Definition
A Request for Quotation (RFQ) is a procurement document used when an organization knows the exact specifications, quantities, and requirements of what they want to purchase, and is soliciting vendors solely for pricing and delivery timelines.
Explanation
In the B2B world, the RFQ is the ultimate commoditizer.
When you receive an RFQ, the buyer is explicitly stating: "We don't need your strategic advice, we don't need your methodology, we just need to know how much this exact list of items will cost."
For hardware vendors, software resellers, or staffing agencies (body shopping), RFQs are standard practice. However, for strategic professional services firms, management consultancies, or custom software agencies, receiving an RFQ is a massive red flag.
If you sell high-value solutions, you cannot compete in an RFQ without severely discounting your [Rate Card](/glossary/rate-card) and suffering immediate [Margin Leakage](/glossary/margin-leakage).
The Danger of RFQs in Services
If a client issues an RFQ for "Development of a Mobile App," they do not understand the complexity of software development. They are treating a highly variable, risk-prone service as a static commodity.
Winning an RFQ on price alone means you have zero buffer for [Scope Creep](/glossary/scope-creep) or unexpected technical debt, almost guaranteeing a failed project or an unprofitable engagement.
Commercial Checklist for RFQs
Before responding to an RFQ, ask yourself:
- Are the requirements truly static? If there is any ambiguity in the specs, you cannot accurately quote a price without incurring massive risk.
- Can we differentiate on anything other than price? If the answer is no, you are in a race to the bottom.
- Is this a foot in the door? Sometimes firms accept an unprofitable RFQ to get on an approved vendor list, with a strategy to upsell later. (Be careful: this often trains the client to expect low prices forever).
Related Concepts
- [RFP (Request for Proposal)](/glossary/rfp)
- [Rate Card](/glossary/rate-card)
- [Margin Leakage](/glossary/margin-leakage)
- [Bid/No-Bid Decision](/glossary/bid-no-bid)
What is the difference between an RFP and an RFQ?+
An RFP asks vendors to propose a solution to a problem. An RFQ assumes the buyer already knows exactly what they want (quantities, specs, timelines) and is purely asking for the lowest price.
Should a consulting firm respond to an RFQ?+
Usually, no. RFQs are designed for highly commoditized goods (e.g., 500 laptops, 10 tons of steel). If a buyer issues an RFQ for complex professional services, it indicates they view your expertise as a commodity, leading to a race to the bottom on price.
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