/services required by a company whereas quotation is the response to bidders, where they quote their price for goods/services. Quotation is also termed as an estimation given by professionals for jobs. Tender is more formal than quotations.

raja
Updated on 17-Jul-2021 16:39:35

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