How to read a manufacturer's quotation

A new brand gets three quotations for the same tablet. They are ₹18, ₹26 and ₹31 per unit. The obvious move is to take the ₹18.

It is frequently the most expensive of the three by the time stock reaches the warehouse, and this article is about why.

We issue quotations, so this is written from the inside, including the things that are legitimately left out and the things that should not be.

What a quotation should contain

If any of these is absent, ask. The absence is usually where the surprises live.

The product

• Product name, dosage form, strength
• Full composition with quantities per unit, and standardisation percentages where they apply
• Pack size and count
• Whether it is private label or custom

Commercial terms

• Unit price at a stated quantity, the quantity matters as much as the price
• MOQ, and price breaks at higher quantities
• GST, stated separately. A quotation that does not say whether GST is included is ambiguous by half
• Payment terms, advance percentage, balance on dispatch
• Validity period of the quotation

Packaging

• What is included: bottle, cap, inner seal, label, mono carton, shipper
• Packaging MOQ, stated separately, this is the most commonly omitted line and the most commonly painful
• Who supplies and who stores the packaging

One-time charges

• Artwork and plate or cylinder charges, per SKU and per colour
• Formulation development, for custom
• Stability testing
• Licensing and consultancy

Logistics and timelines

• Lead time from PO, and from artwork approval, these are different dates
• Shelf life, and shelf life remaining at dispatch
• Freight: included or extra, and to where
• Who bears GST on freight

The lines people misread

“Price per unit” without a quantity

Meaningless on its own. A price is a function of batch size. ₹18 at 50,000 units and ₹26 at 5,000 units may be the same manufacturer being consistent.

Ask: at what quantity, and what is the price at the quantity I will actually order?

MOQ, and the two MOQs

Product MOQ is what the production line needs to be worth running.

Packaging MOQ is set by the printer and the bottle supplier, and it is frequently higher. You can be told the product MOQ is 2,000 bottles and discover the minimum label print run is 10,000.

That extra 8,000 labels is your money, sitting in a box. And if you change the artwork, which first-time brands almost always do, it is wasted.

Ask for both, separately, in writing.

Composition without quantities

A quotation listing “Ashwagandha extract, Shatavari extract, Safed Musli extract” and no numbers is not a specification. It is a description, and it is not comparable to anything.

Two quotations are only comparable when both state quantities and standardisations. Without that, you are comparing a price to a price with no idea what you are buying, which is exactly how the ₹18 quotation wins.

Standardisation, where the money actually is

This is the single biggest legitimate reason for price differences, and it is invisible unless you ask.

“Ashwagandha extract 500 mg” could mean:

• A 10:1 extract with no measured marker
• An extract standardised to 2.5% withanolides
• An extract standardised to 5% withanolides
• A branded, clinically studied extract at a specified withanolide content

These can differ in cost by several times. All four print as “Ashwagandha extract 500 mg”.

So ask: standardised to what, measured how? If a quotation says only “extract” with a ratio, the manufacturer is not necessarily hiding anything, extract ratios are normal commercial practice, but you cannot compare it to a quotation that specifies a marker percentage.

And if you intend to cite research on your marketing, the standardisation matters. The studies were done on a specified material.

Capsule shell, which nobody checks

Gelatin is cheaper than HPMC (vegetarian). If your label will say vegetarian, or your market expects it, confirm which you are getting. This is a real cost difference and a real compliance point.

And gelatin source matters for some markets and some customers, bovine versus porcine is a genuine question in India and one that export buyers ask.

Excipients and fillers

Every tablet and capsule contains non-active material. That is normal and necessary.

What you should know: how much of your 500 mg is active and how much is excipient. A quotation for a “500 mg tablet” where 300 mg is filler is a different product from one where 100 mg is.

Testing, included or extra

Ask specifically:

• Is a COA provided with every batch, or on request?
• Which tests are in-house and which third-party?
• Are heavy metals tested on every batch or periodically?
• Is the active assayed?
• Is the cost included or billed separately?

A quotation that is cheaper because testing is minimal is not cheaper. It is a different product with your name on it.

Shelf life at dispatch

A detail that costs brands real money.

A product with 24 months total shelf life, dispatched to you four months after manufacture, gives you 20 months to sell it. That is usually fine.

The problem case: stock from an older batch, dispatched with 12 months left. For a new brand still finding its sales rate, that can be the difference between selling through and writing off.

