RFQ (request for quotation)

A request for quotation usually carries the drawing or the model, the quantity, the material, the wanted delivery time and sometimes the quality requirements. From one customer it is a worked-out package, from another a loose question with a photo attached. The answer is the quotation: a price, a delivery time, and the conditions under which they hold.

What it means for the calculation

Answering a request costs time, and not all requests become orders. That makes the ratio between requests and won orders a direct cost: the more hours per request, the more expensive each won order is. So it pays to see early which requests are hopeless or incomplete. A request with no quantity, no material or no revision also leads to a price resting on assumptions instead of requirements.

Where this comes up

As the first step in the sales process, and as the source for the quotation and later the order. The number of requests per won order is one of the few figures that shows directly what estimating costs a business.

Common mistakes

Treating each request with the same depth, whatever the chance it becomes an order. Also quoting on an incomplete request instead of asking for the missing details; an assumption that turns out wrong costs more than the question would have.

What does a request for quotation need at a minimum?

The part with its revision, the quantity, the material and the wanted delivery time.

Is a quotation binding?

That depends on the conditions attached; it usually holds for a set period and for the stated quantity.

Why does the price differ per quantity?

Because setup time and preparation are spread over more or fewer pieces.