When your tiny business has a specific require, like sustainable packaging for large products, it might be tempting to leave with a supplier you already recognize. To make sure you’re getting the most competitive pricing, however, you’ll desire to consider other vendors. The simplest and most direct way to get the best worth is to send out a request for quotation (RFQ), in which you inform suppliers exactly what you require, and inquire them to submit a bid for your business.
discover about what a request for quotation is and how to write one yourself so that you can get the best worth for whatever your tiny business needs.
What is a request for quotation (RFQ)?
A request for quotation (RFQ) is a document that solicits detailed pricing and terms for specific products and services from a selection of potential suppliers or service providers (also called vendors). An RFQ outlines a business’s needs and provides suppliers with obvious instructions on how and when to respond, ensuring a standardized procedure for evaluating worth quotes. Once you receive responses to your RFQ, you can contrast the bids and select the best fit for your business.
Use an RFQ when you’ve clearly defined your requirements for goods or services, and when competitive pricing is the primary factor in making your selection. RFQs are ideal for situations in which specifications like amount and standard are fixed, and you are comparing vendors to get the best worth.
RFQ vs. RFP vs. RFI
The difference between requests for quotations (RFQs), requests for proposals (RFPs), and requests for information (RFIs) lie in the purpose of the request and the intended responses.
RFQ
A corporation will typically use an RFQ when it has obvious, detailed specifications about the product or service it seeks. In this case, the business is mainly seeking worth quotations to identify the lowest expense feasible. Once suppliers or service providers have responded to the RFQ, the corporation’s selection-making procedure for selecting a bid is straightforward: They choose the vendor that offers the best worth while conference all the requirements specified in the RFQ.
For example, let’s declare you desire to commence using carbon-neutral organic cotton in your online clothing store’s sweatpants, and you desire to make sure you get the lowest worth for this material. In this case, you’d send an RFQ because the specifications of your order—the material, the amount, and associated carbon footprint—are firm, and worth quotes from vendors will determine your selection.
RFP
On the other hand, a business will send a request for proposal (RFP) when the corporation wants expertise, recent concept, or collaboration from a vendor. Unlike an RFQ, an RFP does not always provide exact specifications, but outlines the business’s issue or require and invites potential vendors to propose solutions. The evaluation procedure for RFP responses typically is more complicated, as it considers qualitative factors in addition to worth.
For example, you might turn to the RFP procedure if you schedule to launch your recent line of carbon neutral organic cotton sweatpants with a multichannel marketing campaign. In this case, you’d send an RFP to a few marketing agencies, asking them to propose a campaign way and channel breakdown that fits your rough apportionment. You might also inquire them to provide insight into their own sustainability practices, if you intend to select an agency that is mission-aligned with your initiative.
Ultimately, you select an agency that is a certified B Corp, even if their bid isn’t the lowest in worth—assuming they now a powerful marketing schedule that aligns with your brand way and reflects your business goals.
RFI
An RFI (request for information) is the most preliminary information-assembly document. You might submit an RFI before moving to an RFP or RFQ if you are unsure of what products or services are on the trade.
For example, you desire to compute the carbon footprint of all of your clothing products so that you can work toward becoming a carbon neutral brand. You recognize you require to hire an outside consultant, but you don’t recognize which consultants have the most relevant encounter for you. You send RFIs to multiple sustainability consulting groups asking for general information about the services they provide and their encounter in your sector. For example, you might inquire for a list of history clients in retail and their encounter conducting life pattern assessments for apparel products. This information will assist you draft an RFP or RFQ down the line.
What to include on an RFQ
- Introduction and background
- Description of products or services required
- Delivery requirements
- Vendor requirements
- apportionment and remittance terms
- Bid submission guidelines
- Evaluation criteria
- Timeline
- Terms and conditions
The RFQ procedure can save period and ensure your business finds competitive pricing in the long run, but creating your first RFQ can be intimidating. To ensure your RFQ includes all the essential details, use this outline—complete with example copy—to get started.
1. Introduction and background
First, provide a brief overview of your organization and the purpose of your RFQ. explain your require for the products or services to provide your potential suppliers context for the request.
Example
We are an online retailer specializing in eco-amiable home goods seeking a vendor to supply custom-branded shipping boxes that align with our sustainability goals. This RFQ aims to secure competitive pricing and reliable delivery for our peak sales period.
