What Is an RFQ? Request for Quotation Explained (With Examples)
The complete guide to RFQs - what they are, how the process works, and how RFQ software automates it
What Is an RFQ?
An RFQ (Request for Quotation) is a document a buyer sends to one or more suppliers asking them to quote a price for specific, well-defined goods or services. RFQ meaning in procurement: it is the formal step where a buyer invites competitive pricing for known items - for example, '500 kg of Grade A 12mm steel rods, delivered to Houston by September 15' - and suppliers respond with their best price, terms, and delivery timeline.
An RFQ is used when you know exactly what you want and just need pricing. When requirements are unclear or solutions vary, you use an RFP instead. When you're exploring the supplier landscape, you start with an RFI.
What an RFQ Includes
A standard RFQ format contains:
- RFQ number and issue date
- Response deadline - when quotes are due
- Buyer details and delivery address
- Line items - item, specifications, quantity, unit, required-by date
- Commercial terms - payment terms, Incoterms, currency
- Response instructions - format, submission method, contact
- Validity period for the quotes (e.g. 30 days)
The RFQ Process in 7 Steps
A structured RFQ process compresses sourcing from weeks to days:
- 1. Define requirements - specifications, quantity, quality, delivery date
- 2. Identify suppliers - shortlist 3-10 qualified vendors
- 3. Create and send the RFQ - the same document to every supplier
- 4. Collect quotes - by a fixed deadline
- 5. Compare quotes side-by-side - normalize, rank L1/L2/L3
- 6. Negotiate (optional) - push back on the shortlist
- 7. Award and issue the purchase order
RFQ vs RFP vs RFI
The three request types serve different stages of sourcing. See RFP vs RFQ and RFI vs RFQ for the full breakdown:
- RFI (Request for Information) - tell us about your capabilities (information gathering, shortlisting)
- RFP (Request for Proposal) - propose a solution to our problem (solution + price)
- RFQ (Request for Quotation) - quote a price for these known items (price focused)
Many teams run RFI RFQ as a two-stage process: RFI to shortlist, RFQ to price.
How to Compare RFQ Responses
Collecting quotes is only half the work - comparing them fairly is the other half. Vendor quotes must be normalized (same currency, same Incoterms, same validity) before quote comparison. Rank by price - L1 (lowest), L2 (second lowest), L3 (third) - but weigh lead time, quality, and total cost of ownership. A comparative quotation lays out every supplier side-by-side on the same line items.
RFQ Software
Manual RFQ workflows (email + spreadsheet) take 5-15 days and lose quotes in inboxes. RFQ software like AuraVMS automates the full process: create an RFQ, send to suppliers (they quote via a unique link - no login needed), and compare every response side-by-side with automatic L1/L2/L3 price ranking. Setup takes 15 minutes, plans start at $4.99/month for SMBs.
Frequently Asked Questions
What does RFQ stand for?
RFQ stands for Request for Quotation - a document a buyer sends to suppliers asking them to quote a price for specific goods or services. It is the most transactional of the three request types (RFI, RFP, RFQ), used when specifications are clear and the buyer wants competitive pricing. See RFQ meaning.
What is the difference between an RFQ and an RFP?
An RFQ asks suppliers to quote a price for known items. An RFP asks suppliers to propose a solution to a problem. Use an RFQ when you know what you want and need pricing; use an RFP when requirements are unclear or solutions vary. See RFP vs RFQ.
How long should an RFQ process take?
A manual RFQ process (email + spreadsheet) typically takes 5-15 days end to end. RFQ software compresses this to 1-3 days by automating distribution, collection, and comparison. AuraVMS runs the full RFQ process for SMBs from $4.99/month.
How many suppliers should I send an RFQ to?
For commodity items, send the RFQ to at least 3 suppliers to get competitive tension. For high-value or strategic purchases, 5-10 suppliers is common. For specialized inputs with few qualified suppliers, 2-3 may be the realistic ceiling. The more comparable quotes, the stronger your negotiation leverage.
What should an RFQ include?
An RFQ should include a unique RFQ number, response deadline, buyer details and delivery address, line items with specifications and quantities, commercial terms (payment, Incoterms, currency), response instructions, and a validity period for the quotes. See RFQ format.
Is RFQ software worth it for a small business?
Yes. RFQ software saves 5-15 days per sourcing cycle and captures 5-15% cost savings through competitive quoting - both material for SMBs. AuraVMS is built for SMBs, from $4.99/month with 15-minute setup, and suppliers quote via a link without needing to log in.