Supplier Quote Comparison

Normalizing Quotes That Are Not on the Same Terms

Three suppliers rarely quote on the same Incoterm, and that is where most quote comparisons quietly go wrong. One sends an EXW price, one a FOB price, one a delivered price. The three numbers look comparable because they are all dollars per unit. They are not: each one stops at a different point in the journey, so each one covers a different share of the cost and the risk.

Putting them on the same basis — normalizing them, so that the comparison is apples to apples instead of apples to oranges — takes two steps. First, work out which costs each term already contains. Second, add the missing ones so every quote describes the same delivery.

What each term already contains

Incoterms allocate cost, risk and obligation. Risk transfer is a separate rule from cost, and it matters: under CIF the risk passes to you at the port of shipment even though the seller is still paying the freight. For a cost comparison, the costs are the part you can put a number on.

The origin charges are the ones people forget

Between an EXW price and a FOB price sits a group of charges that exist on every export shipment and appear on no quotation that starts at the factory gate. An export declaration fee, terminal handling, a bill of lading fee, a container or pallet handling charge, sometimes inspection, sometimes an export licence or a fumigation certificate. Individually they are small. Together, on a first order that is not yet a full container, they can move the landed cost per unit by more than the difference between two suppliers' unit prices.

These charges are also charged per shipment, not per unit, so they shrink as the order grows — which is why a quote comparison built on a small trial order can rank two suppliers differently from the same comparison built on the volume you intend to buy.

Why the low EXW price keeps winning and losing

An EXW quote is the smallest number in the room, and it is the one most likely to be chosen on instinct. It is also the one with the most left out. Once the origin charges and the freight are added, the goods have to be cleared for export and carried before they stand in the same place as a FOB or a CIF price — and those additions are usually larger, relative to the goods value, than a supplier's unit price spread.

The mirror image is the DDP price, which is the largest number and frequently the cheapest once everything is counted. A supplier who ships enough volume on a lane may buy the freight, the clearance and the delivery more cheaply than you can, and a DDP price passes that advantage on. It is regularly thrown out of a comparison for looking expensive.

Two habits that keep the comparison honest

• Ask every supplier for the same quotation pack — the same specification, the same packaging, the same carton dimensions, the same quantity, the same delivery term. A quotation answered on a different assumption is not a quotation you can rank.
• Write down which term each price is quoted on before you put the numbers side by side. The Incoterm is not a detail of the note; it is the thing that decides whether the numbers are comparable at all.

The calculator above does this arithmetic for you: pick the term each supplier quoted on and enter the costs that term leaves out. Every quote is then converted to one basis and ranked on landed cost per unit.

A Worked Example

Three suppliers quoting the same product, delivered to the same destination. Selling price $22.00 per unit, import tax 20%, other import costs $700, order quantity 500 units.

Supplier A quotes the lowest unit price and lands the most expensive. Its $8.00 unit price is $0.75 below Supplier B's, worth $375 across the order. Its freight is $2,300 higher, which costs $4.60 per unit. Freight sits inside the CIF value, so it carries duty as well — though the cheaper goods pull the other way, since they shrink the dutiable value too. The two partly cancel: A's duty on a CIF value of $7,200 is $432 against B's $316.50 on $5,275, a net $0.231 per unit. Net the three effects and A lands $4.081 per unit above B.

Supplier C is the most instructive of the three. It is quoted above Supplier A and attracts double the duty rate — 12% against 6% — yet still lands $576 cheaper than A, because $1,100 less freight produces a smaller CIF value for the higher rate to bite on. A 12% rate on $6,300 is $756; A's 6% on $7,200 is $432, so C pays $324 more duty and still comes out ahead. It remains $2.929 per unit above Supplier B. A decision made on duty rate alone would have discarded the second-cheapest supplier.

What This Comparison Does and Does Not Include

• Included: goods value, freight and insurance, import duty, brokerage and other import charges, and import tax shown separately.
• Not included: payment terms and the cost of financing them, currency movement between quote and settlement, quality and defect rates, lead time, minimum order quantities, tooling or sampling costs, and the cost of switching suppliers. A quote comparison is a cost comparison, not a sourcing decision.
• Duty basis: this page assumes duty is assessed on a CIF value, which is the common basis in the EU, the UK, most of Asia, Latin America and Africa. Some customs authorities assess duty on an FOB or FOB-plus-freight basis instead. If yours does, enter freight as 0 and add it to "other import costs" so it is not taxed — and check the rule with your customs broker.
• Rates: this site holds no tariff data. Every rate on this page is one you typed in. Look up the duty rate for the actual HS code and origin before you rely on the result.

Next Steps

• Import cost calculator — the full cost stack for a single shipment, with the tax broken out.
• Landed cost calculator — the simple version, if you only need duty and inland delivery.
• Export price calculator — work out the price you should be quoting in the first place.
• Freight quote request builder — put together the shipment details a forwarder will ask you for.

Frequently Asked Questions

Should I compare quotes on unit price or landed cost?

Landed cost, whenever the goods are being imported. Unit price only ranks suppliers correctly when freight and duty are identical between them, which is rare across different origins. Comparing on unit price alone systematically favours whichever supplier is furthest away.

Why is import tax excluded from the landed cost?

Because a registered importer normally recovers VAT or GST as an input credit, so it is not a real cost of the goods. It is still real cash out of the business until it is recovered, which is why the calculator reports it rather than ignoring it. If you are not registered, or your tax is not recoverable, add it back in.

Can I compare more than three suppliers?

Not on this page. Three is the point where a comparison stays readable on a phone. For a longer list, run the strongest candidates through here and use the import cost calculator for the rest.

What if the suppliers quoted different quantities?

The comparison is per unit, which is what you want, but be careful: a freight quote belongs to a specific volume. If supplier A quoted you 500 units and supplier B quoted 5,000, the freight figures are not interchangeable, and per-unit freight will be far higher on the smaller order. That is a real effect, not a calculation error — but make sure you are comparing the volumes you would actually order.

Does a lower landed cost mean I should switch suppliers?

No. Landed cost is one input. Lead time, quality, payment terms, minimum order quantity and the cost of qualifying a new supplier all sit outside this calculation, and for many importers they decide the outcome. Use this page to find out what the price difference really is, then decide on everything else.

My suppliers quoted different Incoterms. Can I still compare them?

Yes, and you should — just not by putting the three numbers next to each other as they arrive. A delivered price and a factory-gate price describe different amounts of work, so comparing them directly always favours whichever supplier quoted on the earlier term. Normalize them first: say which term each price uses, add the costs that term leaves out, and then compare. The calculator above does exactly that, which is what the Quoted as selector is for.

What does it mean to normalize a supplier quote?

Normalizing means converting quotes made on different terms to a single common basis, so that the difference between them is the price and not the paperwork. In practice: establish what each price already includes, add the costs each one excludes, and express all of them at the same point in the journey — usually landed cost at your warehouse. Quotes that have not been normalized are not comparable, even when the currency, the unit and the quantity are identical.