Ask: what is the minimum shelf life remaining at dispatch? And get it in the PO.

Why the cheap quotation is often expensive

Having seen this repeatedly, the common reasons:

Lower standardisation. The largest and most legitimate difference, and invisible without asking.

More filler, less active.

Gelatin instead of HPMC.

Minimal or no testing. No batch heavy metal data, no assay, identification by appearance.

Cheaper packaging, thinner bottles that crack in transit, labels that peel in humidity, seals that fail. Packaging failures generate returns, and returns cost more than the packaging saved.

Excludes GST while another includes it, an 18% difference that is purely presentational.

Excludes freight.

Excludes artwork and plate charges, which appear later.

Longer lead time, which has a cost if you have committed to a launch.

No documentation support for licensing, which becomes consultant fees.

And the one to watch for: a price that is below plausible material cost. Ashwagandha extract has a market price. If a finished tablet is quoted below what its declared actives would cost as raw material, the declared actives are not in it at that level. That is not a bargain; it is a label you cannot defend.

How to compare two quotations properly

Put them in a table and normalise. Specifically:

1. Same quantity, ask both for a price at the quantity you will order
2. Same standardisation, go back and ask the vague one to specify, or ask the specific one to quote at the vague one’s level
3. GST treatment identical
4. Freight to the same place
5. All one-time charges included, artwork, plates, development, stability
6. Packaging specified identically, including MOQ
7. Capsule shell type stated
8. Testing scope stated
9. Shelf life at dispatch stated

Then compute a landed cost per unit for your first order, including the one-time charges amortised over that order. That number is what you should compare, and it frequently reverses the ranking.

A worked illustration of the shape of it: a ₹18 unit price at 10,000 units with ₹60,000 of plate and artwork charges and freight extra lands differently from ₹26 all-inclusive at the same quantity. Do the arithmetic rather than reading the unit price.

Questions that reveal the most

Three questions, in our experience, tell you the most about a manufacturer:

1. “Standardised to what, and measured by which method?” A manufacturer who answers precisely is used to being asked. One who says “premium quality extract” is not answering.

2. “Can I see a COA from a recent batch of a similar product?” Handed over without hesitation means they do this routinely. Reluctance means something.

3. “What is the packaging MOQ, separately from the product MOQ?” Someone who volunteers this before you ask is protecting you from the mistake everyone makes.

What a quotation legitimately will not tell you

To be fair to manufacturers:

Their margin. Nobody shows you this and nobody should expect to see it.

Their supplier. Sourcing relationships are commercially sensitive.

Exact costing breakdown. You are entitled to know the specification, not the cost structure behind it.

A fixed price forever. Raw material prices move, herbs are agricultural commodities with seasonal and weather-driven variation. A quotation has a validity period for a real reason, and a repeat order six months later may legitimately be priced differently.

Our own practice

Stated so you know what to expect from us, and what to ask of anyone else.

We state standardisation percentages and quantities on every quotation. If a client asks us to quote against a competitor’s vague specification, we will quote the specific version alongside and show the difference.

We state packaging MOQ separately, because it is the most common unpleasant surprise.

We state minimum shelf life at dispatch.

We charge formulation development visibly rather than folding it into unit price.

And we decline the request we get most often in this conversation: hitting a target unit price by reducing a standardisation while the artwork continues to cite research done at the higher one. The saving is real, the exposure is real, and the brand carries it rather than us.

The short version

1. A unit price without a quantity is meaningless. Ask for a price at the quantity you will actually order.
2. Ask for product MOQ and packaging MOQ separately. Packaging MOQ is often higher and it is your money in a box.
3. “Extract 500 mg” hides a several-fold cost range. Ask: standardised to what, measured how? This is the biggest legitimate price difference.
4. Confirm capsule shell, gelatin or HPMC, if your label says vegetarian.
5. Ask what proportion is active versus excipient.
6. Ask whether heavy metals are tested every batch, and whether the active is assayed.
7. Ask the minimum shelf life remaining at dispatch, and put it in the PO.
8. Normalise before comparing, same quantity, same standardisation, GST, freight, artwork and plate charges included.
9. Compute landed cost for your first order. It often reverses the ranking.
10. A price below plausible material cost means the declared actives are not there at that level.

More detail: supplement costing and margins and choosing a contract manufacturer. Related: private label vs custom formulation and why MOQ exists.