Practical guide
RFQ to purchase order
A request for quotation (RFQ) is the document you send to several vendors when you already know exactly what you want to buy and only need their prices and terms. The vendor responses are collected into a quote comparison, one vendor is picked, and that winning quote becomes the purchase order. This guide walks the full chain: writing the RFQ, comparing quotes on landed cost rather than sticker price, and issuing the PO.
Who needs this workflow
Any team that buys the same goods from more than one possible supplier: small manufacturers sourcing parts, contractors buying materials for a job, office managers ordering equipment, and one-person procurement functions that still want an auditable paper trail. If you only ever buy from a single supplier at their list price, you can skip the RFQ and raise a purchase order directly; the RFQ step earns its keep the moment two or more vendors could win the business.
Step 1: Write the RFQ
An RFQ that produces comparable quotes pins down everything except the price:
- Line items with quantities and units. "40 task chairs, model or approved equivalent" gets you comparable numbers; "office chairs" gets you apples and oranges.
- Delivery place and required date. Freight is often the deciding cost, and vendors cannot price it without a destination.
- Response deadline and quote validity. Ask vendors to hold their price for a stated period (30 days is common) so the winner cannot reprice before you issue the PO.
- Evaluation criteria. Telling vendors you will weigh price, lead time, and warranty keeps the responses honest and the award defensible.
- What to include in the price. Ask for freight, duties, and fees as separate lines so you can compute landed cost yourself.
Send the same RFQ to every vendor. If one vendor asks a clarifying question that changes the scope, share the answer with all of them.
Step 2: Compare the quotes on landed cost
Landed cost is what a purchase actually costs once the goods are on your dock: goods plus freight plus duties and fees. Comparing quoted unit prices alone routinely picks the wrong vendor. Here is a worked example for 40 task chairs:
| Vendor | Unit price | Goods (40 units) | Freight | Fees | Landed cost | Lead time |
|---|---|---|---|---|---|---|
| Vendor A | 62.00 | 2,480.00 | 150.00 | 0.00 | 2,630.00 | 10 days |
| Vendor B | 59.00 | 2,360.00 | 320.00 | 45.00 | 2,725.00 | 7 days |
| Vendor C | 63.00 | 2,520.00 | 0.00 | 0.00 | 2,520.00 | 21 days |
Vendor B has the lowest unit price but the highest landed cost once its freight and handling fee land on top. Vendor C is cheapest overall but needs three weeks. If the chairs are needed within two weeks, Vendor A wins at 2,630.00 despite being neither the cheapest unit price nor the cheapest landed total. That is why the comparison sheet, not the quote stack, is where the decision happens: it lets you weight price against lead time and warranty instead of sorting on a single column. Tax treatment varies by jurisdiction, so keep any vendor-quoted tax as its own line and check the rules for your country on the relevantcountry page.
Step 3: Issue the purchase order
The purchase order goes to the winning vendor only. It should restate the agreed line items, quantities, unit prices, delivery place and date, and payment terms from the winning quote, and it should quote the vendor's quote number so there is no argument later about which offer was accepted. Once the vendor accepts the PO, the price and terms are locked; changes after that point should go through a documented revision, not a phone call. The losing quotes do not disappear: keep them with the comparison as the record of why the winner won.
How this differs from adjacent documents
- RFQ vs purchase requisition. A requisition is an internal request for approval to buy; an RFQ is an external request for prices. The requisition usually comes first. See purchase order vs requisition.
- RFQ vs quote. The RFQ is your outbound question; a quote is the vendor's inbound answer. One RFQ typically produces several quotes. Seeestimate vs quote for how a quote differs from a looser estimate.
- Quote vs purchase order. A quote is the vendor's offer; the PO is your acceptance of it. The commitment forms when the PO is issued and accepted, not when the quote arrives.
Frequently asked questions
Is a purchase order a contract?
A purchase order is an offer to buy on stated terms, and in most business settings it forms a binding agreement once the vendor accepts it or starts performing. Whether a particular PO is enforceable depends on the rules where you operate, so treat every PO you issue as a commitment and check local specifics on the country pages.
How many vendors should an RFQ go to?
Three is the common working minimum: enough to see the market price, few enough to evaluate properly. For routine purchases, more than five usually adds work without changing the answer.
What is the difference between an RFQ and an RFP?
An RFQ asks for prices on a defined specification; you already know what you want. A request for proposal (RFP) asks vendors to propose how they would solve a problem, and the approach itself is part of the evaluation. If your line items are fixed, you want an RFQ.
Can I negotiate after quotes come in?
Yes. It is common to go back to the leading one or two vendors on price, freight, or lead time. Record any revised numbers as an updated quote so the comparison reflects what was actually agreed, and keep the original for the audit trail.
What if the winning vendor's price changes before I send the PO?
Check the quote's validity period. Inside it, you are entitled to the quoted price; issue the PO referencing the quote. If the validity has lapsed, ask the vendor to reconfirm in writing before issuing the PO, and re-run the comparison if the new price changes the ranking.
Do I need an RFQ for small purchases?
Usually not. Most small operations set a threshold (for example, anything over a few hundred in your currency) below which a direct purchase order is fine. The RFQ pays for itself on repeat purchases and larger one-offs, where a few percent of price difference outweighs the time spent comparing.
Doing this in Formnivo
Each step of the chain has a generator: theRFQ generator, thevendor quote comparison sheet, and thepurchase order generator. The workspace also wires them together: an RFQ can be aggregated into a vendor comparison (many quotes, one sheet, with each vendor's freight, duty, and fees captured separately and price, lead time, and warranty weights you control), and the comparison converts into a purchase order that carries the winning vendor as supplier and drops the losing quotes from the PO while keeping them on the comparison. If a purchase starts as an internal request, thepurchase requisition generator feeds the same chain: a requisition converts to an RFQ or directly to a PO. Everything is free, needs no account, and stays in your browser's local storage on your own device; nothing is uploaded anywhere.