What Is an RFP? How a Request for Proposal Works

A request for proposal (RFP) is a formal document a business creates to outline project specifications, requirements, and evaluation criteria, inviting qualified third-party vendors to submit competitive bids.

Without standardized vetting and clear requirements, outsourced partnerships often fail to deliver on expectations. According to global research from the Project Management Institute, only 50% of business initiatives meet their defined success criteria, with 37% only partially delivering expected results due to misaligned partner capabilities and unclear upfront scopes. A structured RFP process eliminates guesswork by establishing direct, comparative evaluation criteria before you commit capital.

Learn what an RFP is, who creates one, how to write and manage the bidding workflow step-by-step, how RFPs compare to other procurement requests, and how to evaluate and manage vendor workflows after awarding a contract.

What is an RFP?

A request for proposal (RFP) is a formal procurement document published by a buyer to solicit detailed bids from prospective vendors for a specific project. When an organization needs to outsource a complex project, an RFP spells out the problem, budget guidelines, technical specifications, and delivery expectations. RFPs are used for business needs such as custom inventory manufacturing, wholesale logistics, raw material sourcing, digital transformation or new technology implementation, or advertising campaigns.

In response, vendors submit written proposals detailing their capabilities, pricing format, fulfillment timelines, quality control standards, and compliance certifications, where relevant. By soliciting multiple bids under identical guidelines, businesses can evaluate competing offers fairly side-by-side.

For example, when Jake Miller founded the design-forward coffee product brand Fellow, he had to build a manufacturing pipeline from scratch after raising $200,000 on Kickstarter for the Duo coffee brewer. With no existing factory network, Jake cold-called other entrepreneurs using similar materials like glass and stainless steel for referrals. Once he assembled his list, he used RFPs to vet the partners. 

As Jake says on Shopify Masters, “That’s how I sourced factories: We thankfully got a few referrals, and did light RFPs with those companies. Flew to Asia, met with them in person, toured the factories, and ultimately landed on a factory shortly after the Kickstarter campaign closed.”

Who creates an RFP?

RFPs are often created by government agencies. But in business, the size of the company determines who oversees the document:

• Founders and business owners. In early-stage and growing businesses, founders handle procurement directly.

• Procurement and sourcing managers. Mid-size and up businesses rely on dedicated purchasing specialists to run bids, vet vendor credentials, negotiate favorable payment terms, and protect profit margins.

• Team leads. Department heads create technical RFPs to purchase specialized tools, equipment, or services.

What an RFP includes

An effective RFP gives vendors clear parameters while providing your team with uniform data to compare. Write your document using the following sections:

• Executive summary and project goals. Open with a concise snapshot of the project. Explain what your business is buying, the problem you need solved, and your target completion timeline.

• Company background. Provide relevant context about your brand, current sales channels, and product line to help vendors understand your positioning and scale.

• Detailed scope of work. Detail the exact project specifications. 

• Success metrics. Outline the key performance indicators (KPIs) that will be used to measure the success of the initiative. 

• Submission guidelines and deadlines. Specify how vendors must format their proposals, where to send questions and responses, and the deadline for submission.

• Technical, regulatory, and compliance standards. List any mandatory regulatory requirements. 

• Pricing structure and cost breakdown. Instruct bidders to break down costs transparently rather than providing a single lump sum. 

• Evaluation criteria. Publish the exact scoring rubric you will use to grade proposals, weighting factors such as technical capability, price competitiveness, production timeline, and historical track record. 

• Contractual and payment terms. State your baseline commercial preferences. Clarify whether you expect net 30, net 60, or staged milestone deposits.

How the RFP process works

1. Draft
2. Distribute
3. Q&A
4. Evaluate
5. Shortlist
6. Award

To issue an RFP, work through these six stages:

1. Draft

Compile all specifications to draft the RFP. Structure every question so bidders submit objective, standardized data rather than open-ended sales pitches. 

Make sure the project scope covers the quantities you need, technical requirements, deliverable types and the formats you want them delivered in, as well as any other industry-specific standards or country laws you expect vendors to conform to. 

Entrepreneur Mary Young discovered the hard way the materials label in her Canadian-designed and manufactured garments wasn’t specific enough to meet US regulations. With a big order for Nordstrom on the line, she had to scramble to save the day. 

To make the vetting process easier, list specific metrics you want vendors to share about past work, such as on-time delivery rates and historical defect rates for manufacturing, or campaign conversion rate for advertising.

