The Complete Request for Quote (RFQ) Guide

Procurement

Spend Management

A detailed overview of the process for requesting a quote, including steps to simplify and improve the process for buyers evaluating SaaS tools.

Written by
Vendr Team
Published on
June 22, 2024
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Reviewing information about payments and pricing is an essential step in the SaaS procurement process as buyers vet potential suppliers. That’s where a request for quote/quotation (RFQ) comes into play. An RFQ is a formal document inviting suppliers to submit pricing information about a specific product or service a company is considering purchasing. RFQs ensure transparency and foster healthy competition between suppliers who offer similar products and services. 

RFQs allow companies to see the total cost of completing a task or project. They are typically used when the exact quantities or requirements for a project are known — unlike a request for proposal (RFP), which is used to vet different potential solutions or formulas to solve a problem or need. RFQs can be used on their own or as a final stage in the entire process to find, vet, and procure tools, which includes a request for information (RFI) and RFP prior to the RFQ

Read on for:

  • A step-by-step look at the RFQ process.
  • 6 tips for writing an effective RFQ.
  • Legal and ethical considerations when creating your RFQ.
  • FAQs about RFQs.

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A step-by-step look at the RFQ process

Whether you're a seasoned professional or a business owner looking to streamline purchasing, understanding how to create an RFQ can significantly impact your ability to obtain quality products and services at competitive prices. A comprehensive and effective RFQ will help you get the data you need to select the right suppliers and support your business goals.

Identifying your needs

RFQs contain highly detailed specifications about what a company needs from a supplier in order to complete a project or task. As such, it’s important that you clearly define your business requirements before drafting the RFQ. You’ll need a firm understanding of the goals of your project, how you intend to meet those goals, and what specific product or service you will use from the supplier in order to do so (and how many seats/licenses you need, if relevant). It’s also important to have a firm timeline in mind and include any budget constraints or quality standards that the suppliers must meet within your RFQ. 

Selecting suppliers

It’s important to send your RFQ to the right suppliers. Gather supplier information through RFIs and industry directories, then review the information thoroughly to determine which supplier might be the right fit for your needs. Check references and reviews for third-party confirmation of the supplier’s capabilities. Then, make a short list of suppliers who will receive your RFQ. Vendr can help organize and expedite this process with information about more than 2,000 SaaS suppliers, including their capabilities, experience, and capacity to deliver the SaaS solution you need. 

Drafting the RFQ document

When drafting your RFQ, make sure to ask for and include the following information: 

  • An outline of project requirements.
  • Contact details.
  • Selection criteria.
  • Completion dates and contract requirements.
  • Cost and pricing details.
  • RFQ submission deadline.

Keep your language concise and include any information about budget or timeline constraints that suppliers must adhere to. This will help you weed out unfit suppliers. The more detail you can provide to ask for exactly what you need, the more effective your RFQ process will be in the end. 

Evaluating responses

Set a clear deadline for suppliers to submit their responses to your RFQ so you can evaluate all responses against each other at the same time. It’s best to streamline your evaluation process as much as possible so you can quickly progress to negotiating contracts, completing projects, and making an impact on your business. Streamline your efforts by creating a clear evaluation rubric and scoring criteria prior to receiving any RFQ responses, and follow it precisely for every supplier. Within your rubric, include sections to evaluate and score both financial and operational considerations that are important to your business. 

Vendr’s integrated platform helps you stay on track by gathering and organizing data received within the RFQ and sharing pricing insights to help you understand cost-saving opportunities and benefits provided by each supplier. Vendr also provides expert buyer support to help you make informed decisions during your SaaS procurement process.

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6 tips for writing an effective RFQ

A comprehensive and compelling RFQ will capture the attention of top-tier suppliers, get your organization the pertinent information it needs to vet the supplier, and set the stage for a successful partnership in the future. Use the following tips to help craft an effective RFQ:

1. Define the problem, not just the solution

Clearly outline the problem you are trying to solve, rather than just specifying the solution. This approach encourages suppliers to propose innovative solutions that you may not have considered.

2. Be transparent about evaluation criteria

Within your RFQ, detail exactly how bids will be evaluated, including the weighting of different criteria (e.g., cost, quality, delivery time) that your team will use. Transparency helps suppliers tailor their proposals to meet your priorities — and encourages them to put their best offer forward for your most important needs.

3. Emphasize total cost of ownership (TCO)

Encourage suppliers to consider the TCO rather than just the initial purchase price. This includes maintenance, operating costs, and any other long-term expenses. Understanding the TCO will help improve and optimize your financial planning efforts. 

4. Specify acceptance criteria

Clearly outline the criteria that will be used to accept or reject the delivered goods or services. This sets clear expectations and reduces the risk of disputes later on.

5. Consider future scalability

Inquire about the scalability of the solutions offered. Understanding how easy it is to scale up or adapt the proposed solutions can be crucial for long-term planning.

6. Specify data and reporting requirements

Clearly outline any data reporting requirements, including frequency, format, and key metrics. This ensures that you receive the necessary information to monitor the progress and performance of the supplier. It will also help you set expectations upfront, which will mitigate communication issues as the project progresses and lead to a better long-term relationship with your supplier.

Legal and ethical considerations when creating your RFQ

When conducting an RFP process, it's vital to address legal and ethical considerations to ensure fairness and compliance. This involves adhering to procurement laws, contract laws, non-discrimination policies, confidentiality, intellectual property rights, and preventing bid rigging. Ethically, it also requires maintaining transparency, fairness, and impartiality, avoiding conflicts of interest, being honest and providing accurate information, offering feedback to suppliers, and being responsive and accountable. These best practices build trust, foster competition, and lead to successful procurement outcomes.

Request for quote FAQs 

How do you ensure confidentiality during the RFQ process?

Confidentiality is crucial to protect sensitive information and maintain trust with potential suppliers. To ensure confidentiality during the RFP process, follow these steps:

  • Require all participants to sign non-disclosure agreements (NDAs), which legally bind them to keep shared information confidential. This is especially important if you are involving any third-party consultants or agencies in the RFQ process. 
  • Use secure, password-protected platforms or procurement software to share and store RFQ-related documents and communications.
  • Limit access to RFP documents to ensure that only team members who require access to perform the duties of their role can view and edit these files. 
  • Anonymize supplier information to prevent bias and ensure focus on the content of the proposals. 
Can you negotiate prices after receiving RFQ responses?

Yes. Many SaaS buyers enter into price negotiations after receiving RFQ responses in order to receive the best possible terms and value. Before engaging in negotiation conversations, review and compare your RFQ responses against each other to identify negotiation opportunities. Build rapport with your suppliers and be transparent about your needs. In addition to negotiating prices, it’s also helpful to consider non-price factors such as improved quality, better service, faster delivery timelines, or extended warranties. 

How does Vendr negotiate optimal prices?

Vendr can help you obtain the best terms and pricing during new contract agreements or when negotiating renewal opportunities. Vendr’s platform contains data about pricing benchmarks and commercial terms. Vendr also employs negotiation experts who can help you identify opportunities to enhance your SaaS procurement processes and achieve cost savings through more favorable terms.

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Vendr Team
Vendr Team
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Vendr's team of SaaS and negotiation experts provide their curated insights into the latest trends in software, tool capabilities, and modern procurement strategies.

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