A request for quote (RFQ) is a formal invitation businesses send to suppliers, asking them to submit pricing details for specific products or services. Companies use RFQs to compare offers and select vendors during procurement.
An RFQ outlines a company's requirements, including product specifications, quantities, delivery timelines, and payment terms. Suppliers respond with their pricing, often including additional details like discounts for bulk orders or expedited shipping options.
After receiving responses, the buying company evaluates bids based on price, quality, reliability, and other factors. The process concludes with a purchase order sent to the selected vendor.
| Type | Description | Use Case |
|---|---|---|
| Open RFQ | Publicly advertised to any qualified vendor | Government contracts, large-scale projects |
| Selective RFQ | Sent to a pre-approved list of suppliers | Established business relationships, specialized goods |
| Closed RFQ | Restricted to invited vendors only | High-security or proprietary projects |
RFQs ensure transparency and competition, helping companies secure the best prices and terms. They're common in industries like manufacturing, construction, and IT, where costs can impact profitability.
For example, a tech startup needing 500 custom-built servers might send an RFQ to multiple manufacturers. Suppliers respond with quotes, allowing the startup to compare prices, warranties, and lead times before making a decision.
Another mistake is overlooking non-price factors. A supplier with a slightly higher quote might offer better customer support or faster delivery, making them the better choice despite the cost difference.
When my company needed to upgrade our CRM system, we sent an RFQ to five vendors. Quotes varied widely-some included training and migration support, while others offered lower prices but fewer features. We chose a mid-priced option that balanced cost with long-term value, saving us from hidden expenses later.
RFQs simplify procurement by standardizing vendor comparisons. They're essential for cost control, supplier accountability, and informed decision-making. Whether for large projects or routine supplies, RFQs help businesses secure the best deals while maintaining flexibility.