The lowest unit price is not automatically the lowest-cost order. Before ranking suppliers, establish whether they quoted the same product, quantity, packaging and delivery scope.
A quotation comparison should make differences visible. If important information is missing, leave it marked as missing and ask for it. Do not turn an unknown cost into a zero just to finish the comparison.
Start with one specification
Give each supplier the same product brief and identify the version. Record the material, dimensions, finish, functional requirements and packaging. If a supplier proposes an alternative, show it separately.
Suppose one supplier quotes a product in individual printed boxes and another quotes bulk-packed units. The prices may both be correct for their respective offers. They are not yet comparable for an order that needs retail packaging.
This is why the Australian Government’s guidance on suppliers considers factors beyond price, including quality, experience, location and reliability. The comparison needs to reflect what your business is actually buying.
Normalize the commercial assumptions
Set up a comparison with one row per supplier and the same columns for everyone:
| Area | What to record |
|---|---|
| Product | Specification version and any substitutions |
| Quantity | Order quantity, minimum order and price breaks |
| Price | Currency, unit basis and quotation validity |
| Packaging | Unit packaging, labels and master cartons |
| One-off costs | Samples, tooling, setup and artwork charges |
| Timing | Sample lead time and production lead time |
| Delivery scope | Named trade term, place and included services |
| Payment | Deposit, balance timing and stated conditions |
| Open points | Missing answers and assumptions to confirm |
Ask suppliers to correct the comparison where necessary. Their response is useful: a clear correction is better than two parties continuing with different assumptions.
Separate unit costs from order costs
Consider this fictional example. Supplier A quotes 1,000 units at $4.20 each and charges $300 separately for packaging. Supplier B quotes 1,000 units at $4.40 each with the same packaging included.
Before other costs, Supplier A’s order total is $4,500 and Supplier B’s is $4,400. The apparent unit-price advantage reverses once the specified packaging is included.
This example does not establish the final landed cost. Freight, inspection, product-specific requirements and other charges still need to be assessed on the appropriate basis. Its purpose is to show why the quotation total needs to be reconstructed from the actual scope.
Make delivery terms explicit
Record the trade term and named place exactly as quoted. Do not compare a factory collection price directly with a delivered price and describe the difference as a supplier saving.
The International Trade Administration’s pro forma invoice guidance identifies delivery terms and the delivery point as information to include in the commercial quotation. Where the responsibilities are unclear, have the supplier and your freight provider clarify them before calculating a comparable total.
Keep the supplier’s quote, the freight estimate and your own assumptions identifiable. That makes it easier to update the comparison when a rate or order quantity changes.
Consider the practical effect of the terms
A longer production time can affect when you must place a replenishment order. A higher minimum quantity can tie up more cash and storage. An early balance payment can change the period between paying for stock and collecting sales revenue.
Write those consequences beside the numbers. You do not need a complicated scoring model to recognize that a quote creates a stock or cash commitment your business cannot comfortably support.
Finish with a decision and a question list
Your shortlist should explain the basis for proceeding: for example, a comparable specification, acceptable sample, clarified packaging and manageable order quantity. Keep unresolved verification or inspection requirements visible.
If the quotations are too inconsistent to compare, improve the request first. Read how to write a sourcing RFQ, or discuss a quotation evaluation.