Should We Use An RFP Or An RFQ?

Sellers have the will to please,
Products, time, and expertise
Buyers who will mine this gold
Learn and solve while they are sold.
 

Question: When should we use an RFP versus an RFQ?

People use these terms loosely, so let’s clarify:

  1. RFQ is a Request for Quote.
  2. RFP is Request for Proposal.
  3. Later we’ll look at an RFI, which is a Request for Information

The label may not matter, but the words are helpful… and how you think about the process is critical.

Do you simply want a quote – that is, a price? Or do you want a proposal?

 

Making The Case For A Quote

If you are 99% sure you won’t need ANY clarification – that is, if one back-and-forth will be enough to make a final decision – then the RFQ does the job. But consider what this implies:

  1. You won’t learn anything new about the purchase from the responses
  2. You can perfectly detail all of your requirements & product specifications
  3. You have as much expertise about the product as the sellers

When the quotes come in, you should be able to line them up side by side as a near-perfect comparison and make your pick.

Sometimes this is the case. The RFQ can be a useful negotiation tool and definitely has a place. (In fact, I have a one-page RFQ from that I’ll share with you – just click here for the RFQ.)

 

A Preference for Proposals

Now let’s consider what it means to request a proposal.

A proposal is a solution to solve a problem. It should include an approach, details about the solution, and pricing information.

It’s also a DRAFT of an answer – it’s rarely the final version.

This concept is the major foundation to the RIGHT use of an RFP. The RFP at best is an efficient and structured conversation between a buyer and multiple sellers. It gives the buyer the opportunity to learn about their own requirements, about new developments in the marketplace, about options for delivery and use, about innovation… and yes (of course!) about pricing.

But what about those times when you JUST want pricing?

First, keep in mind that no price walks alone. (I love writing that – it sounds like a Johnny Cash song.) It’s surrounded by an entourage:

  1. terms & conditions
  2. product specifications
  3. delivery options

Second, consider that the world is changing rapidly in ways that impact virtually everything we buy. For even the most mundane purchases – paper cups, rubber gloves, office supplies – there are huge innovations, economic shifts, and variations in delivery.

 

Put Yourself In Their Shoes…

Think about how you sell. Would you prefer your clients to ask you for a price, or to present a problem and ask you for solutions?

How many times does the initial RFP end up matching exactly what the customer needs? It’s usually a good starting point, but there is enormous value added in the follow up discussions. The buyer knows their business, but the seller usually has far greater expertise in what they are delivering.

If that’s true when your clients buy from you, it’s generally true for the things you buy from your vendors.

Your goal is the MVP – the Most Value Possible – from the purchase. The sellers’ expertise is a great asset. Make a decision and take the time to mine that gold.

If you’re still wondering about RFP versus RFQ or have any other questions about this give me a call – 703.944.9676. (Or if you want the RFQ example send me an email and ask for it.)

For more clarification on what an RFP is, make sure that you read our article titled: What Is An RFP?

Maybe you need help on creating an RFP template for vendors, check out our article titled: How To Organize An RFP – A Template Overview.

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