Quote Request vs RFXs: Similar structure, different applications in a marketplace
Quote Requests and RFPs are both sub-categories of non-commoditised services. As a quick reminder: non-commoditised services are the ones that cannot be purchased without prior discussion between the customer and the vendor. These discussions are usually to determine the nitty-gritty of the service requested eg. timing, conditions.
Quote Request: The customer usually is very clear on the vendor they’d like to avail the service from, and requests a price quote from the same. For example, lets consider you have a large scale event to plan, and responsible for finalising the caterer as well. Last year, you’d visited a wedding where you loved the food that was served, and had taken the details of the caterer. You know its the same caterer you want to hire for the event, but first you need to give him your event details (eg dates, no. of people etc, menu preference etc) so he can come back to you with the pricing. Thus the detailed plan the vendor comes back to you with is his Quote for the service he will provide, and the initial details you gave to him was the ‘Quote Request’. Quote Requests are a 1:1 relation, and also open-sided in terms of the booking flow.
RFX: It is a non-commoditized service request initiated by a buyer to “n” vendors i.e a 1:n relation. The Vendors that will respond to the request are unknown to the Customer at the onset, and the booking flow is that of a blind-side marketplace. RFX refers collectively to a RFI, a RFQ, or a RFP.
- RFI – Request for information: It is a questionnaire used to ask vendors about their services and often gathers general information, market details and solution ideas for planning purposes.
- RFP – Request for proposal: It is a detailed questionnaire used by customers to collect decision-critical information from potential vendors. The RFP is one of the most commonly used tools for evaluating vendors and documenting selection justification.
- RFQ – Request for quotation: It is a document that details a buyer’s needs and asks vendors to respond with a detailed pricing proposal. Generally, a buyer issues an RFQ when looking for the lowest possible price. This is different from a Quote Request as here, the customer is looking for a specific skill that he hs already found in a vendor and now just wants to know price to be paid for it.
Do certain factors affect which type your non-commoditisied marketplace should be configured to provide?
Truth is, your non-commoditised marketplace does not necessarily have to make an either/or choice here. It the case of both, Quote Requests and RFX, the structure of the transaction is the same – the customer demands some data from the vendor/s, the vendor/s reverts and the customer concludes. The only difference is how many vendors he requests this data from at a given time. If its just one it becomes a Quote request, if its multiple it becomes an RFX.
That said, if you do however want to restrict your marketplace to only provide one of the two, these are some points you’d want to think about:
| Quote Request | RFX | |
|---|---|---|
| Customers key focus | The purchase is motivated by the quality of the vendor. The customer is usually already very clear about his needs and who can address them. | The purchase is motivated by whoever can best understand and meet the customers needs. The customer is usually unaware of a particular vendor that he can go to. |
| Price Sensitivity | Low | High |
| Example | If you’re looking for a heart surgeon for a family member, you do not go around asking multiple doctors about their specialties and pricing. You research the best one and approach only them. | While looking for a house insurance for your apartment, you usually are aware of the key criteria you want addressed, and then evaluate based on proposals from different insurance providers |