Comparing Quotations: Landed Cost, Not Sticker Price

Two steel quotations are on the table. Supplier A: Rs. 53,900 per tonne. Supplier B: Rs. 54,600 per tonne. Nine sites out of ten circle Supplier A, issue the order, and congratulate themselves on saving Rs. 700 a tonne. Then A's material turns out to be ex-godown: you arrange the truck, pay loading at his yard, and by the time the steel is on your site, "cheaper" A has cost Rs. 874 per tonne more than B. On a 10-tonne order, the site paid Rs. 8,740 to feel like a good negotiator.

The sticker price is one input. The decision number is landed cost: what one unit of material costs sitting inside your site gate, taxes and transport and handling included.

Landed cost = basic + GST + freight + loading/unloading, on identical terms

Before any arithmetic, force the quotations onto identical footing. A comparative statement is only valid when every column answers the same five questions:

1. Same specification? Fe 500 vs Fe 500D, PPC vs OPC 53, ISI-marked or not. A cheaper quote for a lower grade is not a quote — it is a substitution.
2. Same delivery point? "FOR site" (freight included to your site) vs "ex-godown" (you collect). This single term is the most common trap.
3. Who pays loading and unloading? Often assumed, rarely written.
4. Same payment terms? A rate against advance payment and a rate against 30-day credit are different products; credit is priced in.
5. GST shown separately and at the correct rate? Following the GST rationalization effective 22 September 2025: cement 18 percent (down from 28), steel 18, tiles 18, paint 18, sand and aggregate 5. Brick rates depend on the supplier's scheme (commonly 12 percent with input tax credit). These are commonly applied rates — confirm current notifications with your CA, and see our GST on construction materials guide.

Worked example: 10 tonnes of Fe 500D, two quotations

The indent: 10 t of Fe 500D TMT bars, dia-wise breakup attached, required FOR site. (Rates are indicative mid-2026 market range — always use your city's current quotations.)

• Supplier A quotes Rs. 53,900 per tonne ex-godown. Transport is yours to arrange: Rs. 1,500 per tonne for the local trip, plus Rs. 200 per tonne loading at his yard. Unloading at site (crane-less, by labour) costs Rs. 250 per tonne either way.
• Supplier B quotes Rs. 54,600 per tonne FOR site — freight and loading included. Unloading at site is the same Rs. 250 either way (a gang from the naka at your city's daily wage; the per-tonne figure here is indicative — plug in your own).

Both quote 18 percent GST on the basic rate, same brand, same payment terms (15 days). Now the comparative statement, per tonne:

Supplier B wins by Rs. 874 per tonne — Rs. 8,740 on the order — despite a sticker price Rs. 700 per tonne higher. The Rs. 1,700 of freight and loading hiding behind A's low basic rate more than erases his advantage. This exact pattern — low basic, ex-godown, "transport aap dekh lena" — is the most common quotation trap on residential sites.

Two refinements worth knowing:

• Input tax credit (ITC). An individual building his own house cannot claim GST back, so the GST-inclusive landed cost above is the true comparison. A GST-registered contractor who can claim ITC should compare ex-GST landed cost: A = 53,900 + 1,500 + 200 + 250 = Rs. 55,850; B = 54,600 + 250 = Rs. 54,850. B still wins, by Rs. 1,000 per tonne. (Whether ITC is actually claimable depends on your registration and contract structure — commonly applied practice; confirm with your CA.)
• Payment terms have a price. A 2 percent discount for advance payment against a 30-day credit rate is roughly a 24 percent annualized return — usually worth taking if cash flow allows. Put a terms row in every comparative statement.

The unit traps that break comparisons

Quotations fail silently when units differ. The classics:

• Sand and aggregate: brass vs cubic metre. 1 brass = 100 cubic feet = 2.83 m3. A quote of Rs. 4,800 per brass is Rs. 1,696 per m3 — comparing it against a per-m3 quote without converting inflates it by nearly 3x. (Also confirm whether the "brass" is struck level in the truck bed or heaped — short-volume trucks are their own leakage, worth a headline check at the weighbridge or by measuring the bed.) Two regional riders: "brass" itself is western-India trade usage — elsewhere quotes come per cft, per m3, or per truckload, so fix the unit in writing; and ask whether state royalty on sand and aggregate (and the royalty pass or transit challan that proves legal sourcing) is included — royalty is levied per tonne or per brass at rates that vary by state, and a quote silently excluding it grows at the gate. In river-sand-restricted regions, get M-sand and river sand quoted as separate lines; they are different materials at different prices, not substitutes at one rate.
• Bricks: per 1,000 vs per piece, and delivered vs kiln-gate. Breakage allocation (who owns transit breakage?) belongs in the PO.
• Steel: per tonne vs per kg, and whether the rate includes GST already ("all-inclusive") — an all-inclusive Rs. 64 per kg and a plus-GST Rs. 55 per kg are Rs. 64,000 vs Rs. 64,900 per tonne landed; write both to the same base before comparing.
• Tiles: per box vs per square metre. Box coverage varies with tile size (a 600x600 box of 4 tiles covers 1.44 m2). Convert to per-m2, and remember laid cost includes wastage from cutting — Lesson 5 puts numbers on that.

Common mistakes

• Comparing different specs. The cheapest quote is often quietly for Fe 500 against your Fe 500D enquiry. The comparative statement must carry a spec-confirmed column.
• Ignoring delivery point. Ex-godown vs FOR site — the worked example above is the whole argument.
• Letting the lowest quote skip scrutiny. The lowest bidder deserves the most scrutiny: is the grade right, is the brand genuine, can he actually deliver on your date? A default rate is expensive when the truck does not come.
• Comparing one order in isolation. Your rate register (previous lesson) tells you whether all three quotes are high this month.
• No written record. The comparative statement, signed and filed, is what protects the engineer when the owner asks six months later why Supplier B got the order. In the RERA era, every serious construction dispute — owner versus contractor, buyer versus developer — is decided on the file, and a signed CS is the document that proves the purchase was diligence, not favouritism. It also protects your money going forward: the CS's terms column is what the PO copies, and the PO is what turns a supplier's "diesel badh gaya, rate change" mid-supply into a written breach you can charge back instead of a shrug you absorb.

Where this goes next

The comparison picks the supplier; the purchase order locks the terms you compared on. The next lesson is about writing POs that hold up — and the GRN discipline that makes sure what you compared is what actually arrives.