Preparing an Export Quotation: Costs, Freight and Payment Terms

An export quotation is a proposed commercial agreement in a compact form. The price is meaningful only when the product, quantity, delivery responsibilities and payment conditions are clear. Prepare an internal cost sheet first, then turn it into a buyer-facing offer with explicit assumptions.

Fix the quantity and specification

Define product, grade, specification version, net quantity per pack, number of packs and total saleable quantity. State any permitted variation only after agreement. Calculate costs on what will be invoiced, not just the kilograms purchased from farmers; grading and processing can reduce the saleable output.

Use current supplier and service quotations with dates and validity. Record whether each amount includes applicable taxes and which costs may be recoverable. Have the accountant confirm that treatment for the actual transaction. Do not count an expected refund as immediately available cash.

Map costs to the promised delivery point

List procurement, sorting or processing, packaging, inland transport, handling, documentation, testing and any freight or insurance the seller is responsible for. Add financing time, bank charges and a realistic allowance for identified risks. Separate estimated costs from confirmed charges.

The ICC's Incoterms 2020 guidance explains that the rules allocate responsibilities, costs and risk. Select a term suitable for the transport mode with competent advice, and specify the exact named place and edition. A three-letter term alone does not describe the whole contract or settle the payment method.

Use an example to expose assumptions

For an illustrative 1,000 kg offer, suppose procurement is ₹180,000, packing ₹20,000, inland transport ₹15,000, handling ₹10,000 and other identified charges ₹5,000. Known costs total ₹230,000. An offered price of USD 3.50 per kg produces USD 3,500.

At an assumed planning conversion of ₹80 per USD, revenue would be ₹280,000 and the difference from known costs ₹50,000. At ₹75 per USD, it would be ₹262,500 and ₹32,500. These are invented planning rates, not current exchange-rate advice; neither difference is final profit because other applicable costs may remain. Discuss actual conversion, hedging options and charges with the bank.

Make the buyer's offer unambiguous

Include quotation number and date, buyer identity, product specification, quantity, currency, unit and total price, named delivery point, validity, planned delivery window and payment conditions. State exclusions and which changes require a revised quote. Attach the agreed specification rather than placing every technical detail in a short email.

For payment, define the due event, due date, documents required and who bears relevant bank charges. Have the bank review unfamiliar arrangements. Do not assume a document called a letter of credit eliminates every risk; its terms and the ability to comply require review.

Control revisions and acceptance

Give each revised quotation a new version. Record why it changed and mark the previous offer superseded. Ask the buyer to accept the matching specification and terms in writing. Recheck availability, rules and logistics before committing, especially if the quotation validity has expired.

Use a margin floor and exposure limit approved by the board. Staff should know when a lower price, longer credit period or extra promise needs escalation.

Should freight be included? Include the costs belonging to the agreed delivery arrangement, and name the point clearly. Avoid double-counting a charge already included in a service provider's estimate.

Is an enquiry price a permanent price? No. State validity and assumptions. A changed crop price, destination, specification or shipment date may require a new quote and buyer acceptance.

Prepared with AI assistance for the CAFIC knowledge series. Examples are illustrative. Check current official requirements and local conditions before acting on regulatory or technical guidance.