RFI vs RFQ vs RFP: Which should it be?
To select the perfect vendor, you need answers to your critical questions, but how do you ensure you ask the right questions? It often comes down to whether you should issue a request for information (RFI), request for quotation (RFQ), or request for proposal (RFP).
According to Kevin Iwamoto, senior consultant at Goldspring Consulting, “All three have been used globally for decades to obtain relevant information from potential suppliers and are meant to create and establish a fair and equal weighted process where all vendors, incumbent and potential, have a chance to become a ‘preferred’ supplier for a corporation. They have been instrumental in enterprise risk mitigation, process standardization, cost savings and cost avoidance.”
What’s your end goal?
RFPs, RFIs, and RFQs have very distinct purposes. So your first step is to clearly establish what you’re trying to achieve.
- Do you know what questions to ask a vendor?
- Are your questions very specific or more general?
- Do you already have a preferred vendor list (a shortlist)?
- Do you need to bid out the work through a formal process?
- Are you working with repeat or first-time vendors?
- Do you know exactly what you’re looking for, or would you like vendors to make suggestions?
You should also have an internal discussion to get answers to these questions. Find additional RFP questions to ask your team in order to avoid setbacks down the road.
Request for Information
- When you’re looking for information.
- Ask general questions.
- It’s casual. Like grabbing a drink.
- When you’re not sure
what you’re looking for.
- Advantage: they’re fast.
Request for Quotation
- When you know exactly what you want.
- Ask questions about requirements.
- It’s structured. Like a five-course meal.
- When you know exactly what
you want and why.
- Advantage: lets you focus on price.
Request for Proposal
- When you’re ready to shop.
- Ask specific questions
- It’s formal. Like a dinner party.
- When you know what you want,
but need details.
- Advantage: comparison of vendors.
What’s an RFI?
An RFI is the formal means of getting general information from vendors. According to TechTarget, “An RFI is typically the first and most broadly cast of a series of requests intended to narrow down a list of candidates.”
- An RFI is a casual first date in vendor management.
- Questions should be open ended and high level.
- Perfect if you’re early in your buying process or if you have vague project requirements.
- An RFI gives you a broad scope (landscape) of your vendors.
- Advantage: They’re fast. You could email your initial questions to a shortlist of providers, get responses within a week, and then use their responses to craft an effective RFP.
Writing an RFI
Start very high level.
- Let vendors confirm or challenge the research you’ve conducted.
- You aren’t promising them work at this point, but dangle the carrot to keep them interested.
- You are gathering information and testing the waters. Be brief.
- Seek their perspectives, not their capabilities (you’ll judge these later).
- See what questions they have. While it might seem counterintuitive, it can give valuable insight into how a company thinks and their level of expertise.
#PRO TIP: Start with an RFI and a wide net. Ask a number of vendors for some information. Surprisingly, not all suppliers post everything on their websites. A little directed interest can yield substantial benefits.
Example RFI questions
Start by giving Responders some goal context. Tell them who you are and what you’re hoping to achieve.
For example, you are ABC Company, and you’re looking to strengthen your relationship with customers through social media channels. You currently maintain a Facebook page, Twitter account, and LinkedIn presence.
Your challenge is to engage current customers and use their networks to refer your products/services to peers. Based on this scenario, here are some RFI questions you might ask:
- What social media channels do you consider to be important for ABC Company and why?
- What are your initial impressions of our social media presence?
- How do you measure ROI for social media activities?
- For efficient integration between our internal marketing and external service providers, what people, process, and technology factors do you think are important to consider? Are there limitations we need to know about?
- As we get ready to prepare an RFP, what questions do you have for us?
#PRO TIP: An RFI is especially helpful if you’re new to your space (in this example, social media). Your bidders’ responses will not only demonstrate their expertise, but also inform and educate you (with very little time invested by either party). Their answers can also help you nail down more concrete questions for the eventual RFP.
What’s an RFQ?
An RFQ is a request for pricing and payment information about a highly specific solution. According to Investopedia, “When the soliciting company knows the exact number or type of product or services it desires, it customarily uses an RFQ. Typically, companies use an RFQ when products and services are standardized, or off-the-shelf.”
- A list of requirements.
- Centered around a vendor’s capabilities, costs, and payment terms.
- Used when you already know exactly what you’re looking for.
- An RFQ lets you know if vendors can provide the solution you want and what it will cost.
- Advantage: It’s incredibly specific. Organizations issuing RFQs are typically committed to making a purchase and already know what type of features and functionality they want to see. This document allows them to evaluate all solutions that meet their needs based on price.
Writing an RFQ
RFQs don’t typically contain questions, like an RFI or RFP would. Instead it’s a list of requirements, presented as line items, that vendors provide prices for. You’ll want to include:
- Detailed list of products, features, and functionality required.
- Quantity or duration required.
- Date of expected delivery.
- Payment terms.
#PRO TIP: Only use this document if you are already well aware of the marketplace conditions and offerings. This allows you to compare similar solutions based on price, rather than learning about solution offerings you may not currently be aware of.
What’s an RFP?
An RFP is a highly formal and structured way of getting specific vendor information (including pricing). It allows you to specify the problem you wish to solve and invites vendors to suggest solutions. According to Hubspot, RFPs “give you a sneak peek into different strategies you may not have considered since each vendor will include their own unique action plan along with their bid.”
- RFP questions should be very specific.
- You should share internal information about your process and needs.
- You should have clear-cut needs and be ready to buy.
- You should be ready to move beyond exploration and into commitment.
- An RFP helps you compare vendors based on your priorities.
- Advantage: They’re very thorough and offer a side-by-side, fact-based comparison of vendors’ capabilities. Learn about RFP weighted scoring.
Writing an RFP
Be specific. Give parameters for the types of service or product you’re looking for.
- Ask for examples of their work. If you’re looking for specialized/customized service, ask to see an example of that kind of work done for other clients.
- Avoid sticker shock by requiring a comprehensive pricing plan.
- Be as in-depth as you need to be. At this point, you both have skin in the game, so make sure your priority questions are as thorough as they need to be.
- If you’re unsure of a seller’s expertise or competency for your needs, address it. Ask them for the examples, certifications, or references that will put you at ease.
#PRO TIP: Vague questions (at this point) don’t do anyone any favors. You have specific expectations, whether you realize it or not. So if you’re having problems writing exact requirement questions, collaborate with someone outside the situation who can help challenge assumptions.
Example RFP questions
Besides getting pricing and approach details, the RFP is a great place to get info on how you will work together. Ask how you can reduce risk, save time, and save money. Below are some examples.
- How will you approach the implementation of X? (List an example that’s specifically relevant to your business).
- What steps can we pursue to control costs and/or limit cost overruns? (You want to partner with someone who will work to get you the best deal).
- What risks to the timeline or budget do you see, based on your understanding of our organization? (A high-level question like this gives you a sense of how much thought or effort they’re putting into their response.)
- How are you monitoring and staying ahead of trends in our industry? (Works as a kind of litmus test.)
Get more tips on how to write an RFP and speed up your process.
WHICH DO YOU SEND?
Bottom line, RFI, RFQ, or RFP? If you’re shopping for very specific services and know exactly what you want, then an RFQ is your best best. If you’re close to a purchase but open to ideas, an RFP is probably the way to go. If you’re just trying to get an overview of your vendors or see if there’s a solution to your pain, then the simpler RFI might be the better choice.