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What is a Request For Quotation (RFQ)?

Q: When should I use an RFQ instead of other procurement methods?

Use this request when you can clearly define what you are looking for and you just want to compare prices and terms. It’s perfect for straightforward, repeatable purchases, like software licenses.

Q: Can this kind of request be used for software development projects?

Yes! You can use these procurement documents for closed-end software products like user licenses or standardized implementation services. As long as the product or service is 'off-the-shelf.'

Q: What should be included in an RFQ for software?

You should include the number of licenses needed, what features you require, any integration needs you have, and training or support you’ll need. You can also include delivery timelines and payment terms. Make your request clear and specific, so your vendor can provide accurate and competitive pricing.

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A request for quotation (RFQ), sometimes called an invitation for bid (IFB), is a competitive process that buyers use to solicit price quotes from suppliers to fulfill a specific need for a product or service. In this context, buyers are usually businesses asking a select group of suppliers to give them their best price for goods or services.

To receive accurate quotes, RFQs will typically be submitted as a formal bid document that includes information such as detailed specifications, timelines, and any essential terms to ensure that suppliers are all bidding on the same request. The more detailed this specification, the more accurate the suppliers’ quotes will be.

RFQs are particularly important for businesses that need a long-term consistent supply of products or the provision of a particular service.

Request for Quote RFQ Template — Source: Template.net

A Request for Quotation, or an RFQ, should typically include a list of the goods or services included, as well as specific details of what will be involved.

This document is helpful for organizations that know exactly what they need. That way, they can make side-by-side comparisons of the responses they get.

These comparisons will look at: price, terms, and delivery timelines, among other details.

An RFQ differs from an RFP (Request for Proposal) in that the RFQ is highly specific and narrow. A completed RFP should include solutions, vision, testimonials, and more broad information. An RFQ, in contrast, just gets to the nitty gritty. It’s transactional and detail-oriented.

The requesting business will include all the information the potential vendor needs to give a price quote. This includes the exact product or service, the quantity, specifications, and any quality requirements. The vendor can then respond with a detailed quote.

You’ll often see RFQs in manufacturing, construction, logistics, and IT. It is these industries that call for product specifications and where cost is a huge factor.

For example: a company may send an RFQ for software licenses for 150 users with admin-level features and integrations with Google Workspace and Slack. They may include in that RFQ how long the quote validity should last (e.g. 30 days) and how pricing should be itemized.

You’ll usually see several steps required to get this done. This includes drafting and sending the request, collecting vendor responses, evaluating bids, and selecting the best quote.

It’s now possible to use a procurement platform both to create this Request for Quotation and to respond to it. These platforms will allow you to track the quote as it moves through your workflow.

In the end, these requests help you streamline the procurement process and ensure competitive pricing. They also help vendors qualify leads quickly.