Do you ever just wish there was an easy quote template to follow, so you didn’t have to struggle to create one?
Do you ever notice there are so many styles of quote templates that it makes your head spin?
And how would you even make yours stand out in the sea of other, competing quote templates?
Let’s face it, administrative tasks can be a drain on any business, so why not figure out how to streamline some of them so you can make your business more efficient and more profitable?
Keep reading for an easy-to-implement guide on how to make your request for quote template look and perform amazingly, so you can attract the right kind of bids.
What Is a Request for Quote?
First things first, what is a request for quote?
Unlike an invoice, which documents what is owed for services, an RFQ opens up the bidding process by listing specific products and services.
It’s basically the same thing as an invitation for bid, or a request for proposal.
It outlines, in detail, the project’s requirements to the potential bidder. For a more in-depth discussion of this, check out this blog.
This template is super important because the RFQ will require the bidder to carefully itemize all of the costs so that the solicitor (you and your company) can compare other bids you’re receiving.
If you’re requesting services or products that are standardized, or “off the shelf”, this template becomes even more important.
Your company will award the bid to the vendor that meets the criteria with the lowest price.
When to Use a Request for Quote
Using an RFQ helps keep the solicitation process more efficient because fewer responses are provided, so fewer quotes are qualified. That means you’ll need less evaluation time as bids are received only from qualified bidders rather than from a pool of bidders that may or may not be qualified.
Pro Tip: A quote received in response to an RFQ is not an offer, and you can’t use it to create a binding contract. The purchase order is an offer from your company to a vendor to purchase goods or services according to specific terms and conditions.
Your company awards the contract only when a vendor accepts the offer.
Have you pre-qualified the vendors you’ll be bidding to? This is a vital step in the process, called the request for information. This can include a questionnaire for your potential vendors to complete.
(Wanna know more about the request for information? Head over to our blog to learn more.)
How Do You Break down an RFQ Template?
The RFQ is typically broken into four sections: the preparation phase, processing phase, awarding phase, and the closing phase. We’ll go over these phases a bit more in depth, later.
The template itself should have the following:
Intro and Executive Summary
This might actually be your summary, too, which will go last in your RFQ. Here you’ll want to give an overview of your business, and what you’re looking for.
Biz Overview and Background
Here you’ll want to give more detail on your business, and on what you’re hoping the products or services you’re seeking will accomplish for you. You might also want to give an idea of the market and anything else related to this RFQ, so the vendor has all pertinent details.
This will help you be able to compare bids quickly and accurately. Specific templates within your RFQ might be cost drivers and elements. While templates will vary based on product, and by each RFQ, it’s good practice to have all the info for the specific products in the same format.
This is the meat of your RFQ, so you’re going to want to get very specific here.
Here’s a short list of some things to be detailed with:
- Product schematics or hardware requirements
- Part descriptions or item number
- Technical requirements
- Quality requirements
In public sector RFQs, an official fee typically is required to ensure that the process is open and transparent.
Think of this like a retainer, or even a consulting fee. The fee is usually held in escrow during the completion of the RFQ process, and if the vendor wins the bid, it can be applied to the payment schedule. Other potential bidders who lost the contract will get their tender fee returned.
Assumptions and Constraints
There may be other parts of this project that are not included in the total pricing for the product featured in your RFQ. In this section, list any other factors, such as licenses that need to be earned, travel expenses for the vendor, or other anticipated costs that the vendor might have to be willing to cover.
Contract Terms and Conditions
List the general terms and conditions for the contract, and explain which terms are negotiable. The GTC includes payment terms, contract length, warranties, performance penalties or incentives, and renewal options.
This gives vendors the information needed to weigh their options when considering whether to respond to your RFQ. It also saves time during contract negotiations, since you’ve already stated what you’re willing or unwilling to negotiate.
As part of the RFQ process, you have established the criteria for awarding your contract. The decision to include this information in the RFQ is strategic, and you can use it to your advantage or you can keep it under wraps.
Some companies include this information in the RFQ, because they believe it will help vendors better understand the company culture and structure, while others keep this hush-hush.
Be sure to include the contact info for any further questions, the deadline for submitting a bid, the format for the bid, and any other pertinent details. You may also choose to have vendors submit their entire RFQ response in a form to expedite the process and keep things really organized.
This is when following a template format and sticking to it can really come in handy and keep your bid comparisons on-point.
