RFI vs. RFP vs. RFQ: What's the difference?

SaaS Buying

The acronyms for a request for information (RFI), a request for proposal (RFP), and a request for quotation (RFQ) are similar enough to be easily confused. Yet they each serve a distinctly different purpose.

Written by

Taylor Bruneaux

Published on

July 14, 2022

October 26, 2022

Read Time

Twitter icon
Facebook icon
LinkedIn icon

The acronyms for a request for information (RFI), a request for proposal (RFP), and a request for quotation (RFQ) are similar enough to be easily confused. Yet they each serve a distinctly different purpose. 

How do you know whether to use RFI, RFP, or RFQ when sourcing possible suppliers? In this guide, we identify the definition for each, what they’re best for, and the challenges associated with each method. 

To begin, let’s look at a definition for each. 

What's a request for information (RFI)?

Image: G2

A request for information is a standard business practice that collects written data on the capacity of various suppliers. It’s formatted in a way that makes it easy to compare suppliers and find the optimal option. 

RFIs are also used for record-keeping purposes. For example, an organization might manage an internal database with RFI responses for future projects. 

The benefits of RFIs

RFIs help a company stay organized by:

  • Adding a layer of formality to the bidding process
  • Signaling they’re acting appropriately in vetting their options
  • Gathering updated information on the current market

What's a request for proposal (RFP)?

A request for proposal is a business document that outlines the specific details of a project in order to receive bids and suggestions for potential solutions from qualified contractors. It’s a useful way for companies to lay out the issues or projects they are trying to solve. Creating RFPs to manage the execution of new projects is standard practice for most organizations. 

The organization posts its RFP announcement publicly to connect with contractors and receive competitive bids. An RFP doesn’t just describe the project, it also includes the specific company goals associated with the project and bidder and contract terms

The benefits of RFPs

It helps to think of an RFP as an advertisement you might post on a community bulletin board. Vetting the best supplier offers provides a few major benefits:

  • Keeps project costs low (because of supplier competition for projects)
  • It Helps organizations get visibility across all their supplier options
  • Provides an added layer of formality when dealing with suppliers

What's a request for quotation (RFQ)?

A request for quotation is a process businesses use to gather quotes from potential vendors to complete a task or a whole project. An RFQ is helpful when production runs on a schedule, and an organization has a predictable project lifecycle. 

When organizations request a quotation from a supplier, it’s usually because they’re likely to work with them and want to know specifics on payments and pricing. An RFQ includes highly detailed specifications on the deliverables. Suppliers that provide the lowest price generally win the contract. 

Keep in mind that price isn’t always the defining factor in a company’s preference for a specific supplier. Factors beyond price—like reliability, quality, and capacity—also play a key role in the decision-making process at this stage. 

The benefits of RFQs

Requests for quotations come with their own set of benefits, including:

  • Targeted quotes from suppliers organizations want to hear from
  • Insight into the potential costs of a project for future planning
  • Effective cost-savings management

RFI vs. RFP vs. RFQ: Purposes

Each motion serves a different purpose as a means to an end. For example, a request for information informs and educates an organization on its options. As suppliers enter their bids and open that line of communication, businesses can make optimal decisions driven by data. In short, it’s an effective way for businesses to accurately consider their options. 

Next comes the comparison stage with a request for proposal. An organization's general approach to running operations is maximizing value and lowering costs. With a request for proposal, businesses can carefully explore their options and gauge the value a supplier offers. 

But what if companies want a breakdown of the cost of a specific task? That’s what a request for quotation accomplishes. Once companies have an eye on a handful of specific suppliers, they can directly request a quote to learn about the granular costs and the value they’d get from completing a defined task from that supplier. 

When to use an RFI vs RFP vs RFQ

Here’s a general overview of when it’s best to use each method regardless of your industry.

RFIs—At the beginning stages of completing a project, start with a request for information. RFIs usually come before RFPs, because you have to know the capacity of the current market to fulfill a project. This way, you're informed well enough to request a proposal as the second phase of the supplier vetting process. 

RFPs—After gathering enough information on suppliers and their capacity to complete a job, an RFP is in order. RFPs are necessary if a project is complex enough. A highly technical project benefits from an RFP because businesses can get a glimpse into formula proposals from various vendors and compare them objectively. 