In your pricing guidelines, be clear about the level of granular detail and what you want itemized, so that you can understand how your overall budget would be allocated by the vendor. 

Finally, prepare your scoring matrix before sending a formal solicitation.

2. Distribute

Identify 5 to 15 qualified vendors using industry directories, trade shows, and founder referrals. Reach out to them via email with a copy of the RFP, inviting them to submit a proposal. 

3. Q&A

Allow vendors one to two weeks to review specifications and submit clarifying questions. Consolidate vendor questions and distribute an anonymized Q&A addendum to all bidders to maintain parity.

4. Evaluate

Score each submission against your rubric. Separate technical capability from pricing information to remain objective in the review process. 

When evaluating capability, look for signs of legitimacy. For physical suppliers, confirm active business licenses, plant square footage, equipment lists, and third-party audit reports. 

For marketing and advertising agencies, verify official platform partner badges (such as Google or Meta Partner status), active errors and omissions (E&O) insurance, third-party data security compliance, and direct references from current or recent clients.

When evaluating pricing, eliminate bids that fall suspiciously below market rates, which often signal inferior materials or lesser-credentialed service providers.

Also consider each vendor’s communication throughout the RFP process. As founder of the product brand LatchLight Julie Carty says on Shopify Masters, her 19-factory RFP process was an opportunity to evaluate initial responsiveness as an essential communication test. 

If a prospective manufacturer struggles to answer questions clearly or respond promptly during the low-stakes RFP phase, consider that a major warning sign that they will fail to problem-solve when complex production challenges occur during active runs.

5. Shortlist

Select the top two to three vendors that scored highest during the evaluation phase to begin technical validation. 

For manufacturing, order physical product prototypes and pre-production samples to test quality firsthand. Use this round to conduct virtual or on-site facility audits, inspecting factory machinery and working conditions. Meeting key personnel also provides insight into their transparency and problem-solving capabilities. 

For marketing agencies and software vendors, use this phase to schedule follow up meetings with various stakeholders to assess real-world capabilities and team chemistry.

Before launching Unbound Merino, Cofounder Dan Demsky flew to China to meet the manufacturing team. Besides wearing production samples around Shanghai for a week, he and his cofounders made new friends. 

“We got to become friends with them. We got invited to their family weddings,” says Dan. That relationship ensured quality control and has lasted nearly a decade. Unbound Merino still works with that original supplier. 

Use this stage to negotiate commercial agreements and lock in favorable payment terms and realistic MOQs. For instance, a founder sourcing a custom product might find that one shortlisted factory offers a lower unit cost but requires a 5,000-unit minimum, while a competing supplier offers a slightly higher unit price with a manageable 1,000-unit MOQ and net-45 terms. 

Evaluate these trade-offs against your working capital in order to select the partner that best preserves cash flow while meeting product quality benchmarks.

6. Award

Notify the winning bidder and establish the legal and operational framework for the partnership. Execute non-disclosure agreements (NDAs) and a formal master services agreement (MSA)—or a specialized manufacturing services agreement. 

Use it to detail quality acceptance thresholds for products or deliverables, defect rate allowances, escalation paths, intellectual property protections, delivery milestones, and agreed-upon payment terms. 

Once the legal contracts are signed, issue your initial purchase order to lock in production schedules and authorize tooling or material procurement.

RFP vs. RFQ vs. RFI: Which should you use? 

While an RFP asks vendors to pitch custom strategies and pricing for complex projects, businesses use two other tools when their needs are simpler. 

A request for information (RFI) is an early research check used to see what kinds of vendors or solutions exist in the market. A request for quotation (RFQ) is a price check used when you already know the exact item or service you need and just want bottom-line costs and turnaround times. 

Here’s how request for proposal (RFP) vs. a request for quotation (RFQ) and request for information (RFI) all compare. 

How to manage suppliers after the RFP process

Awarding a contract is only the beginning—maintaining operational efficiency requires centralizing your vendor data, order tracking, and payouts. Once an agreement is signed, add your new partner’s details into your ecommerce platform to assign supplier records to individual products, monitor stock levels across locations, and track incoming purchase orders from your admin dashboard.

Centralizing vendor payouts also protects your cash flow and working capital. Using tools like Shopify Bill Pay, you can upload supplier invoices, schedule payments via bank transfer, ACH, or credit card, and maintain full visibility over outstanding liabilities in one place. This prevents payment delays and keeps active production or services on schedule.