The Quotation That Was Priced Too Low
You work in the sales office of a small firm that supplies printed packaging. You prepared a quotation for a regular customer: 5,000 boxes at 2.40 each, total 12,000, valid for 30 days, delivery included. You have now discovered that the unit cost should have been 3.10 - you used an out-of-date price list. The customer has already accepted in writing within the validity period and has ordered its own labels to fit the boxes. At 2.40 the job loses about 3,500. Your manager says: "Write back and say there was a pricing error and the price is now 3.10, or we cancel. Keep it vague - don't admit we got it wrong." The customer is one of the firm's three largest accounts.
1. Should the quotation be honoured at 2.40? Analyse the position.
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Honour it, unless there is a genuine and clearly stated basis not to.
Analysis:
- The customer accepted a definite quotation within its validity period. That is a binding agreement on the stated terms, and the price was not described as "subject to confirmation" or "estimate."
- The error was ours. A unilateral internal pricing mistake does not by itself undo an accepted offer, and the customer has relied on it by ordering labels - reliance makes a late repricing even harder to justify.
- The manager's instruction to be vague is the most serious problem. A message implying the customer must pay more, without disclosing the reason, is misleading. If the firm wants to reprice, it must say plainly what happened and on what basis.
Recommendation:
- Fulfil at 2.40 for this order.
- Fix the price list the same day and add a validity date and a "prices subject to confirmation at order" clause to future quotations.
- Treat the 3,500 as the cost of a control failure, and report it as such rather than hiding it in a vague letter.
Losing 3,500 once is cheaper than a dispute with a top-three account and a reputation for shifting prices after acceptance.
2. Draft the substance of the reply to the customer and explain your drafting choices.
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Substance of the reply:
- Confirm the order is accepted at the quoted price of 2.40 per box, total 12,000, delivery included, on the stated terms.
- Confirm the delivery date and the specification (box size, board, print) so there is no later ambiguity.
- Add one neutral sentence: "Our quotation was based on a price list that has since been superseded; we are honouring the quoted price for this order and will send you our updated list for future orders."
- No apology theatre, no blame of any individual, no request for more money.
Why drafted this way:
- Confirms the contract in writing, which protects both sides and prevents a later argument about what was agreed.
- Discloses the cause in one line without inviting renegotiation. Vagueness would leave the customer suspecting the firm tried to reprice after acceptance.
- Signals a future price change so the next quotation is not a surprise, and separates this order from the next.
- Specifies delivery and specification because most disputes about "the price" are really disputes about what was included.