A request for quotation (RFQ) is just one of many helpful RFx documents. It’s a key part of any well-rounded procurement toolkit. Indeed, the RFQ is an excellent tool for efficient and cost-effective sourcing — when used properly. In the right situation, RFQs are advantageous. They offer quicker results than their more common counterpart, the RFP.

Admittedly, RFx documents and procurement terminology can be confusing. Consequently, this post will explore the request for quotation in depth. To begin, we’ll define what exactly an RFQ is and when to use it. Next, we’ll walk through how to write an RFQ as well as the elements to include. Finally, we’ll conclude by sharing a helpful RFQ template and a few examples.

RFQ basics: Definition and uses

What is an RFQ?

A request for quotation or quote (RFQ) is a document that details a buyer’s requirements and asks vendors to respond with pricing and payment terms.

Request for Quote

 

The request for quotation standardizes vendor pricing. In addition, it much easier for a buyer to compare their options objectively.

An article in Modern Machine Shop discusses the importance of creating thorough and thoughtful RFQs, saying:

“A well-crafted RFQ is essential to the sourcing process and must provide crucial details to contract manufacturers who will determine if they can perform the job. Detailed RFQs allow suppliers to prepare accurate quotes that minimize the potential for cost overruns, delivery delays and products that don’t meet your requirements.”

*Note: RFQ may also stand for request for qualifications. Check out this blog to explore the other RFQ.

RFQ vs RFP: What’s the difference?

The difference between an RFQ and an RFP is what each document hopes to accomplish. When using an RFQ, you’re likely looking for the lowest price. On the other hand, a request for proposal (RFP) asks complex questions to select the best vendor based on a number of factors. 

Accordingly, questions in an RFQ focus almost exclusively on cost. Common questions in a request for quotation include cost per unit, bulk discounts, pricing packages and service terms. In addition, they often have pricing tables to help facilitate easy comparisons between vendors.

By contrast, RFP questions often explore more nuanced considerations like experience, customer service, competitive differentiators and so on. While RFPs often address price, typically, it is one small consideration among many various evaluation criteria.

To explore the RFP process in detail, checkout the ebook: The RFP process guide.

When should you use an RFQ?

While extremely helpful, an RFQ isn’t a good fit for every procurement situation. Because the primary consideration in an RFQ is cost, it is most often used for indirect purchasing. For example, you may use an RFQ to purchase specific products, such as hardware, office supplies or materials. In addition, you may also use them for indirect procurement. However, when used to source complex goods and services, it’s important to know all the details of what you want.

Think of an RFQ as a no-frills pre-order form ⁠— it clearly defines what product or service specifications needed. From style to size to design, use your request for quote to account for every available variable. 

The RFQ also outlines how each vendor should provide their pricing information. Indeed, RFQs require a detailed view of the vendor’s bid including itemized costs for each product or service. The level of detail allows you to make accurate vendor comparisons.

Should you use an RFQ?

Is an RFQ for you?

  • Do you have a list of prequalified vendors that can supply the specific product or service you need?
  • Is price the most important factor?
  • Are you buying something that is ready out-of-the-box and needs no specialization?
  • Do you know exactly what you want to buy and how many of each item?
  • Will you be able to manage the item yourself without support from the vendor?

If you answered yes to all of these questions, then an RFQ is a good choice for you.

4 Types of RFQs

A request for quotation may be presented in a few different ways. Each type of RFQ has pros and cons.

Open bid

An open bid is when responses are visible to all qualified vendors. The buyer opens bids during the submission period allowing vendors to see one another’s pricing. Suppliers can alter and update submitted bids until the bid deadline.

Pro: Pricing visibility may encourage more competitive pricing, driving costs down
Con: Open pricing can backfire and lead to price-fixing among vendors

Sealed bid

A sealed bid is when an RFQ is open to all qualified bidders. However, the buyer only opens responses after accepting all submissions at the conclusion of the submission period. Sealed bids are common in public and government procurement projects.

Pro: May help reduce the risk of fraud and provide vendor selection transparency
Con: Vendors may not be as motivated to provide their very best pricing

Invited bid

An invited bid is when only specific vendors receive the RFQ. They work with both open and sealed bids.

Pro: Issuing the RFQ to previously used and trusted vendors can speed the selection and contracting process
Con: Competition is more limited and the buyer may miss out on cost savings offered by new vendors that are unknown to them

Reverse auction

A reverse auction asks vendors to supply their lowest offer and the cost decreases as the auction goes on. The reverse auction may use a secondary step if an RFQ is issued, but no vendor meets the price target.

Pro: It is a fast, competitive, internet-based process and the lowest offer automatically wins

Con: The contract is awarded automatically based on the lowest price, so other important factors may not be considered

An overview of the RFQ process

What to include in your RFQ

The request for quotation documents vary widely from one industry to the next and can be customized to fit your business’s needs.

Buyer information

  • Project name
  • Goals and background
  • Buyer point of contact information
  • Bidder instructions
  • RFQ timeline

Detailed specifications

  • Product or parts description
  • Technical requirements
  • Quantities
  • Delivery requirements
  • Pricing table/form

Selection criteria

  • Prequalification questionnaire
  • RFQ type (open or closed)
  • Scoring criteria
  • Selection process timeline

Terms and conditions

  • Legal and security requirements
  • Terms and conditions
  • Disclosures
  • Standard contract

Sample RFQs: Template and examples

RFQ template

Every request for quote is different. An RFQ that works well for supplies procurement, won’t be well suited to an IT support services quote. RFQ templates can be used as a guide, but customize them to fit your needs.

Download this RFQ and customize it to meet your needs.

RFQ examples

Government RFQ example

RFQs are often used in public procurement. The U.S. General Services Administration used an RFQ when they needed to establish government-wide janitorial services. As you might expect, the RFQ is very detailed and offers very specific information about scope, guidelines and requirements. The document also provides a clear process for evaluation so suppliers know what to expect.

GSA janitorial service request for quote example

Nonprofit RFQ example

RTI International is a nonprofit institute based in North Carolina. The organization provides global research and technical services to government and commercial clients. In 2017 they prepared a request for quotation when they needed to acquire new tablets and tablet covers. This document is a great example of the detail-oriented nature of the RFQ.

RTI International Tablet request for quotation example

Utility company RFQ example

BrightRidge, a public power company, created a request for quotation to purchase a very specific piece of equipment. The document details all the specifications for the transformers and offers helpful information and instructions to guide vendors. 

BrightRidge transformer request for quote sample

Additional RFx resources

Need more templates? Interested in learning more about the other types of RFx documents? Want to know what the difference is between an RFI, RFQ and RFP?

We’ve got you covered. Check out these helpful blog posts:

Remember that issuing RFx documents doesn’t have to be a manual process. RFP software empowers RFP automation and allows issuers to create RFx templates, collaborate with vendors, automatically score proposals and more. Technology is transforming the procurement process and empowering better vendor selection.

To learn more, check out this ebook: RFP software guide: How to find an RFP solution that identifies right-fit vendors.

Originally published November 2019 — Updated November 2021