rfq-vs-rfp

RFQ vs. RFP: What are an RFQ and RFP?

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.

Key takeaways:

  • 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.

Read Next: SWOT AnalysisPersonal SWOT AnalysisTOWS MatrixPESTEL AnalysisPorter’s Five ForcesTOWS MatrixSOAR Analysis.

Main Free Guides:

FourWeekMBA Business Toolbox

Business Engineering

business-engineering-manifesto

Tech Business Model Template

business-model-template
A tech business model is made of four main components: value model (value propositions, missionvision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Web3 Business Model Template

vbde-framework
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Asymmetric Business Models

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Business Competition

business-competition
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

technological-modeling
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Transitional Business Models

transitional-business-models
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

Minimum Viable Audience

minimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Business Scaling

business-scaling
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Market Expansion Theory

market-expansion
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.

Speed-Reversibility

decision-making-matrix

Asymmetric Betting

asymmetric-bets

Growth Matrix

growth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Revenue Streams Matrix

revenue-streams-model-matrix
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Revenue Modeling

revenue-model-patterns
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Pricing Strategies

pricing-strategies
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

Main Free Guides:

About The Author

Scroll to Top
FourWeekMBA