How to compare chemical quotations that look identical

Three quotations arrive, each with a price per kilogram. Two look cheaper. Sorting them properly usually reverses that order, because the headline price excludes most of what you actually pay.

First, check that you are comparing the same thing

Grade, purity basis, packaging and Incoterm have to match before any price means anything. A price per kilogram on a dry basis is not comparable with a price on an as-supplied basis if the moisture content differs.

Ask each supplier to state the specification they are quoting against, in writing, in the same units. If one quotes assay minimum 99.0 percent and another quotes typical 99.5 percent, you are not comparing prices, you are comparing promises.

Build a landed cost sheet, not a price list

Add these to the quoted price before ranking anyone:

• Freight to your door, including dangerous goods surcharges
• Insurance, if risk does not sit with you at the port
• Import duties and any anti-dumping measures
• Port charges, documentation and customs brokerage
• Packaging cost, and whether pallets are returnable
• Payment cost, such as letter of credit fees or the financing value of an advance

A supplier quoting ex works with a low unit price can easily be the most expensive option landed, especially for a first import.

Compare the commercial terms line by line

Lead time for the first order and for a repeat order. Validity of the quotation, in days. Currency and whether the price is firm or indexed to a raw material. Minimum order quantity and what happens if you order less.

Two quotations with the same landed cost are not equivalent if one holds its price for thirty days and the other for seven.

Read what is excluded

Quotations are often silent rather than explicit. Silence usually means excluded. Look specifically for: third-party inspection, certificates of origin, fumigation, drum labelling to your specification, and disposal of packaging.

Write your own standard quotation template and send it with the enquiry. Suppliers who fill it in properly are usually the ones who will fill in a shipping document properly too.

The decision rule that holds up

Rank by landed cost per unit of usable material, then discount the ranking for commercial risk. A supplier with unclear documentation and a two-week price validity is not equal to one with a registered entity and a firm thirty-day price, even at the same number.

The cheapest quotation is a hypothesis. The landed cost is the number you can actually defend to your own finance team.