When a vendor meets with a prospect, they could be looking for your help in different ways. They may need an outside supplier to do some work for them, which is when they’ll issue a request for quotation (RFQ).
Alternatively, they might want to hire the team as the new marketing agency. In that case, the company will send out a request for proposal (RFP) or request for information (RFI).
These days, providing these documents is easy. In fact, a business can already automate it using RFP management software. They can create these responses from scratch or use builders and templates. They can customize each depending on who is making a request and keep some for future reference.
Nevertheless, a company receiving these requests still needs to know the differences among these terms so that they can respond appropriately and correctly.
RFP versus RFQ
A request for proposal is a solicitation from an organization requesting that suppliers, consultants, or potential service providers submit a price quote. It is usually used when the client company needs to procure specific goods and services that are unique or specialized in nature. Companies use RFPs to maintain uniformity throughout the procurement process by obtaining all quotes in a standardized format.
Meanwhile, a request for quotation is more common and may be used for any product or service that comes in standard packaging or defined specifications. This type of request does not require the prequalification of vendors. It can be issued to any supplier who meets the basic criteria set forth by the buyer.
A quote can also be sought after items are already available rather than before they exist. Vendors are then used as resources to create a list of existing product or service options.
However, many people interchange the two terms and use them synonymously. It is not uncommon for companies to request both an RFP and RFQ at the same time. Regardless of how the terms are used, it’s important to know which one you’ve received for your company so that you can respond accordingly.
RFP versus RFI
The key difference, which will also affect what the vendor submits in response, is that an RFP is more rigidly defined than an RFI. It sets out much more clearly what the contracting agency wants developed or provided, whereas, with an RFI, the customer asks for information about the product/service and its cost without committing to a purchase.
Sometimes the contracting agency will attach more importance to an RFI than an RFP because it may be a less cost-intensive way of finding out whether an organization has the capability to provide a particular service or develop a particular solution. It also gives the customer time to carefully consider the responses and select those who they perceive to be the best able to meet their needs. The contracting agency will read all responses but may only contact a minority of them for further discussions or submissions if required.
The client is therefore looking for an RFI response that:
- Explains why the vendor is capable of meeting their needs
- Shows how the product/service can be integrated into their environment
- Includes a detailed pricing structure that projects total cost over the entire period of service or development
By contrast, with an RFI, the contracting agency may likely have already selected the company as one they would like to do business with based on its experience and how well it meets their needs in an RFI. They may also have contacted a wider range of organizations to see who else is available as a potential service provider or development partner, so they are looking for stronger justification that the vendor is the best choice. This could include references from previous clients who would confirm your capabilities and expertise in meeting their requirements.
The client will therefore be looking for an RFP response that:
- Clearly demonstrates how the vendor’s a product/service meets (or exceeds) their stated requirements
- Shows specific examples of how it’s been used by other organizations
- Includes detailed technical specifications and/or system designs
- Provides case studies or testimonials from other satisfied clients
- Shows how your product/service and its associated costs meet their budget constraints
The obvious conclusion is that the RFI response should be more general in nature while the RFP requires a very specific submission.
However, it’s worth noting that some agencies may never issue an RFI at all but simply issue an RFP when they have a requirement that they want to explore. Others may use an RFI before issuing an RFP if they’re not sure of the potential contracting requirements or don’t have the in-house capability to develop/provide them.
In such cases, the vendors would need to consider carefully how best to present themselves as the best possible service provider for their needs without having the chance to demonstrate that they are capable of doing so based on previous experience.
Since all businesses are different, there’s no one-size-fits-all approach to writing RFPs, RFQ, or RFIs and winning business from them. However, understanding how they differ does help one knows what the client is looking for and how the vendor’s product/service can meet their needs.