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Best and final offer (BAFO) is a sales technique, usually forming part of a request for proposal (RFP) process. Here, the buyer invites their ideal vendors to submit their final proposal on the most favorable possible terms. They do this rather than negotiating with each bidder individually.
BAFO in sales is usually initiated to speed up the procurement process and encourage vendors to fight amongst each other to secure the buyer’s business. The caveat here is, of course, that it can backfire. In some cases, it can scare away potential vendors who would have otherwise been an ideal match for the buyer.
Buyers use the BAFO process to streamline decision-making.
Rather than getting bogged down in extended one-on-one negotiations, the buyer can set a deadline and ask each vendor to put forward their most compelling offer. This helps accelerate the final stages of procurement. It also brings transparency and fairness to the selection process.
In high-stakes or high-value contracts, a BAFO request ensures that the buyer sees the maximum value possible from each vendor. It can also help expose hidden pricing flexibility or added services that weren’t originally offered in the initial bids.
Sellers will often submit a BAFO in response to an RFP, as this prolonged sales process can involve multiple rounds of negotiation.
And while BAFO can be an opportunity for vendors to strengthen their proposal, it definitely brings risk with it.
If a vendor misjudges the competition or undercuts too much, they may win the contract at unsustainable margins.
In contrast, vendors who aren’t confident in the process may choose to withdraw rather than revise their bid under pressure.
Sellers have to approach BAFO strategically. You’ve got to balance competitiveness with long-term profitability. Also make sure you really understand your buyer’s priorities (cost, timeline, service levels) before coming up with your BAFO.
A strong BAFO is not just about price. Vendors should consider enhancing their proposals by:
These value-adds can differentiate your offer even if you’re not the lowest bidder. Buyers aren’t always looking for the cheapest bid on the block. Rather, they want long-term value, reliability, and partnership potential.
So, clearly articulate how your solution meets their strategic goals, reduces risk, or improves operational efficiency. This can make your offer really pop.
Visuals, case studies, and testimonials can also help reinforce credibility and impact.
BAFO is a term used in sales to indicate the offer being made is the last and most favorable offer that a seller or bidder is preparing to offer a buyer.
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