A request for quote (RFQ) is one of the most widely used procurement tools in business. When pricing is important and the scope is already defined, an RFQ gives teams a disciplined way to gather supplier quotes, compare vendor pricing, and make a confident purchasing decision.

Below, we’ll explain how the RFQ process works, when it makes sense to use one, and how to evaluate RFQ responses.

What’s in this article?

• What is a request for quote?
  
• How does a request for quote work and why does it matter?
  
• When should a business use a request for quote?
  
• What information should be included in an RFQ?
  
• How is an RFQ different from an RFP or RFI?
  
• How do suppliers respond to a request for quote?
  
• How do businesses compare and evaluate RFQ responses?
  
• How Stripe Invoicing can help
  

What is a request for quote?

A request for quote is a formal way for a business to ask suppliers an important question: how much would you charge to deliver this exact product or service, under these exact conditions?

Business acquiring committees use RFQs when they already know the specific product or service they want to buy. The goal is to get comparable pricing from qualified suppliers to make a clear, defensible purchasing decision.

How does a request for quote work and why does it matter?

The RFQ process eliminates ambiguity. It follows a structured path so buyers can directly compare the pricing of different suppliers.

Here’s how an RFQ works:

1. The buyer defines the scope internally: The buyer finalizes scope, specifications, quantities, timelines, and commercial terms before they contact suppliers.

2. The RFQ document is prepared: This should outline requirements, pricing formats, submission rules, deadlines, and evaluation criteria.

3. Suppliers are invited to participate: The RFQ is sent to a selected group of vendors or issued more broadly, depending on the sourcing strategy.

4. Suppliers review and clarify requirements: Suppliers submit questions within a defined window to ensure accurate pricing.

5. Quotes are submitted: Vendors submit pricing and required documentation in the specified format by a fixed deadline.

6. Pricing and terms are compared side by side: Because the RFQ standardizes responses, buyers can quickly identify differences in unit prices, totals, lead times, or commercial terms.

7. A supplier is selected and awarded: The buyer selects the supplier that meets all requirements at the best price or value and formalizes the decision through a purchase order or contract.

8. The RFQ process is closed: Unsuccessful suppliers are notified, records are retained for auditability, and procurement moves into execution.

When should a business use a request for quote?

An RFQ is most effective when the buying decision hinges on price, timing, and clear execution. There are several scenarios where this makes sense:

• The requirements are clearly defined: The product or service, specifications, quantities, and delivery expectations are already locked in, which leaves little room for interpretation.

• Price is the main differentiator: All invited suppliers can meet the requirements so the decision comes down to cost and commercial terms.

• The purchase is standardized or commoditized: The purchase is either a product made from common materials, components, or equipment, or is a routine service that’s widely available in comparable form.

• Suppliers are already vetted: Vendors have been prequalified for capability, compliance, and reliability so the process doesn’t need to evaluate fit.

• Clean comparisons matter: The business needs side-by-side pricing that it can assess quickly and objectively.

• Speed and discipline are important: A structured process minimizes back-and-forth and supports fast, auditable decisions.

What information should be included in an RFQ?

A strong RFQ should give vendors everything they need to price accurately. It’s equally important that the RFQ outlines everything buyers will need to easily compare responses.

Here’s what businesses should include in an RFQ:

• Overview of the request: A brief summary of what’s being purchased and why, without unnecessary details

• Detailed specifications or scope of work: Exact technical, functional, or service requirements suppliers must meet

• Quantities and volumes: Precise amounts, including minimums, maximums, or tiered volumes if applicable

• Delivery requirements and timelines: Dates, milestones, locations, and any logistical constraints that affect cost or feasibility

• Pricing format: Straightforward instructions for how prices must be presented, such as unit pricing, totals, optional add-ons, discounts, and recurring charges, so every quote follows the same structure

• Payment terms: Invoicing requirements, payment timelines, currency, and financial assumptions

• Commercial and contractual terms: Key terms suppliers must accept or price against, such as warranties and service levels

• Compliance requirements: Certifications, regulatory standards, insurance, or legal qualifications

• Evaluation criteria: A high-level explanation of how quotes will be assessed

• Submission instructions: How, where, and when quotes must be submitted, including formatting rules and deadlines

• Point of contact for questions: A single channel for questions, with clear rules on timings and communication

How is an RFQ different from an RFP or RFI?

RFQs, requests for proposals (RFPs), and requests for information (RFIs) solve very different problems. They’re also used at different stages of the buying process.

• RFQ: This is used when the buyer knows exactly what they want and needs firm pricing for a defined scope.

• RFP: This is used when the buyer knows the desired outcome but wants suppliers to propose solutions, approaches, and pricing.

• RFI: This is used early in the process to gather information about suppliers, capabilities, and the market.

In short, RFQs minimize interpretation and focus on price, RFPs encourage differentiation and long-term thinking, and RFIs are exploratory and noncommittal. RFQs are often the final step, used after suppliers are vetted or a solution is already defined but before suppliers are onboarded.

How do suppliers respond to a request for quote?

From a supplier’s perspective, an RFQ is a pricing exercise, not a sales pitch. The focus is on clarity, accuracy, and compliance.

Typical steps include the following:

• Assess fit: Confirm the ability to meet specifications, timelines, and terms.

• Develop pricing: Calculate costs, margins, and delivery constraints based on the defined scope.

• Request clarifications: Use the formal question period to resolve ambiguity.

• Prepare the quote: Submit pricing exactly as requested.

• Include documentation: Provide certifications, confirmations, and contractual acknowledgments as requested.

• Submit on time: Late or noncompliant responses are usually excluded.

Once quotes are submitted, suppliers generally wait for the decision and revise pricing only if explicitly invited to do so.

How do businesses compare and evaluate RFQ responses?

A well-designed RFQ speeds up the evaluation phase. There are several strategies to keep in mind when you compare and evaluate RFQ responses:

• Review all quotes together: Responses are opened after the deadline to preserve fairness.

• Consider compliance first: Noncompliant quotes are typically removed before pricing is considered.

• Compare prices line by line: Unit prices, totals, discounts, and ancillary costs are reviewed side by side.

• Investigate outliers: Extremely high or low quotes are checked for errors or hidden risks.

• Apply any secondary criteria: If they’re included, factors such as delivery speed and payment terms are weighed and defined.

• Resolve clarifications: Buyers might confirm assumptions or address gaps before final selection.

The winning supplier is selected and notified, and the decision is recorded for audit and governance purposes.

How Stripe Invoicing can help

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Learn more about how Stripe can simplify your AR process, or get started today.