Speed versus accuracy: The dilemma in quotation costing

In many industrial companies, quotation costing has long since become a critical competitive factor. Customers expect rapid response times, particularly in the context of tenders and RFQs, whilst at the same time price pressure is constantly increasing. Those who take too long to submit a quote risk not even making it onto the shortlist. Those who calculate too imprecisely, on the other hand, jeopardise their own margins. Companies thus find themselves caught between two conflicting priorities that are almost impossible to reconcile: speed on the one hand, accuracy on the other.

This dilemma is not a theoretical problem, but a daily reality in sales, controlling and cost engineering. Whilst the sales team needs to provide reliable prices as quickly as possible, the demands on the quality of the costing are increasing in parallel. This is because even small deviations can have significant financial implications, depending on the project volume. At the same time, the conditions in the early stages of tendering are often far from ideal: incomplete specifications, uncertain volume assumptions, a lack of detailed information or risky supply chains make precise evaluation considerably more difficult.

The key question is therefore not whether speed or accuracy is more important. Rather, it is about understanding how both requirements can be reconciled, and what the consequences are if one of them is systematically neglected. This is precisely where this article comes in: it examines the causes of this conflict of objectives and shows how companies can structure their quotation calculations so that they are both fast and robust.

In many industries today, it is no longer just price that determines whether a contract is awarded, but also response speed. What is known as ‘time-to-quote’ has become a key competitive factor. Companies that are able to submit a quote quickly position themselves early on in the customer’s decision-making process – often with a decisive advantage over slower competitors. Particularly in the case of standardised tenders or short-notice enquiries, customers expect reliable responses within the shortest possible time.

Furthermore, in the early stages of supplier selection, often only those providers who can deliver a quote promptly are considered. Those who react too late here may, in the worst case, not even be evaluated in the first place – regardless of how competitive the quote would have been in terms of content. Speed therefore directly influences the likelihood of securing the business in the first place.

From a sales perspective, too, a fast quotation process is essential. Short turnaround times make it possible to process more enquiries and thus utilise the pipeline more efficiently. At the same time, it increases flexibility in dealing with customer requirements, for example when adjustments or variants are requested at short notice. Companies that can react agilely in this regard not only appear more professional but also strengthen their position as a reliable partner.

However, speed is not just a question of efficiency, but also of perception. Long waiting times can raise doubts in the customer’s mind, for example regarding internal organisation or the ability to implement projects just as swiftly later on. In an increasingly dynamic market environment, speed is therefore often interpreted as an indicator of performance.

The challenge lies in achieving high speed without compromising the quality and robustness of the quotation. It is precisely at this point that the tension arises which preoccupies many companies on a daily basis.

As crucial as speed is in the quotation process, there is little room for error when it comes to the accuracy of the calculation. After all, the calculated price directly determines the profitability of an order and, consequently, the financial success of a project. Even small discrepancies can have a significant impact on the margin, particularly in the case of large order volumes or long-term contracts.

An underestimated calculation leads directly to margin losses, which are often difficult or impossible to correct retrospectively. Rising material costs, underestimated production costs or unaccounted-for overheads can result in a seemingly attractive order turning into a loss-making venture. On the other hand, an overly conservative calculation also carries risks: if the price is set too high, the chances of winning the contract decrease. Even if your own company offers the better solution in terms of technology and quality.

Furthermore, the accuracy of the calculation also has a strategic dimension. Repeatedly imprecise quotations can permanently damage customer trust. If prices have to be renegotiated during the course of the project or prove to be unsustainable, this has a negative impact on the business relationship. At the same time, an inaccurate calculation complicates internal management: discrepancies between preliminary and final calculations only provide valuable insights if the original data set was reliable.

Last but not least, quotation costing forms the basis for numerous subsequent decisions, ranging from make-or-buy questions and capacity planning to investments. Errors at this stage therefore have an impact along the entire value chain. Accuracy is therefore not a ‘quality feature’ that can be improved as and when required, but a fundamental prerequisite for sound business decisions.

The challenge lies in ensuring this necessary precision even under time pressure, particularly in the early stages of a project when many parameters are still uncertain. It is precisely here that we see just how demanding the balance between speed and accuracy actually is in practice.

In practice, the tension between speed and accuracy rarely arises by chance. Rather, it is the result of structural challenges faced by many industrial companies. One of the main causes is the often incomplete or unreliable data available in the early stages of the quotation process. Customer enquiries do not always contain all relevant information, specifications are still subject to change, and key parameters such as quantities, materials or manufacturing processes must initially be assumed. Producing a reliable calculation under these conditions is inevitably fraught with uncertainty.

Added to this is the increasing complexity of products and variants. Individual customer requirements, different designs and a multitude of possible manufacturing scenarios mean that quotations are becoming less and less standardised. Instead of clearly defined structures, case-by-case assessments often dominate, which are correspondingly time-consuming. The more complex the product portfolio, the more difficult it becomes to arrive at a sound cost assessment quickly.

