An RFQ, which is short for Request for Quotes, is one of the first steps when selecting a manufacturer for your products. This is a very important first step as it is very often the very first impression that you will make with a potential supplier or partner. As a result, you need to make sure that you do the RFQ right in order to set a strong foundation for the rest of the sourcing or procurement process.
What does RFQ stand for?
RFQ stands for Request for Quote, and A process where a buyer sends out an invitation to multiple factories or suppliers to get bids and cost.
What is a Request for Quote (RFQ)?
Requests for quotations, or RFQ, are the most common requests, and they live up to the name. Request for quotes is, simply put, when you reach out to a seller or manufacturer and request a quote for them to manufacture your product.
You, the buyer, need to make sure that you have a very detailed set of specifications for the product. This often takes the form or a product spec sheet. IF you have not completed a product spec sheet then please see the guide here: https://www.cosmosourcing.com/blog/how-to-create-a-great-product-specification-sheet
An RFQ is a request, and thus is kind of like an invitation for a seller to give you a price for what you are asking.
How is a Request for Quote different from a Spec Sheet?
To be honest for some projects there isn’t that much difference. For other projects, they can be drastically different. Why? It really depends on the complexity of the project. If you are sourcing a simple item you can use your full spec sheet in the RFQ, but if the project is more complex, then you may want to make a simplified product spec sheet to attach to the RFQ.
There are two parts to an RFQ and that is the initial message/email to the factory and a product spec sheet. Some people introduce the full product spec sheet in the first part and that’s fine for most projects, while others will make a simplified one introduce the product and show the full product spec sheet when it comes closer to production.
We’ll go over more about how to talk to suppliers later, but for now, we will use this section to craft a great introduction to you and your product.
What makes a good RFQ?
Keep in mind that when you are asking a supplier to make a quote, they will only be using the information that you have provided them with your product. In the previous section/blog post, you made a well-defined spec sheet. This is the time that you start to share the product spec sheet. When the supplier receives the product spec sheet, they will have a project manager or an engineer will go over the product spec sheet line by line to calculate the cost.
You also need to make sure that it can be shared easily. Your contact with the factory will take the product spec sheet and share it with all the appropriate departments and staff. What WON’T be shared is the various emails that you sent to them asking about the product or question features etc. so if you asked for a change in an email it will not be included unless you update the product spec sheet.
How to create an RFQ
The RFQ needs to do two things: First, it needs to fully and quickly introduce your product, and second, it needs to solicit the supplier to send you a quote on your product.
When messaging a supplier you need to ask them to make a quote on the product details that you provided. The main information that every RFQ needs to ask from a supplier is
- Cost
- Minimum Order Quantity (MOQ)
- Bill of Materials
- Price per unit
- start-up cost
- Shipping terms
- and a few more details depending on your product
For many projects, you may also find it helpful to include this. Additional factors that you need
- Bill of Materials
- Machinery used (some project require very specific machinery)
- Closest port
- The price difference with or without customization or feature
Remember that you are letting manufacturers know what you are making and inviting them to make a quote on your product. Some people like to quickly email blast a dozen or more potential suppliers, but I try and do each email individually. For the most part, I follow a template and create a new one for each project with the ability to add a few customizations. I included an example of one below.
RFQ Template:
Below is a template of a script that you can use. This one is a fairly basic and straightforward template but should work fine for most simple projects. Our DIY Sourcing Kit features several scripts that you can use to communicate with suppliers, as well as Templates for the product spec sheet and much more. If you want to see a preview of our DIY sourcing kit before purchasing check out our BEfore you source pack for free!
