Preparing paperwork isn’t always the most fun part of a new project. In fact, if you’re not used to the process, it can be completely overwhelming.
However, putting together a solid request for quotation (RFQ) is an important way to get the best deal for your business. Done right, the bidding process can save your business money, help you see what your business can afford, and clarify your needs.
Still, we know how frustrating it can be to get bogged down by industry jargon. We’re here to simplify the process and clear up some confusing terms. Read on to learn what an RFQ is, what it isn’t, and the five things you should make sure it includes.
What Is an RFQ?
Simply put, an RFQ is a document that asks vendors what their product or service costs. It helps you compare the deliverability, quality, and prices different companies offer. It’s a helpful document for businesses that know the details of what they need and what they want to compare.
What’s the Difference Between an RFQ, RFI, and RFP?
We get it. There are so many three-letter acronyms in business paperwork that it can feel like you need an MBA or PhD to keep them straight. Here’s a simple breakdown of some of the most commonly confused terms:
If you’re a buyer, the request for information (RFI) is most useful early in the planning process. At this point, you might not be ready to buy an item, but you’re interested in a product or service. You could send an RFI to get a better grasp on what’s possible or what materials a company actually has in stock.
You’ve picked out a problem—maybe your ceiling is falling apart, or you’re seeing some rust form around pipe joints. This is when a request for proposal (RFP) will come in handy. An RFP gives vendors a chance to offer possible solutions to your problems. It lets other businesses lay out the specifics on a project, how they could tackle your problem, and what types of items you would need to complete the job.
You can send an RFQ with an RFP or on its own. Either way, you’ll usually use it later in the buying process.
If you know exactly what you need, it’s time to send out an RFQ. This document asks vendors how much a specific project or product will cost. That way, the buyer can compare different vendors using the same information.
What’s the Purpose of an RFQ?
Why should a buyer go to the trouble of sending an RFQ before making a purchase? Here are some advantages:
Even if you’re a math whiz, it’s not easy to know what the specifics on a job will cost. Material costs can bounce up and down, and service costs can vary wildly from place to place.
When you get vendors to fill out an RFQ, you’ll get a grasp on the value of your project. It puts the power to choose in your hands, which can save the company money.
Since you get pricing info up front, an RFQ can show you which companies or products your business can afford, making it easier to build and stick to a budget.
Ease of Comparison
We’ve all had a salesperson try to push an extra product on us that we didn’t want in the first place. RFQs help protect against that nuisance. They put each potential vendor on the same level, which means you can see exactly how much each vendor will charge for the service or product you actually need. RFQs also give you a peek at how responsive, or unresponsive, the vendor is to your needs.
What to Include in an RFQ
If done right, an RFQ can help you compare costs on a one-to-one basis. Here are five things to make sure you include in your next RFQ:
1. General Info
You can set clear expectations by including general information. That means including submission dates, closing dates, and delivery addresses. This addition protects against last-minute miscommunications and things such as unexpected rush fees.
2. Quality and Quantity Needs
If you’re ready to submit an RFQ, you’ve probably already done your research. An RFQ is your chance to see which companies can meet your expectations.
Make sure to include how much of the product you need. At the same time, you’ll want to add the quality or grade of each product you want priced.
3. Pricing Details
When it comes to churning out a productive RFQ, the more details, the better. Ask vendors to break down labor prices, costs of raw materials, and delivery fees. Also, remember to give them a chance to explain additional charges.
4. Payment Fine Print
Hopefully, you’ll be dealing with companies you trust, but it’s still a good idea to close off any loopholes by including your own fine print. That means adding the period in which a quote will be considered valid and any opportunities for early-payment discounts.
5. Deliverable Details
When you’re sending off your RFQ, double- and triple-check to make sure the deliverables are covered and clear. Ask vendors to give you a detailed price breakdown. They should nail down delivery specifics, map out project timelines, and recap the exact dimensions of the product.
We’ll Work with You
This RFQ guide should help you get the most out of the bidding process, and while putting an RFQ together can be confusing, we want our customers to be comfortable with unfamiliar processes. Have questions? Contact us here, and we’ll help answer your questions.