You send the same drawing, the same quantity and the same delivery date to four factories in Guangdong. Two quotes come back close to each other, one is noticeably lower, and one is high enough that you assume they misread the enquiry. Nobody made an error. Each factory priced a slightly different job, because the enquiry left them room to, and the spread you are looking at is mostly a map of what each one assumed.
Treating the spread as a negotiating position is the expensive mistake. The lowest number in the set is usually the supplier who assumed the least — the thinnest material inside tolerance, the cheapest surface finish that still passes visual inspection, no testing, and tooling charged later. Comparing quotes is not the same as comparing prices, and the work of making them comparable falls on the buyer.
The spec you sent is not the spec they priced
Most quotation spread is specification spread wearing a disguise. A drawing that shows dimensions but no tolerances lets each estimator choose one, and tolerance drives process choice, scrap rate and inspection time far more than raw material cost. The same applies to a material called out by family rather than by grade, a finish described by adjective, and a standard cited without its version year.
Four gaps do most of the damage:
- Tolerances left open. A general tolerance note lets one supplier price a routine process and another price a tighter one, for the same drawing.
- Material stated by family, not grade. Grade determines the mill certificate, the price step and the lead time on the raw material itself.
- Finish described in words. Colour, gloss, texture and coating thickness each carry cost. Without a reference sample or a numeric target, each estimator picks a defensible interpretation.
- Testing left unstated. Whether the price includes any testing, and against which standard, can change a unit cost materially — and it is invisible on the quotation until you ask.
Where the spec is open, the certification that follows is open too, which is why paperwork that looks correct can still describe goods you did not expect. Reading it properly is a separate discipline, covered in how to read a China certificate of conformity.
What actually sits inside a unit price
A unit price is an assembly of components, and factories build it in different orders. Knowing the parts tells you which question to ask when a number looks odd.
| Component | Why it varies between factories |
|---|---|
| Raw material | Grade, supplier, purchase timing, and whether the factory buys at scale or per order. |
| Yield and scrap allowance | A factory with a stable process carries a smaller allowance. The estimate reflects their history, not yours. |
| Labour and machine time | Automation level, shift pattern, and whether a step is done in-house or subcontracted. |
| Subcontracted operations | Plating, heat treatment, printing and specialist finishing are often outsourced and marked up. |
| Packaging | Export-grade cartons, inner protection and pallet configuration are a real line item, frequently assumed rather than specified. |
| Tooling | Charged separately, amortised into the unit price, or waived against a volume commitment. |
| Testing and certification | Inside the price, quoted separately, or excluded entirely. |
| Overhead and margin | Plant scale, utilisation, and how much the factory wants the order. |
Only the last row is negotiation in the ordinary sense. Everything above it is engineering and logistics, and pressing on price without touching the specification simply moves the supplier down one of the earlier rows — usually the yield allowance or the packaging. The costs that sit outside the quoted unit price follow the same pattern, and a broader view of what drives China manufacturing costs is worth having before the first RFQ goes out.
Tooling: the single largest source of apparent gaps
For any part that needs a mould, a die, a fixture or a print screen, tooling treatment explains more quotation spread than every other factor combined. Three approaches produce three very different-looking quotes for identical work.
- Tooling quoted separately. The unit price looks high because it is the true unit price. This is the most transparent form and the easiest to compare.
- Tooling amortised into the unit price. The unit price absorbs the tooling across an assumed quantity. It looks worse per piece and better in cash terms, and it silently ties you to that quantity.
- Tooling waived against volume. The tool is free provided a stated volume is reached, and the cost reappears if it is not. Ownership of the tool is often unresolved in this arrangement.
Ask three questions of every tooled quotation: what the tooling costs, what quantity any amortisation assumes, and who owns the tool at the end. The third one decides whether you can move production later. The mechanics are set out in more detail in the guide to tooling and mould costs in China manufacturing.
Quantity, trade terms and payment terms are all price
Three assumptions outside the product itself can move a quotation as much as the product spec does.
Quantity. Suppliers quote at the break quantity that suits their line. Ask for a price ladder — three quantities, same specification — rather than a single figure, and the shape of each supplier's cost curve becomes visible. That ladder is also the honest way into a conversation about minimum order quantities and quoted lead times, because a low MOQ carried at a high unit price is a different offer from a high MOQ at a low one.
Trade terms. An EXW price and a FOB price for the same goods are not comparable, and a DDP price contains freight, duty and clearance that nobody has itemised for you. Insist on one Incoterm and one named port across every quotation you intend to compare; the differences are laid out in Incoterms explained for China sourcing, and the arithmetic of getting from a factory gate price to a delivered cost is covered in landed cost calculation.
