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| CHAPTER: Finding Suppliers, Buyers & Distributors |
| 8. |
How do I respond to a request for a price quote? |
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ANSWER: As inquiries lead to interest, prospects will ask for specific price quotations, or “Proforma invoices” as they’re known internationally. Proforma invoices are not bills for payment, since a sale has not yet occurred. They’re basically quotations in an invoice format. You want the prices you quote to cover all your export costs. The key issue here is, who will pay to get the goods from your factory to their final destination -- you or the buyer. The Incoterms most often used to make this distinction are Ex Works (cost at factory), FOB and CIF. For example, if you’re paying all the shipping and insurance costs, you’d quote a CIF price. If the buyer wants to arrange the shipping and insurance, you’d quote an FOB price. Although formats can vary, Proforma invoices should be neatly typed on business letterhead and cover at least the following points:
- Price of each item (typically in U.S. dollars to reduce foreign-exchange risk).
- Trade discount, if applicable.
- Country of origin of the goods.
- Gross and net shipping weight (in metric units where appropriate).
- Total dimensions (in metric units where appropriate) packed for export.
- Delivery point.
- Terms of sale.
- Payment terms and method, including currency to be used for payment.
- Insurance and shipping costs, specifying who will pay.
- Total charges to be paid by customer.
- Estimated shipping date to factory or U.S. port (it’s preferable to give U.S. port).
- Estimated date of shipment arrival.
- Any other terms of the proposed sale.
- An explicit expiration date for quotation.
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