What is an RFP?
This article explains what Request for Proposals (RFPs) are, how they work, and how to respond to them effectively without wasting resources on opportunities you're unlikely to win.
Understanding the basics of RFPs
RFP stands for request for proposal. It's a document organizations create when they need help solving a problem. They send this document to potential vendors asking for solutions. For the organizations sending RFPs, it's a way to find the best vendor. For those answering, it's a chance to win business and build relationships.
About $11 trillion of business is won through competitive proposal processes each year. That's a lot of money, so understanding RFPs matters.
Types of RFP opportunities
You'll run into two main kinds of RFPs. First are the ones where someone invites you to participate. They already know about your company and want to see what you'd offer. Second are the ones you find yourself—through research or word of mouth—where you weren't specifically invited.
You're more likely to win the first kind. When someone invites you, they already think you might be a good fit.
RFP terms worth knowing
The organization sending the RFP has a problem they want solved. They're the issuer. You're the responder. What you send back is your proposal or response. It usually answers a set of questions from the issuer. If they pick you, that's a win. If not, that's a loss. Everyone loses sometimes.
The RFP timeline
Responding to RFPs takes time. Ideally, you'll have 3-6 weeks to write your response. Often, you'll have just a week, which means working under pressure.
How long it takes depends on a few things: how many people are working on it, whether you already have relevant content, and how streamlined your process is. If you've answered similar RFPs before, you might be able to reuse some of your work. If this is new territory, you'll need to start from scratch.
Should you respond?
Before you dive in, ask yourself five questions:
Did you know about this opportunity before the RFP came out? Can your solution actually solve their problem right now—not after some future changes? Does your price match their budget? Will winning this contract help your company strategically? Do you have time to write a good response?
For example, if you sell project management software and get an RFP from a manufacturer looking mainly for manufacturing software with some project management features, you might want to pass. Better to focus on opportunities that fit you well.
Building a good response
If you decide to go ahead, you need to focus on three things:
First, project management. Put someone in charge who can coordinate everyone's work and keep things on schedule.
Second, content management. You need people to write and review content, and a place to store it for future use. Even if this is your only RFP this year, what you gather will help with sales proposals, customer questions, and training.
Third, quality. Don't just answer the questions—show that you understand the issuer's specific problems and needs.
Remember, the issuer is creating competition to find the best vendor. You need to stand out to win.
RFPs and sales
For sales teams that struggle to find enough leads (about 69% of B2B salespeople say they don't have enough), RFPs can be valuable. But they also take a lot of work—up to five times more than regular sales opportunities.
That's why your process matters. Companies with good RFP tools respond to 43% more RFPs and win about 15% more often.
Using technology wisely
Good RFP software helps you:
- Save time by reusing content
- Keep your messaging consistent
- Use your company's collective knowledge
Your software should help with the whole process—from creating proposals to answering questions to responding to formal RFPs. It should also work with your other tools like your CRM.
Working across languages
If you work globally, you need to handle RFPs in different languages. Good RFP tools can translate incoming RFPs into your language, let you work in your native language, and then translate your response back to the original language.
RFPs as market intelligence
Beyond just winning business, RFPs tell you about market trends and what customers care about. Every RFP you see—even ones you don't respond to—gives you insights into what organizations in your market value.
By watching RFP patterns over time, you can spot new requirements, changing priorities, and gaps in what you offer.
Conclusion
An RFP is more than paperwork—it's a structured way organizations find vendors, and a way for you to find customers. By understanding RFPs, choosing the right ones to respond to, and using good processes, you can win more business.
The right approach to RFPs can turn them from a burden into one of your most valuable sales channels.
Frequently asked questions
What are the 7 steps in an RFP?
The seven steps in an RFP process typically include:
1. Planning and preparation - defining requirements and objectives
2. Creating the RFP document - drafting the formal request with detailed specifications
3. Distribution to potential vendors - sending the RFP to selected vendors or publishing it publicly
4. Q&A period - allowing vendors to ask clarifying questions
5. Proposal submission - receiving completed responses from vendors
6. Evaluation of proposals - reviewing and scoring vendor submissions
7. Selection and contract negotiation - choosing the winning vendor and finalizing terms
What does RFPs stand for in business?
RFP stands for Request for Proposal. It's a formal document issued by an organization seeking solutions from potential vendors. It serves as a structured way for organizations to find the best vendor for their needs, while for responding vendors, it represents a significant business opportunity to win valuable contracts and build lasting relationships.
What is difference between RFQ and RFP?
The key differences between RFQ (Request for Quotation) and RFP (Request for Proposal):
RFQ:
- Focused primarily on price
- Used when specifications are clearly defined
- Seeking the lowest cost for a standardized product or service
- Usually simpler and shorter than RFPs
- Primarily quantitative evaluation
RFP:
- Focused on comprehensive solutions
- Used when the problem is defined but solutions may vary
- Seeking the best overall value, not just lowest price
- Usually more complex and detailed
- Includes both quantitative and qualitative evaluation criteria
Who needs an RFP?
Organizations that need RFPs include:
1. Businesses making significant purchases or seeking complex services
2. Government agencies required to use competitive bidding processes
3. Non-profit organizations seeking vendors for major projects
4. Educational institutions procuring systems or services
5. Healthcare organizations sourcing specialized equipment or services
6. Any organization looking to objectively compare multiple vendor solutions
7. Companies with formal procurement policies requiring competitive bidding
RFPs are particularly valuable when organizations need to make important purchasing decisions that require careful vendor evaluation and comparison of different approaches to solving their problems.