If you’re curious about bids and want to learn more, especially about government construction bids, check out this comprehensive list.
How Do I Write This RFQ so It Looks Good?
Don’t assume that sharing an RFQ with pre-selected and qualified vendors will yield awesome responses and great prices. You will receive better bids if you have a clearly written, well-organized RFQ.
Here are some best practices for writing an RFQ:
Use a Template
An RFQ is packed with information. Use of a template will reduce confusion for the writer, and keep it organized.
Tell vendors your exact requirements–no one is a mind reader! Be sure they respond in kind, with equal detail.
Define Your Expectations
Describe what you want in the RFQ responses. Your business success depends on how well a vendor responds. Describe what you want, and be sure to clarify what happens if the vendor does a great job, or not so great, too.
Ask Relevant Questions
Time is a precious resource for companies. Don’t stuff your RFQ with unnecessary fluff, and only stick to pertinent details. If you’re really into writing content that attracts clients (hey, this benefits all industries), check out this blog on how to write snappy content.
Set Appropriate Deadlines
Give vendors an adequate time frame to prepare a solid response. For smaller RFQs, two weeks is sufficient. Add more time depending on the size of the project and if your RFQ is super detailed.
Revise the RFQ
Writing is really rewriting, and learning to edit well is key. Once you draft the RFQ, ask key stakeholders and colleagues to review it and ensure you were clear in stating your needs and requirements.
What About RFQ’s for Construction Businesses?
RFQs are commonly used for acquiring vendors in construction, especially in the supply chain department. They are designed to evaluate the capacity of those vendors and are used as a pre-screening process.
RFQs typically follow an RFI (request for information). Regardless of where the RFQ falls in the process, create one primarily if the terms are financial to obtain pricing specifics and info about meeting those requirements.
Keep in mind that RFQs are uncommon in project work.
Invest the time in this phase of researching your RFQ to save time later. Good preparation includes deciding what you want in the product and the process (have you noticed this emphasis on specifically stating what you want?)
Setting up clear requirements from the beginning allows you to quickly review bids and quickly award a contract. Working with project managers and other internal stakeholders can ensure that you’ve identified all the necessary requirements and have established a solid and reproducible RFQ process.
Send the RFQ to the vendors and be sure to allow enough time for them to respond with a thoughtful quote. During this phase, be prepared to answer questions about the RFQ and share the answers with all the other vendors.
You may find it helpful to track the queries as you answer them to help with subsequent projects or pricing. You could do this in a Google Doc that all vendors have access to.
It’s essential during this time to treat everyone equally! This will ensure that you conduct a transparent and fair bidding process. Don’t provide more information or other favoritism to any vendors over others, and stick to any confidentiality requirements spelled out in the RFQ as you receive the bids.
Keep track of the responses as they come in and let vendors know of their receipt. Notify the selection committee of your progress, so those members will know how much time to set aside to review the bids.
Depending on your process, you may want to open all the bids once the deadline has passed, or to open the bids as they arrive. Put safeguards in place to ensure that confidentiality is respected as bids come in and you consider sharing them.
Awarding the Contract
Once the deadline has passed for receiving bids, the review committee can now compare the submissions based on the selection criteria. If you’ve used a template to collect price quotes, it should be easy to compare the bids. The winner will be the vendor offering the lowest price at while meeting the most criteria.
Based on that RFQ response, you can create a contract or purchase order to finalize the deal.
Document the winner, the process, the number of bids, and criteria in an internal memo for an auditor, which will help guide a template for future projects (as well as save administrative headaches).
The contract should be easy to finalize and sign since many of the contract details were part of the RFQ process. There may be some negotiation still left to do such as packaging, changes in pricing levels, or delivery schedules.
Once the contract is signed, notify the other vendors that a winner has been chosen and thank them for their participation. Because you maybe want to do business with these other vendors in the future, you don’t want to burn any bridges. Also, this process was pretty rigorous and their time is valuable.
Be sure to thank them!
Need to know more about contracts for construction businesses? We’ve got that covered.
Easy Guide: Request for Quote Template
In this broken-down and simple guide, you’ve been able to see how much less daunting the request for quote template and process can be.
If you stick to some simple guidelines, writing your request for quote will be a lot simpler, more organized, and less of an administrative headache.
Haven’t had enough learning about B2G articles and bidding? Head over to our blog that talks all things B2G articles and bidding, too.