Request for Quote (RFQ)

What is a Request for Quote (RFQ)?

A Request for Quote (RFQ) is a procurement document that businesses use to solicit pricing from suppliers when requirements are already well-defined. An RFQ focuses on getting comparable price quotes and delivery terms rather than broad proposals or exploratory information.

For example, if your SaaS company needs to add 500TB of cloud storage with specific performance requirements, you'd send an RFQ to cloud providers asking for their pricing on those exact specifications. This differs from a Request for Proposal (RFP), where you're still exploring how vendors might solve a more open-ended problem.

Why RFQs Matter for SaaS and RevOps Teams

RFQs serve two purposes in procurement: they create competitive pricing pressure and ensure you're comparing offers on equal terms. When buying infrastructure, software tools, or professional services, an RFQ forces vendors to quote against the same specifications rather than proposing different solutions at incomparable price points.

From a RevOps perspective, understanding RFQs matters whether you're buying or selling. If you're procuring billing systems, payment processors, or usage analytics platforms, a structured RFQ helps you evaluate total cost of ownership. If you're selling B2B software, knowing how to respond effectively to customer RFQs directly impacts win rates.

When to Use an RFQ

Use an RFQ when you have:

Clear specifications: You know exactly what you need. Technical requirements, service levels, and delivery expectations are documented and non-negotiable.

Price as the primary decision factor: While vendor reputation and support matter, your main question is "what's your best price for this specific thing?"

Multiple qualified vendors: You've already identified several suppliers capable of meeting your requirements. The RFQ creates competitive tension.

Standard products or services: You're buying commoditized offerings like cloud compute, support hours, or established software categories.

Don't use an RFQ when your requirements are still evolving, when you need vendors to propose different approaches, or when you're buying something highly custom. Use an RFP instead.

How RFQs Work

The basic process involves identifying qualified vendors, sending them identical requirement documents, collecting their quotes, and comparing responses.

Most organizations create a standardized response template to ensure vendors quote on the same parameters. For a cloud infrastructure RFQ, this might include columns for base pricing per tier, overage rates, implementation fees, minimum commitments, and payment terms. Without this structure, you'll receive proposals in different formats that are hard to compare.

Response timelines typically allow vendors 5-10 business days to prepare quotes. Shorter deadlines may exclude qualified vendors who need time for accurate pricing. Longer timelines risk market conditions changing or vendors losing interest.

Evaluation focuses primarily on price, but most buyers also consider vendor financial stability, support terms, and contractual flexibility. The lowest price from a vendor with poor support or restrictive terms often costs more over the contract lifecycle.

Types of RFQs

Open bid RFQs are publicly posted and anyone can respond. This maximizes competition but requires significant administrative overhead to manage potentially many low-quality responses.

Sealed bid RFQs keep vendor quotes confidential until a specified opening time. This prevents vendors from seeing competitor pricing and adjusting their bids accordingly.

Invited bid RFQs go only to pre-qualified vendors. You get higher-quality responses with less administrative burden, though potentially less price competition.

Reverse auctions let vendors see current best prices and submit lower bids in real-time. These work well for standardized services but require careful quality controls to prevent a race to the bottom.

RFQs and CPQ Systems

Vendors responding to RFQs increasingly use Configure, Price, Quote (CPQ) software to generate accurate, consistent quotes. CPQ systems automatically calculate discounts, enforce approval workflows, and ensure pricing aligns with company policies.

For example, a CPQ system might automatically apply volume discounts at specified thresholds, require VP approval for deals above certain sizes, or block quotes that don't meet minimum margin requirements. This standardization helps vendors respond to RFQs faster while maintaining pricing discipline.

From a buyer's perspective, vendors using CPQ systems often provide more detailed, accurate quotes with clearer breakdowns of pricing components. When evaluating RFQ responses, quotes generated from professional CPQ systems tend to have fewer errors and ambiguities.

Billing systems like Meteroid integrate with CPQ workflows to ensure quoted terms transfer accurately into contracts and invoicing. This reduces errors in the quote-to-cash process and improves revenue recognition accuracy.

Common Challenges

Specification creep: Requirements change between RFQ issuance and vendor selection, invalidating quotes. Lock down specifications before sending the RFQ.

Comparing unlike quotes: Vendors interpret requirements differently or quote on modified specifications. Extremely detailed RFQs and response templates help, but expect to ask clarifying questions during evaluation.

Hidden costs: Lowest quoted price doesn't include implementation, training, or support costs that emerge later. Require vendors to itemize all potential costs in their responses.

Gaming the process: Vendors quote low to win, then increase prices through change orders or renewal terms. Review not just initial pricing but escalation clauses and long-term cost structure.

RFQ Best Practices

For buyers: Provide realistic usage scenarios in your RFQ. Don't just ask for list prices—give vendors your current volumes, projected growth, and usage patterns. This helps them quote accurately and reduces surprises when actual usage differs from assumptions.

Ask vendors to explain their pricing models clearly. If you're buying usage-based services, understand how pricing scales, where breakpoints occur, and what triggers overage charges.

For vendors: Address every requirement explicitly in your response. If you can't meet a requirement, explain why and propose an alternative. Buyers often have flexibility on specific requirements if you communicate clearly.

Provide context around your pricing. Explain what's included, what costs extra, and how pricing changes with volume or commitment terms. Transparent pricing builds trust even if you're not the lowest bidder.

RFQs in Procurement Strategy

RFQs are one tool in a broader procurement approach:

An RFI (Request for Information) helps you understand the market and identify potential vendors before you've defined requirements.

An RFQ gets specific pricing when you know what you need.

An RFP (Request for Proposal) solicits comprehensive solutions when requirements are complex or you need vendors to propose different approaches.

Most procurement processes use multiple documents. You might issue an RFI to understand available solutions, then an RFQ to get pricing from shortlisted vendors, and finally negotiate detailed terms with your top choice.

Implementation Considerations

When issuing RFQs for software or services that integrate with your billing infrastructure, ensure your requirements cover integration specifications. Ask vendors about API capabilities, data formats, authentication methods, and any integration costs.

For usage-based services, structure your RFQ to request pricing at different volume tiers. Understanding how costs scale helps with financial forecasting and capacity planning.

Review contract terms carefully, not just pricing. Payment terms, auto-renewal clauses, termination rights, and liability caps significantly impact total value. An RFQ should request complete commercial terms, not just unit prices.