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RFP meaning: What it is and how it works
Business Basics

RFP meaning: What it is and how it works

9 min read

Highlights

  • RFP stands for “request for proposal.”
  • RFPs are used to solicit proposals from potential vendors for products or services.
  • An RFP can help a company get the best value for their money and make sure all necessary requirements are met.

What is an RFP?

An RFP, or request for proposal, is a document that is used in the procurement process. It describes an upcoming project or business need and invites suppliers, vendors, or contractors to submit a proposal for a specific product or service to complete the project. It can be submitted to select vendors for review, or posted publicly for everyone to see. The requesting company (or decision makers within the company) can then choose the vendor with the best options and price.

What does RFP stand for? RFP stands for “request for proposal,” and the two terms can be used interchangeably. It’s called this because you are putting out an open request for various suppliers or contractors to give you proposals for their products or services.

Why do companies use RFPs?

The benefits of an RFP can be numerous. RFPs allow companies to:

  • Get the best value
  • Understand all available options
  • Ensure all requirements are met
  • Standardize the selection process
  • Minimize risk

What goes on a request for proposal?

An RFP can include several different sections depending on the scope and details of the product or services a company needs.

An RFP might include several of the following sections: 

  • Description of the company issuing the RFP
  • Description of the product or services needed
  • Submission requirements and questions the vendors should answer
  • Information about how submissions will be evaluated
  • Contract terms and conditions
  • Project deadline

RFP example

You can find many RFP samples online, but let’s break down one hypothetical example. A gym called IronLift Fitness is seeking to purchase a new set of gym equipment. This is what their RFP might look like:

RFP new gym equipment

IronLift Fitness is a medium-sized fitness facility located in downtown Indianapolis. We are seeking proposals for a new set of gym equipment to replace our current outdated equipment.

Scope of work: The new gym equipment should include a variety of cardio and strength training equipment, such as treadmills, stationary bikes, and free weights.

Proposals will be evaluated based on the following criteria:

  • Cost: We are seeking an affordable solution.
  • Quality: The equipment should be commercial grade and durable.
  • Customer service: The vendor should offer comprehensive support and maintenance services to ensure the equipment is always in good working order.

Submission requirements:

Proposals will be reviewed by our team, and shortlisted vendors will give demonstrations of their equipment at an agreed upon location. The final selection will be made based on the criteria outlined above.

Contract terms:

The selected vendor will be required to enter into a contract with IronLift Fitness for five years to provide maintenance, support, and repair services.

RFP vs RFQ vs RFI

An RFI is a “request for information.” When a company wants to learn more about a vendor that has responded to their RFP, they can submit an RFI to learn more about what the vendor has to offer. An RFI can also be included in the initial RFP process. Alternatively, an RFI can be used before an RFP to help select vendors who will later receive an RFP and RFQ.

An RFQ is a “request for quote.” After a vendor responds to an RFP, the company that issued the RFP might use a RFQ to learn more about the vendor’s pricing breakdown.

When should you use an RFP?

If you need an outside vendor or contractor to complete a project, and you want to complete the selection process quickly and efficiently, an RFP might be a good choice for your organization.

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The information provided on this page does not, and is not intended to constitute legal or financial advice and is for general informational purposes only. The content is provided “as-is”; no representations are made that the content is error free.

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