Subject(s): “I’m interested in [Product Name]” or “RFQ for [Product Name]”
Hello [Potential supplier] (Note: use their given name if you have it),
I’m (your name) the procurement manager for [company name] and I’m interested in receiving a quote for
[write a few short sentences about your product]
[In a new block, create a bulleted list that shows materials colors and other basic attributes. Keep it short and simple]
If you manufacture
In your response, include:
- Pictures of the product, and a photo of (note: the detail can be anything just make sure it forces them to use pictures taken for you and not found elsewhere
-
- The Minimum Order Quantity
- The price at the MOQ and [some other amount] (Note: I find that getting 2 prices for different quantities lets you know their flexibility on a price and helps in negotiations later on)
- [the price to make any changes or customization that you want] (be specific on this part but you can skip it if you want a product as-is)
- What is the shipping cost of sending a sample?
- The Closest port (note the port should be close to where they claim they are located if you’re dealing with a factory if it’s too far be cautious)
Thanks, we look forward to hearing back from you!
[your name]
Procurement manager
[Company name]
Notes about RFQ Template:
When you are getting the RFQ ready there need to be a few things that you need to keep in mind. Focus on how you work for the tech pack so that it sounds professional and police and leave the potential supplier feeling confident about you, so that
Keep it personal
Please note that the salesperson answering these emails sees the same email templates all the time to take time to personalize it and make it yours. This will help it stand out from the crowd. IF you have the name of the factory or even better the name of the main salesperson or CEO, then use that name. Emails that start off with “To Whom it may Concern” or anything else impersonal will almost always get ignored. If you can add an extra sentence
Another thing to note is that English is almost certainly not the first language of the person you are talking to. Be sure to use clear and simple language, while making sure you are getting your point across.
Keep it professional
Make sure that when you are writing the RFQ that you come across as someone professional. Keep in mind that the supplier will only make a bid if they think you are someone that they will want to work with in the future. They need to be confident in your business plan and trust that you will make a purchase and follow through on the payments.
Be Thorough
When creating the RFQ, make sure you include all of the details of the product that you want to be included. They will use the RFQ and attached Product spec sheet or Tech pack as a reference for the bid and will make a quote based on not just the product but all additional requests such as packaging, and shipping, if requested.
Include a Product Spec Sheet or a Tech Pack
Product spec sheets and tech packs are needed to go along with the RFQ so that the supplier has a complete set of details about what they are making a bid on. Check out our Before you Source Kit for details on how to make a product spec sheet.
Where to post
Now that you have your message and product spec sheet, the next step is to figure out where to send it out and get suppliers. Alibaba is the most commonly used tools but there are several alternatives to Alibaba, which you can check out here Guide to Alibaba alternatives.
For many suppliers, you will email them, the same basic format of copying and pasting the message into the body of the email and attaching the Product Spec Sheet. Keep in mind when emailing it is extra important that you personalize in order to get it to stand out.
Alibaba “Request for Quote” feature
Most sourcing websites such as Alibaba and Global Sources have a Request for quote options for members. This allows the user to submit an RFQ, which almost always includes a form to fill in the text (using your template from above) and attach the product spec sheet.
Message on Alibaba
In addition, to passively waiting, for suppliers to message you you can be proactive and search for suppliers. We wrote a guide on how to find a supplier that you can read here. This follows the same format as copying and pasting the text into the body and including an attachment.
Difference between RFP and RFQ
We wrote a more thorough article about the difference between RFQ, RFP, RFT, and RFI Here
An RFQ is a Request for a quote and your objective is to get a quote. This assumes that you, the buyer, knows the process that goes into the manufacturing of the product and has a product spec sheet that already details what you plan on making
RFP stands for Request for proposal, and the end goal is naturally a proposal. IN this process you will get an overall quote the cost of the project, but also get input from the factory or supplier about how to either make the product or their suggestions about customization or other aspects of the project. This is more popular in more complex projects or new to market products.
If you are doing a Private label you only need to do an RFQ. You should only use RFP if you are flexible with the end result of your product and are curious about what the manufacturer can do.
Conclusion
To summarize, when creating an RFQ make sure that you include all details and follow the script, so that you can have a good rapport with the potential supplier. You should prepare a Product spec sheet before or at the same time as the RFQ and make sure that you adapt it for the medium in which you submit it.
We hope you found this guide helpful if you have any question feel free to leave a comment and we will answer it for you.