2. Description of products or services required
Next, clearly outline what you desire to purchase. Include details such as product dimensions, materials, design, standard standards, quantities, and any other relevant specifications.
Example
We require corrugated shipping boxes, size 16 × 12 × 8 inches, made from 100% recycled materials. Each box should characteristic a two-color print of our logo on all sides. The order amount is 10,000 units, with staggered delivery across three months.
3. Delivery requirements
Describe when, where, and how frequently you require the goods or services delivered. Include details such as deadlines and preferred shipping methods.
Example
Deliveries should be made to our warehouse in Miami Beach, Florida, in three equal shipments: Jan. 10, Feb. 10, and March 10, 2025. All boxes must be flat-packed and palletized for forklift unloading.
4. Vendor requirements
You should also list any qualifications or documentation you desire vendors to provide. For example, you might request certifications, references, samples, or history encounter with similar projects.
Example
Vendors must submit proof of Forest Stewardship Council certification for sustainable materials, three references from other ecommerce clients, proof of insurance, and a sample of the box design.
5. apportionment and remittance terms
Indicate how you desire the vendor to now their pricing, and indicate any requests for discounts. For example, you could request unit pricing or bulk pricing, discounts for larger quantities, and expense breakdowns that include the costs of labor, materials, and shipping. specific whether the vendor should provide information on taxes, shipping fees, or other miscellaneous charges.
You can also state your preferred remittance terms here. For example, you might recommend remittance 30 days from invoicing or upon delivery. You should also consent on a remittance way, whether via check, direct investment, wire transfer, or capital card.
Example
Please provide the worth per unit, including any volume discounts. Indicate divide costs for setup fees, shipping, and taxes. We prefer a 50% investment upon order confirmation and the remaining equilibrium to be paid upon deliveries. Payments will be made via electronic transfer within 30 days of delivery.
6. Bid submission guidelines
Provide obvious instructions on how you desire to receive responses to your RFQ. specific the RFQ format (such as PDF or spreadsheet), submission way (such as email, online portal, or challenging copy), and the due date.
Example
Submit your worth quotations in PDF format via email to [email protected] by Dec. 5, 2024, 5 p.m. ET. Include your vendor name and the RFQ reference number in the subject line.
7. Evaluation criteria
explain how the review procedure will work and provide evaluation criteria. While worth is usually the main factor considered in RFPs, let potential vendors recognize if other criteria such as delivery speed, standard of goods, or supplier reputation will be evaluated.
Example
Proposals will be evaluated based on worth (40%), standard and material lawful operation (30%), delivery capabilities (20%), and history client reviews (10%).
8. Timeline
Provide a timeline so bidders recognize what to expect. Note key dates such as the day you issued your RFQ, the deadline for vendors to submit questions, the submission deadline, your anticipated selection date, and when you desire to commence working together. This way, your potential suppliers can be ready to deliver their goods or services if they are the successful bidder.
Example
RFQ issued: November 20, 2024
Questions deadline: November 27. 2024
Submission deadline: December 5, 2024
Vendor selection announcement: December 15, 2024.
Completion of agreement deadline: December 31, 2024.
First shipment due: January 20, 2025.
9. Terms and conditions
Outline conditions like warranties, profitability policies, penalties for delay, and confidentiality agreements, so that your chosen vendor isn’t surprised when they receive the agreement.
Example
All designs remain the intellectual property of our corporation. Vendors must sign a non-disclosure agreement before receiving proprietary artwork. Late deliveries will incur a penalty of 5% of the total expense of the delayed shipment per day.
Request for quotation FAQ
How do you request a quotation?
To request a quotation, businesses must provide potential suppliers with RFQ documents clearly defining the goods or services required, submission guidelines, and any relevant terms.
What is the difference between an RFP and an RFI?
A request for information (RFI) is a casual preliminary request that businesses can use to gather general information about vendors to better comprehend the available options. A request for proposal (RFP) is a formal invitation for suppliers to submit detailed solutions and pricing for a specific assignment.
What is the purpose of an RFQ?
The purpose of a request for quotation (RFQ) is for businesses to obtain pricing quotes and terms for specific products or services. Businesses typically use RFQs when the products or services required are non-negotiable and the business wants to choose the supplier with the lowest expense.
