An RFQ is a document companies use to gather the pricing information of goods from a potential vendor. Conversely, an RFP is a document companies use to gather information about services from potential contractors. Though they are similar documents with similar names, the RFQ and RFP documents have distinct characteristics making them suitable for different applications.
Understanding the RFQ and RFP document
Business to business (B2B) operations are often difficult as key personnel struggle with the clientele attainment process. With hundreds of potential companies to do business with, how can an organization receive the best price for its goods and services?
When a business needs to procure goods or services from a prospective vendor, Request for Proposal (RFP) and Request for Quote (RFQ) documents are used. However, understanding which document is most suitable is vital.
Though they are similar documents with similar names, the RFQ and RFP documents have distinct characteristics making them suitable for different applications.
Selecting one document over another is an important skill in successfully negotiating corporate sales.
The difference between RFQ and RFP documents
With the above in mind, here are the key differences between each.
Request for Quote (RFQ)
A Request for Quote document is used to gather information about goods or services from the vendor. Before the procurement process, the RFQ stipulates the type and quantity of the product the business wishes to purchase.
Then, potential vendors send a quote in reply and the business chooses a vendor based on price. This makes them ideally suited to large-scale purchases where minimizing costs is a priority.
Request for Proposal (RFP)
A Request for Proposal document is used by companies to gather information about services from a potential contractor or supplier. Note that RFP documents are more complex than RFQ documents because they are asking for more than a simple price estimate.
Thus, the information contained in an RFP might detail:
- The nature of the project the buyer needs to complete, including project goals.
- The number of pages or illustrations the proposal should contain.
- Laws the project is potentially subject to.
- Qualifications that a vendor or contractor must possess.
Using the stipulations outlined above, the contractor submits a proposal estimating the costs of labor, management, and other relevant fees to give a total cost. Where relevant, the contractor will also detail a list of needs that must be met to complete the project successfully.
Then, the company assesses each proposal and selects a contractor based on price and their ability to detail the project scope.
So, what are the main differences?
The first and most obvious difference is the level of detail each document offers. An RFQ is well-suited to an itemized list of materials with known specifications. However, an RFP is more suited to large-scale projects where construction, maintenance, or legal advice is required.
It’s also important to note that RFP documents are part of a formal procurement process. The request leaves no room for interpretation or last-minute changes and edits can only be made with an official addendum. The RFQ request, on the other hand, has a more casual structure that can be adapted to suit. This is particularly true when a buyer accepts a quote it is happy with before the assigned due date.
- A Request for Proposal (RFP) document is used by companies wishing to gather information about large-scale services from potential contractors. A Request for Quote (RFQ) document is used when a company wants a simple, itemized quote for goods or services.
- Although similar in name and appearance, successful corporate sales managers understand that each document is effective for different reasons and in different scenarios.
- There are many differences between the RFP and RFQ documents. Perhaps the most pertinent is that an RFP forms part of a formal procurement process, whereas an RFQ is less formal and more flexible.
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