Proposal (business)

A business proposal is a written offer from a seller to a prospective buyer. Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase.

A proposal puts the buyer's requirements in a context that favors the seller's products and services, and educates the buyer about the capabilities of the seller in satisfying their needs.

The professional organization devoted to the advancement of the art and science of proposal development is the Association of Proposal Management Professionals.

There are three distinct categories of business proposals:

Solicited proposals are written in response to published requirements, contained in a request for proposal (RFP), request for quotation (RFQ), invitation for bid (IFB), or a request for information (RFI).

Request for proposal (RFP)

RFPs provide detailed specifications of what the customer wants to buy and sometimes include directions for preparing the proposal, as well as evaluation criteria the customer will use to evaluate offers. Customers issue RFPs when their needs cannot be met with generally available products or services. RFIs are issued to qualify the vendors who are interested in providing service/products for specific requirements. Based on the response to RFI, detailed RFP is issued to qualified vendors who the organization believes can provide desired services. Proposals in response to RFPs are seldom less than 10 pages and sometimes reach 1,000's of pages, without cost data.

Request for quotation (RFQ)

Customers issue RFQs when they want to buy large amounts of a commodity and price is not the only issue—for example, when availability or delivering or service are considerations. RFQs can be very detailed, so proposals written to RFQs can be lengthy but are generally much shorter than an RFP-proposal. RFQ proposals consist primarily of cost data, with brief narratives addressing customer issues, such as quality control.

Invitation for bid (IFB)

Customers issue IFBs when they are buying some service, such as construction. The requirements are detailed, but the primary consideration is price. For example, a customer provides architectural blueprints for contractors to bid on. These proposals can be lengthy but most of the length comes from cost-estimating data and detailed schedules.

Request for information (RFI)

Sometimes before a customer issues an RFP or RFQ or IFB, the customer will issue a Request for Information (RFI). The purpose of the RFI is to gain "marketing intelligence" about what products, services, and vendors are available. RFIs are used to shape final RFPs, RFQs, and IFBs, so potential vendors take great care in responding to these requests, hoping to shape the eventual formal solicitation toward their products or services.

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