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How to approach a Request for Quotation
Quote requests are usually used for the purchase of commodities, such as commercial off-the-shelf products, or other tangible items with set specifications that are usually available from many sources. Most product resale fits into this category.
Quote requests usually provide a set of specifications that the product must meet and details on how pricing data should be supplied. There are subtle differences between a Request for Quotation (RFQ) and a Request for a Proposal (RFP). Responding to an RFP usually requires supplying information in addition to the price. The evaluation of an RFQ focuses on the price, and the lowest price that meets the specifications usually wins. RFP are usually used for more complicated purchases and the evaluation may be based on the overall value of what you are proposing, taking into consideration reliability, risk, and other factors.
When responding to an RFQ, if the customer has already decided to make a purchase, has budget approval, and knows exactly what they want, they will probably be less interested in salesmanship or packaging, and more interested in the price. If they haven’t decided to make the purchase, they may be requesting the quote to see if it fits within their budget and you may need to persuade them to make the purchase as well as to select you as the vendor. In the letter or narrative text you supply with the quote, you should show that:
- You have the capability to deliver as promised
- You have the flexibility be responsive if requirements change
- You have experience fulfilling similar needs
- You have a history of delivering on-time and within budget
Even though an RFQ response is usually a cost shoot-out, it can still be a good idea to demonstrate value. If you exceed the specifications or requirements or can deliver faster then they require, demonstrate how that will benefit them. It works best if you can quantify the value by showing that it will ultimately save them more then any difference in cost. Providing a better overall value and demonstrating how they will benefit will not only help to differentiate you from any competition, but may even help you to win, even if your price is higher.
You should keep in the back of your mind that there are other reasons for a customer to issue an RFQ. Occasionally an RFQ will be issued to discover pricing, without any intent to actually make a purchase. Sometimes they are even used to justify using a preferred vendor. It helps to have a relationship with the customer so that you can understand the motivations behind the RFQ. It also will help you to link your response to what they are really trying to accomplish.
By Carl Dickson, Founder of CapturePlanning.com
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