Comparing quotes: the landed-cost method

The cheapest unit price loses money all the time. Quotes arrive in different units, currencies, incoterms and assumptions — compare them raw and you're choosing on noise. Here's the method that makes offers truly comparable.

Step 1 — normalize the units

Convert everything to one basis before you look at a single number: per unit, per thousand, per metric ton — one basis, one currency, conversion dated. Half the “savings” buyers find at this stage are unit errors in the incumbent's favor.

Step 2 — decode the incoterm

EXW, FOB, CFR, DDP — each shifts freight, insurance, duty and risk between you and the supplier. An EXW price that looks 12% cheaper can be 8% dearer once you pay the freight they didn't include. Rebase every quote to the same delivery point: your dock.

Step 3 — build the landed cost

• Unit price × quantity (at YOUR realistic volume, not their favorite break)
• Tooling, setup, plates, dies — amortized over honest volumes
• Freight to your site, insurance, duties and brokerage
• Payment terms as cost: 30% deposit for 90 days is working capital with a price
• Quality overhead: inspection, expected reject rate, returns logistics

Step 4 — then judge the soft factors

With landed costs lined up, weigh lead time, MOQ flexibility, communication quality and quote validity. A supplier 3% dearer who answers in two hours and holds four weeks of lead time is often the cheapest thing on the table.

The traps

• MOQ cliffs — a great price at 50,000 units is irrelevant if you need 8,000.
• Validity windows — 15-day quotes force bad decisions; ask for 45–60 days.
• Exclusions in the small print — packaging, pallets, certificates “available on request” become invoices later.

Frequently asked questions

What's a landed cost in one sentence?

Everything it takes to get the product usable at your door — unit price plus tooling, freight, duty, financing and quality overhead — divided by the units you'll actually buy.

How many quotes do I need for a real comparison?

Five comparable quotes is where the market price becomes visible; under three, you're negotiating blind. Volume of comparable offers is precisely what an AI sourcing agent multiplies.

Does HireDov compare quotes for me?

Dov normalizes every reply onto one dashboard — price, lead time, MOQ, terms — ranked and exportable, so the landed-cost work starts from clean data instead of twenty email threads.