A request for quotation (RFQ) is built to answer one question: What will this supplier charge per unit? For most of the last two decades, the RFQ cost was very close to the real cost of actually getting a part onto the production floor; so close that buyers could treat the RFQ price and the landed cost as the same number. Freight, duty, and fees were always a thin, predictable layer on top.
That assumption no longer holds. Under tariff volatility, the quoted unit price and the landed cost have decoupled, and they now move for different reasons on different schedules. A quote can be the lowest on the comparison sheet and still produce the most expensive part in the BOM.
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What Does a Quote Actually Tell You?
A well-formed quote gives you a unit price, a currency, a quantity break, a lead time, a validity window, and usually an Incoterm. Every one of those is useful, but none of them represents the landed cost.
Landed cost encompasses everything required to put the part in your receiving dock: the unit price plus freight, insurance, customs duty, any additional tariff layers, brokerage and entry fees, currency movement between quote and payment, and the carrying cost of whatever lead time the supplier quoted. Some of those are small and stable. The ones that matter now are neither.
The problem is structural. The supplier writing the quote controls the unit price. It does not control, and often does not know, what duty your shipment will face when it clears customs weeks or months later. So the quote leaves the most volatile part of the cost blank, and the comparison sheet treats that blank as zero.
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Why Has The Gap Widened?
Four mechanics can turn a modest difference in unit price into a large difference in landed cost.
Duty follows country of origin, not ship from. A part shipped from a Singapore warehouse can carry a Chinese origin, and it is the origin that customs assesses. Two quotes that both say “ships from Asia” can sit in entirely different tariff brackets.
One part number can have several origins. Many manufacturers assemble and test the same MPN at more than one site. Identical part numbers on two quotes are not a guarantee of identical duty exposure, because the lot that ships today may come from a different facility than the previous one.
Duty is assessed at entry, not at quote. A quote valid for 30 days on a part with a 16-week lead time is priced against one tariff environment and landed in another. In a stable policy climate, that timing gap was harmless. In the current state of trade uncertainty, rates and exclusions can change several times between purchase order and receipt.
Incoterms decide who absorbs the change. A price quoted Delivered Duty Paid from domestic stock has the duty baked in, and the supplier carries the risk of a rate change. A lower price quoted Ex Works or Free Carrier (FCA) from overseas leaves the duty, the brokerage, and the risk of a mid-shipment rate change with you. The lower number is lower partly because it is quoting less.
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How Does a Price Win Suddenly Become a Cost Loss?
Picture two quotes for the same capacitor. Quote A is the lower unit price, Ex Works, from an overseas broker, origin unstated. Quote B is higher, Delivered Duty Paid, from a franchised distributor’s domestic stock. On a price comparison, A wins every time.
Now land them. Quote A picks up international freight, a customs broker, entry fees, and whatever duty applies to an origin nobody confirmed. If that origin falls under an additional tariff layer, the duty alone can erase the price advantage. If the rate changes while the parts are in transit, the difference grows again, and it lands on your budget rather than the supplier’s. Quote B has already absorbed most of that exposure into its price.
Nothing about Quote A was misleading. It answered the question the RFQ asked. The loss happened because the evaluation stopped after the request.
This is also why purchase price variance reports can look healthy while total material cost climbs. Pre-purchase verification (PPV) measures the gap between standard cost and invoice price. Duty, brokerage, and freight often post to different accounts, so the savings show up in one report and the costs show up in another.
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What Changes When Buyers Compare Landed Cost?
The fix to this issue is not adopting a new tool, but rather asking more questions at RFQ time. Savvy buyers tend to do four things:
- They request country of origin per line item, and they ask whether it is fixed or depends on which lot ships. A supplier that cannot answer is telling you something about the risk you are buying.
- They normalize every quote to the same Incoterm before comparing. Putting an Ex Works quote beside a Delivered Duty Paid quote is comparing two different products.
- They match quote validity against lead time. When the part will clear customs well after the quote expires, the tariff risk belongs in the evaluation as a range, not a point.
- They treat price comparison as the first filter rather than the verdict. The spread across authorized distributors shows where the market sits. Landed cost decides which of those offers is actually cheapest to own.
None of these steps make the RFQ obsolete. It makes the RFQ the start of a cost decision instead of the end of one. The lowest unit price is still worth finding. It is just no longer the same thing as the lowest cost, and in a volatile tariff climate, the buyers who notice the difference first will be the ones whose savings survive contact with customs.
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