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Proposal vs. Contract: Which should you Use?

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Most entrepreneurs and MSMEs are doing this wrong.

A proposal is NOT a contract.



A proposal is a document that walks the client through the process you will follow to solve their business problem. Your proposal should not give them the solution to their problem for FREE.

The purpose of a proposal is to SELL. It is used to sell the client on choosing you.

If your client wants to buy your product/service, proceed to the contract.

A contract is also known as a Statement of Work (SOW). It defines the terms of an agreement.

Using both these documents (proposals and contracts) will help you better sell your clients and create happier customers.

PROPOSAL vs. CONTRACT

Here are the important parts of a Proposal:



• Title Page


•Project and Objectives


•Description of your Services


•Optional Services (Upsell)


•Description of Project Management Approach


•Estimated Project Duration (timeline)


•Estimated Project Budget (pricing)


•Description of next steps (Contract)

Here are the important parts of a Contract:



•Title Page


•Detailed description of each project phase


•Description of all delivery rounds


•Checklists outlining what’s included and not included


•Estimated Project duration (timeline)


•Estimated Project Budget (invoice schedule)


•Signature Page (Contract Acceptance)


•Terms and Conditions

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