Payment terms. Terms carry a financing cost that is real even when it is unstated. A supplier asked to fund materials for sixty days prices that, and a supplier receiving a deposit up front does not need to. When you compare a quotation on deposit-and-balance terms against one on a letter of credit, you are comparing two different products; the structures are compared in the guide to T/T and L/C payment terms.
Who is quoting, and what that adds
Part of the spread is simply the number of parties between you and the machine. A factory quoting its own capacity, a trading company sourcing from several factories, and an agent working on commission each carry a different cost structure, and each takes on a different amount of responsibility for quality and for rework.
This is not a reason to route around intermediaries by default. A trading company that consolidates several factories, holds the quality risk and handles export documentation is performing work you would otherwise pay someone else to do. It is a reason to know which one you are talking to, so that you can read the margin correctly — the practical tests are in telling a factory from a trading company and in the comparison of platform sourcing against going direct.
Making the next set of quotes comparable
The fix is upstream. A normalised RFQ costs an hour to write and removes most of the spread you would otherwise spend a week interrogating. Include, on one page:
- A drawing or bill of materials with tolerances stated, and material called out by grade.
- The finish specified numerically or against a physical reference sample.
- The applicable standard with its revision year, and whether testing is in scope.
- Packaging: inner, outer, carton specification and pallet configuration. Where packaging is a cost driver in its own right, suppliers such as Jindong Packaging in Shenzhen quote it as a discrete item rather than an assumption.
- One Incoterm and one named port for every recipient.
- Three quantity breaks rather than a single quantity.
- Tooling shown as a separate line, with the amortisation quantity and tool ownership stated.
- Requested payment terms, so that every quotation is financed the same way.
- Quotation validity, and the sample lead time.
Quotes returned against that document are close enough to compare directly, and the remaining differences are informative rather than noise. If one supplier is still materially below the rest, the gap now points at something specific — a subcontracted step, a different material source, a utilisation problem — and you can ask about it. When you place the order, the same specification becomes the basis for inspection: what a pre-shipment inspection can check is exactly what the RFQ made explicit, and the accompanying document set requested before a first order should reference the same revision of the same drawing. Broader context on packaging as a cost and protection decision sits in the packaging manufacturer guide.
Common questions
Why do two China factories quote different prices for the same drawing?
Because a drawing rarely constrains everything that drives cost, so each factory fills the gaps with its own assumptions about tolerance, material grade, surface finish, packaging, testing and the quantity being priced. Differences in yield allowance, in which operations are subcontracted, and in how tooling is treated then compound those assumptions into a visible price gap.
The gap narrows sharply once the enquiry closes those gaps in writing.
What does the lowest quote usually mean?
In a spread of quotations against an open specification, the lowest figure most often belongs to the supplier who assumed the least demanding version of the job — the loosest tolerance the drawing permits, the cheapest compliant finish, no testing, and tooling to be invoiced separately later. It can also reflect a genuinely lower cost base, such as a factory with spare capacity or in-house plating.
Asking what the number includes distinguishes the two cases faster than asking the others to reduce theirs.
Is tooling cost included in a China factory quote?
Tooling is sometimes included in a China factory quotation and sometimes not, and the quotation itself may not say which, because factories treat it in one of three ways: quoted as a separate one-off charge, amortised into the unit price across an assumed quantity, or waived on condition that a stated volume is reached. Each produces a different-looking unit price for identical work, so a quotation without an explicit tooling line cannot be compared with one that has it.
Ask for the tooling cost, the amortisation quantity and the tool ownership position in the same message.
How do I make quotes from different factories comparable?
Send one document that fixes the variables: tolerances, material grade, finish specified numerically or against a reference sample, standard and revision year, packaging and pallet configuration, a single Incoterm and named port, three quantity breaks, tooling as a separate line with its amortisation quantity, and the payment terms you intend to use. Then require quotations in that structure.
Remaining differences are then real differences in cost base, which is the information you wanted in the first place.
Does a trading company cost more than a factory?
A trading company adds a margin layer, so its quotation for the same goods is often higher than the producing factory's, but the comparison is incomplete unless you account for what that margin buys — consolidation across several factories, export documentation, quality responsibility and a single point of contact that you would otherwise resource yourself. Some trading companies also buy at volumes an individual order could not reach.
The practical step is to establish which one you are dealing with before reading the price, not after.