RFQ meaning: request for quote, and how to run one across three suppliers
RFQ meaning: request for quote — a formal ask for supplier pricing on defined goods. What it is vs quotes and estimates, and how to run one.
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RFQ stands for request for quote (or request for quotation) — a document you send suppliers asking for pricing on a specifically defined set of goods: items, quantities, specifications, delivery requirements. It's the structured version of "how much for 500 of these?" — and the structure is the point, because the reply you get is only comparable to another supplier's reply if you asked identical questions. This article defines the term, separates it from its lookalikes (quote, estimate, proforma invoice), and walks through running one across three suppliers with a comparison table you can copy.
RFQ vs quote vs estimate vs proforma
These four documents get used interchangeably in email threads, which is how buyers end up comparing numbers that aren't comparable:
| Document | Who sends it | What it is | How binding |
|---|---|---|---|
| RFQ | You (buyer) | A request: price these defined goods | Not binding — it's an ask |
| Quote | Supplier | A fixed-price offer for defined goods, usually with a validity window | Firm while valid; accept it and it anchors the PO |
| Estimate | Supplier | A non-binding approximation, often pending specs or capacity | Informal — treat as a ballpark, never as a price |
| Proforma invoice | Supplier | A quasi-invoice issued before the sale: goods, prices, terms, payment instructions | Precursor to the commercial invoice; used for deposits and import paperwork |
The distinction that matters in practice: an estimate is a supplier telling you a number so you'll go away satisfied; a quote is a supplier committing to a number, usually valid for 15–30 days. When you're comparing suppliers, only quotes (and proformas, which state terms and payment structure) deserve columns in your comparison. Where the proforma fits in the order chain is its own topic — see proforma invoice vs commercial invoice vs PO coverage for the full document set.
When does an RFQ fit a small store? When the spend justifies structured comparison: a new product line, a re-sourcing of your bestseller, an annual price review with incumbent suppliers, or any buy where a few percent on unit cost means real money. You don't RFQ a reorder of your best-selling SKU from your standing supplier — you just order it.
The anatomy of an RFQ that gets real answers
Suppliers answer specificity with specificity. The RFQ email that works contains exactly five things:
Subject: RFQ — 2-person camp stoves, 500 units, delivery Q2
- Specs, fixed. "Model CS-2P as per attached spec sheet and approved sample ref. photo set. Green powder coat, igniter type B, packed 1/carton, carton dims per spec." Anything you leave vague ("similar to the sample, you know") becomes a price variable you'll fight about later.
- Quantity, with honesty. "500 units for the first order; est. 1,500/yr ongoing." Annual context earns better unit prices than a naked one-off — but never inflate the number you can't defend if they ask for the PO.
- The response format you want. "Please quote: unit price at 500/1,000/2,000 qty, MOQ, tooling costs if any, payment terms, production lead time, validity period of quote, and FOB port." Asking for tiered pricing and terms up front saves three email round-trips and makes replies drop-in comparable.
- Deadline. "Quotes requested by March 14." An RFQ without a date drifts for weeks.
- What happens next. "Shortlisted suppliers will receive a sample order before any production commitment." This sets the expectation that the quote is a step, not a commitment — and quietly tells them there's real business behind the request.
Send it to three or more suppliers. Fewer than three isn't a comparison; and with more than five, response quality usually drops because nobody believes they're a finalist.