Another key factor is manual and fragmented costing processes. In many companies, quotation calculations are still based on Excel spreadsheets, individual calculation schemes and isolated data sources. Data disconnects between different systems, as well as a lack of automation, mean that data has to be entered, transferred and checked multiple times. This not only costs time but also increases the likelihood of errors.

This problem is exacerbated by a lack of standardisation within the organisation. Different departments or even individual employees use their own methods, assumptions and calculation logic. This leads to inconsistencies that not only make it difficult to compare quotations but also affect the quality of the results. At the same time, reliance on individual experience increases, which further limits the scalability of the processes.

Taken together, these factors mean that companies either prioritise speed at the expense of accuracy, or vice versa. The real dilemma is therefore less a conscious decision and more the consequence of established structures and limited possibilities for meeting both requirements simultaneously.

To address the tension between speed and accuracy, various approaches have become established in practice. Whilst these often yield useful results in the short term, they quickly reach their limits as complexity increases.

A common approach is the deliberate simplification of the calculation. Instead of detailed calculations, averages, flat rates or empirical values are used to arrive at a quoted price more quickly. Whilst this reduces the time required, it inevitably comes at the expense of accuracy. Particularly in the case of new products or changing conditions, such assumptions can quickly lead to miscalculations.

Closely linked to this is the heavy reliance on experience-based estimates. Experienced staff are often able to quickly formulate reliable prices based on their knowledge and intuition. However, this approach only works as long as the relevant expertise is available, and even then, traceability remains limited. Decisions are difficult to replicate, and valuable knowledge is lost when staff changes occur. Furthermore, this approach is difficult to scale when the number of enquiries rises or complexity increases.

Another traditional approach is to consciously accept inaccuracies and correct them subsequently through post-calculation or adjustments. Quotations are initially drawn up with limited data depth and reviewed in greater detail later, for example after the order has been received. However, this approach merely postpones the problem to a later stage. Errors often only become apparent once they have already had a financial impact, and are then difficult to correct.

What all these approaches have in common is that they do not truly resolve the conflict of objectives, but merely weigh them differently. Either speed is prioritised and accuracy reduced, or vice versa. However, with increasing dynamism, a growing variety of options and mounting competitive pressure, these traditional methods are becoming increasingly inadequate for meeting the demands of modern quotation processes.

To resolve the tension between speed and accuracy in the long term, it is not enough to optimise existing approaches on an ad hoc basis. Rather, a systematic rethink is needed in the way quotation calculations are structured and carried out. The aim is to create structures that enable rapid results without compromising reliability.

A key lever lies in the modularisation of the costing process. Instead of calculating each enquiry from scratch, reusable building blocks are defined that represent typical components, processes or cost structures. These modules can be flexibly combined and adapted, significantly reducing the effort involved in calculation. At the same time, the depth of content is maintained, as the individual building blocks are already based on validated assumptions.

Building on this, parameterisation gains in importance. Instead of calculating each variable individually, relationships are mapped via defined influencing factors, such as material, dimensions, batch sizes or manufacturing processes. Changes to these parameters have an immediate effect on the overall result, meaning that even complex variants can be evaluated quickly and consistently.

Another key component is scenario-based costing. Particularly in the early stages of tendering, where uncertainties are inevitable, it helps to systematically run through different assumptions. With the help of automated sensitivity analyses, risks and potential cost savings can also be identified very quickly. Best-case, worst-case or realistic scenarios provide transparency regarding possible ranges and support well-founded decisions, both internally and in discussions with the customer. Rather than relying on a supposedly ‘exact’ figure, a robust understanding of cost dynamics is established.

These approaches are complemented by consistent standardisation of processes and methods. Uniform costing logic, defined data structures and clear procedures ensure that results remain comparable and traceable, regardless of who performs the calculation. At the same time, reliance on individual experience is reduced.

As convincing as the described solutions are in theory, their consistent implementation in practice is equally challenging. For with growing product complexity, an increasing variety of variants and high time pressure, it is becoming increasingly difficult to apply these principles consistently by hand or with unsuitable tools. It is precisely at this point that it becomes clear that it is not only the methodology that is crucial, but also the ability to implement it efficiently. Professional costing software provides the necessary foundation for this. It enables the structured management and use of costing modules, consistently and automatically maps complex parametric relationships, and allows for the rapid evaluation of different scenarios. At the same time, it ensures a uniform data basis and reduces data silos by integrating relevant information from adjacent systems.

This transforms a theoretically sound approach into a practically applicable model. Speed and accuracy no longer need to be viewed as opposites, but can be specifically combined through the combination of clear methodology and suitable system support.

Companies that consistently combine speed and accuracy in quotation costing create a measurable competitive advantage not only in sales, but throughout the entire value chain.

The key factor here is how consistently the necessary structures and tools are implemented. Those who continue to rely on established, manual processes will inevitably reach their limits as complexity increases. Those who, on the other hand, begin to approach costing systematically and support it with technology lay the foundations for fast, robust and scalable quotation processes.