RFQs—Finally, requests for quotations are best when exact quantities and requirements for a project are known and well-defined. An RFQ is appropriate once a business knows which suppliers they want to work with. An RFQ lets businesses know the price tag for completing their task or project. This helps in making a final data-driven decision, which in some cases is the lowest price. 

Challenges managing RFI vs RFP vs RFQ

The biggest bottlenecks organizations face when going through each motion is often the lack of standardization of an internal process that works for their needs. The bigger the company gets, the more this becomes a glaring issue. 

The best way to manage all your proposals and requests is to: 

  • Centralize the RFIs, RFPs, and RFQs
  • Keep an accurate database of eligible vendors
  • Make cost-effective, quick decisions on future projects
  • Improve supplier relationships

Additionally, consider onboarding software. With cloud-based software, you automate many steps within the supplier vetting process. The appropriate software makes organizing, parsing, and comparing data easier, so you always know you’re striking optimal deals with suppliers. 

RFI, RFP, RFQ tips and tricks

Let’s start with some requests for information best practices you can integrate into your own process. During the initial stages, when you’re requesting supplier information, it’s important to: 

  • Avoid outlining specifics and stick with general project information
  • Offer as much background data of the project and its challenges
  • Summarize your business needs succinctly 
  • Describe how you want your request for information to be answered with a clear format

Each RFI will ask for general information like: 

  • Company goals and objectives
  • A clear outline of required supplier credentials, capacity, and skills Open-ended questions about supplier’s business, certifications, solutions they offer, or company track record

A request for proposal will contain different information that’ll inform suppliers enough to create and submit a proposal for completing the project in question. A proposal can include: 

  • A summary of needs
  • Buyer introduction and background
  • Goals and project scope
  • Relevant attachments
  • Project price and payment terms
  • A general RFP timeline
  • RFP sections and questions
  • Terms and conditions
  • Minimum vendor requirements

Keep in mind this list isn’t exhaustive. Different companies choose to include different information—as there are no standard guidelines for drafting RFPs. 

Generally, the more relevant information you can provide to help suppliers make their most informed offer, the better. During this phase, involving relevant stakeholders is key. It leads to a more accurate RFP procedure.

The process of using RFI, RFP, and RFQ to vet vendors benefits from taking the time to create a template that’ll standardize your internal procedures. 

The final stage, the RFQ stage, includes drafting detailed requirements to get an accurate quote from each vendor. The more detailed and specific you are about the complexity of your project, your project needs, and the tasks associated with completing it, the more accurate your decision-making process can be. 

Be sure to include the following within your request for quotation: 

  • An outline of project requirements and an introductory summary
  • Contact details
  • Selection criteria
  • Completion dates and contract requirements
  • Cost and pricing details

Before sending your RFQ to a shortlist of potential suppliers, consider taking the time to gather information for each vendor in one place before deciding who to contact. It’s the best way to track how and why decisions are made. Moreover, ditch paperwork and consider digitizing your efforts with procurement software to support all your RFQ initiatives. 

The more you streamline the quote process, the faster you progress to negotiating contracts, completing projects, and staying ahead. 

Moving forward with RFIs, RFPs, and RFQs

Both detail and organization are the cornerstones of managing each phase of supplier vetting as part of the procurement process. It takes establishing repeatable processes along with standardized and well-documented guidelines.

Onboarding software smooths out many bottlenecks and inefficiencies that inevitably come with each process. This way, you increase visibility, break down data silos, ensure compliance, and position your organization for growth.

Similar posts

The latest news, technologies, and resources from our team.

The 9-step software renewal checklist

Taylor Bruneaux

SaaS Buying

SaaS Stack Management

The 9-step software renewal checklist

Use this 9-step software renewal checklist to build consistency into your renewals process, identify areas for improvement, and negotiate better contracts.

Read post
6 best practices for purchasing management

Taylor Bruneaux

SaaS Buying

SaaS Stack Management

6 best practices for purchasing management

Learn what purchasing management is and discover the six best practices to include in your own buying strategy to cut costs and reduce vendor procurement risks.

Read post
Web Summit: Why nobody wants to buy SaaS from you – and how to fix it

Emily Regenold

SaaS Buying

SaaS Trends

Web Summit: Why nobody wants to buy SaaS from you – and how to fix it

Ryan Neu took the stage of the largest technology conference in the world to share a solution for a problem many of us have faced: how we buy software.

Read post