Running the comparison: the table that keeps you honest
Replies will arrive in different shapes — some quote FOB, some ex-works, some "delivered" with unstated assumptions. Normalize before comparing, or you'll pick the supplier whose quote was merely the most optimistic. Build one row per supplier:
| Supplier A | Supplier B | Supplier C | |
|---|---|---|---|
| Unit price @500 (spec-compliant) | $14.20 | $13.10 | $12.40 |
| MOQ | 500 | 1,000 | 2,000 |
| Tooling cost | $0 | $1,800 | $3,500 |
| Payment terms | 30/70 | 30/70 | 50/50 |
| Production lead time | 35 days | 45 days | 30 days |
| Quote validity | 30 days | 15 days | 60 days |
| Incoterm / basis | FOB port | EXW factory | FOB port |
| Landed unit cost (yours to compute) | — | — | — |
| Sample cost / lead time | $80 / 10 days | $60 / 14 days | free / 12 days |
Two rows are the trap, and both are yours to fill in:
- Landed unit cost. A $12.40 ex-works price with $3,500 of tooling and a 2,000 MOQ can lose to a $14.20 FOB price with no tooling once freight, duty, and amortized setup are added per unit. The build-up is the landed cost formula — compute it per supplier before ranking anyone.
- MOQ reality. Supplier C's price wins only if you can sell 2,000 units; at your real volumes, C is disqualified regardless of the number. This is the same MOQ-distortion problem from MOQ mechanics — a cheap unit price you can't afford to buy isn't cheap.
Then the non-price columns decide ties, and usually should decide more than they get credit for: lead time (longer means deeper stock and more cash tied up), payment terms (50/50 deposits hurt far more than a $0.50 unit difference), quote validity (a 15-day quote hints at volatile input costs), and responsiveness during the RFQ itself — a supplier who takes three weeks to answer a quote request is showing you your future reorders.
Comparison discipline: three rules
- Same spec, same question, same basis — or the comparison is fiction. If Supplier B quoted without the type-B igniter, their number isn't comparable; re-ask until all quotes describe the same product. This is the single most common way RFQs produce bad decisions.
- The RFQ is a filter, not a verdict. Never award production on paper alone: the shortlist gets sample orders, the sample order gets a golden sample kept on file, and production gets inspection. The RFQ narrows the field; the process chooses.
- Tell the truth about volumes. Inflated annual numbers win tempting quotes that collapse when the real PO is half the size — and suppliers remember. Quote real volumes; negotiate from them.
One thing an RFQ is not: a negotiation. The quotes come back, you shortlist, and then the terms conversation starts — the levers and scripts for that stage belong to negotiating with suppliers. Keep the RFQ itself clean and factual; haggling inside the quote request muddies the comparison you're trying to build.
Common questions
What does RFQ mean in business? Request for quote — a buyer's formal request asking suppliers to price a specifically defined set of goods (items, quantities, specs, delivery terms). It's the structured precursor to a purchase order: you RFQ to compare suppliers, then PO the winner at the quoted price and terms.
What's the difference between an RFQ and an RFP? An RFQ asks for a price on well-defined goods — specs are fixed, the answer is a number. An RFP (request for proposal) asks vendors to propose how they'd solve a problem, evaluated on approach as much as cost. Small product sourcing is RFQ territory; RFPs belong to services and complex projects.
Is a quote from a supplier binding? A proper quote is a firm offer for a stated validity period — if you accept within the window, it anchors the PO's price and terms. An estimate is explicitly non-binding and should be treated as a ballpark only. If a reply doesn't state a validity period, ask for one; "the price is the price" quotes that expire silently cause mid-order price disputes.
How many suppliers should I send an RFQ to? Three is the working minimum for a genuine comparison — enough for price tension, few enough that each supplier takes you seriously. Send the identical spec and response format to all of them, and normalize every quote to landed cost before ranking, or you'll be comparing numbers that measure different assumptions.
Do I need an RFQ if I already have a supplier? Periodically, yes — an annual RFQ round on your highest-volume SKUs keeps incumbent pricing honest and surfaces the market's real level, even if you never switch. Run it with the same discipline (same spec, three suppliers, landed-cost comparison), and treat the incumbent's response as just another row.
Where to go next
Draft your RFQ template once — specs block, quantity honesty, response format, deadline — and save it; you'll reuse it every re-sourcing cycle. Then, when quotes land, compute each one's landed cost per unit before anyone gets shortlisted, and keep the negotiation for the stage after the comparison table is built.