Firm quote
A firm quote is a binding price commitment that a supplier must honor if the buyer places an order within the stated validity period and terms. Unlike budgetary estimates, firm quotes carry commercial and often legal weight, enabling actual purchasing decisions based on reliable pricing.
Examples
RFQ response: A supplier responds to an RFQ with firm pricing of $12.50 per unit, valid for 60 days, for quantities of 5,000 or more units, FOB shipping point. If the buyer issues a PO matching these terms within 60 days, the supplier is obligated to honor the quoted price.
Negotiated agreement: After negotiation, a supplier provides a firm quote letter documenting agreed pricing, terms, and validity. This document represents the supplier's commitment and serves as the basis for purchase order issuance.
Quote conditions: A firm quote specifies conditions: pricing assumes order placement by a certain date, first delivery in a specified timeframe, and payment per standard terms. If the buyer's order doesn't meet these conditions, the supplier may not be bound.
Definition
Firm quotes create commercial certainty that enables purchasing decisions. The supplier's commitment allows the buyer to plan, budget, and proceed with confidence in the pricing.
Quote validity periods define how long the price commitment stands. Suppliers limit validity because costs can change: material prices fluctuate, capacity situations evolve, and currency rates move. Shorter validity periods protect suppliers from extended exposure.
The transition from quote to order should reference the quote specifically. Purchase orders should cite the quote number and confirm that the order matches quoted terms. Discrepancies may void the supplier's pricing obligation.
Quote firmness may have legal significance depending on jurisdiction and circumstances. In many cases, a firm quote constitutes an offer that becomes a contract upon buyer acceptance. Understanding the legal framework helps manage commercial and legal risk.
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