Choosing between a proposal and a contract is important for every business. 60% of companies use proposals to start with clients. 40% use contracts to close deals. Knowing when to use - Proposal vs Contract - can make your work smoother and improve client relationships.
Before deciding which tool to use, here are some facts to help you. We recommend Cone Proposal and Billing Software because it combines proposals and contracts into one. You won’t have to choose Proposal vs Contract —CONE creates custom templates to impress clients. Once approved, it automatically generates invoices and offers quick payment options like direct debit or credit card. E-signatures make business pitch approvals fast, and customizable contracts keep binding terms and obligations clear. Cone also syncs with your accounting software, saving time and streamlining your workflow.
What’s a proposal?
In a good software’s language, a proposal is a detailed plan or offer you send to a client. It outlines what services or products you will provide, how much it will cost, and other important details. Think of it as a pitch to win a client's business. Explaining it with examples:
- Software Features Proposal
Consider an example of a software company. Your proposal will then have details about the features your tool/ services offers like task tracking, team collaboration, and reporting as well as pricing..
- Service Package Proposal
Suppose your company offers a range of software services. Then your service outline proposal will list each service, explain how it benefits the client, and provide a total cost.
What makes for a great proposal?
A great proposal is a clear, compelling, and client-focused business pitch that has a very demarcated service outline. Other terms and conditions that a Proposal standout:
- Must have a Strong Introduction that grabs the client’s attention and ensures a meeting.
- Showcase a Detailed Scope with a clear service outline what you will deliver, including timelines, deliverables, and responsibilities.
- Must be easy to read and understand in simple, direct language to explain your offer.
- Should be Client-Focused addressing all specific needs of the clients as well as their pain points, challenges and how your solution can help.
- Must have a Professional Design that is easy to understand plus has a professional layout. Include your company’s branding to make it authentic.
- Must add the USPs as to why the client should choose you over competitors.
- Should have Transparent Pricing with a very detailed breakdown of costs (even any extra costs), so clients know exactly what they’re paying for.
- Always include Previous Clients’ Testimonials like quotes or case studies to build trust and credibility.
- Close the proposal with a clear CTA (call to action) encouraging the client to take the next step like the next meeting or signing the contract, etc.
What’s a contract?
Proposal vs Contract - the latter is a Legal agreement that comes into existence after a proposal is accepted. It sets out the rules and legal agreement of the deal. And it is also a legal binding version of what both you and the client are expecting from each other in terms of work and commitments. Explaining with examples:
- A Service Contract - Here the contract will have a service outline of the subscription plan, how much it costs, when payments are due, and how long the service will last.
- A License Contract/Agreement is the one when you provide a software license. Here the Binding terms will explain how the software can be used, any limitations, and how renewals work vis a vis rules and obligations.
- A Support and Maintenance Contract is the one that will cover ongoing support and maintenance. This will include the timelines and costs of how quickly you’ll respond to issues, any updates, and if there are extra costs.
With CONE, contracts are automatically created once a proposal is accepted. This saves time and reduces errors, as the software fills in all the agreed terms.
What makes for a great contract?
We would like to state here that since a good Proposal and Billing Software is one of the most preferred proposal vs contract creation tool, we would like to list the aspects of a great contract, as per our software’s advantages:
- Automatic generation - Good softwares has features to automatically create contracts from approved proposals. This ensures accuracy and saves time.
- Must have customizable contract templates to fit different client needs and scenarios. This makes contracts more relevant and precise.
- Clearly defines the services, deliverables, and timelines. This helps avoid misunderstandings.
- Detailed final pricing must have a breakdown of all costs and payment terms. Transparent pricing ensures trust.
- Professional layout via using tools to create a clean, professional design. A well-organized contract reflects your business’s professionalism.
- Compliance and legal features ensure that the final service outline of the contract has the legal agreement, the binding terms and obligations.
- Easy to incorporate e-signatures for quick and secure approval. This speeds up the process and simplifies agreement finalization.
- Ability to track contract status and updates within. This keeps you organized and informed about each contract's progress.
- Smooth integration with accounting and billing to ensure the contract syncs with your accounting software to manage invoices and payments efficiently. This reduces manual entry and errors.
Do you need a business proposal or a legal contract?
Deciding between a proposal vs contract: It depends on your business needs. We are stating the stages of which one is suitable when:
When to make a Business Proposal
- To pitch a business idea
- To convince a client with the above or more ideas
- To get an investment for your business/project
- To explain the benefits of the solution/product you are providing as a whole
- And lastly, to simply showcase what products or services your company makes
When to make a Legal Contract
- To finalize and official and legal agreement towards doing business
- To clearly and finally chart out the service outline of your obligation towards a client
- To protect the legal rights of both the parties, during when the deal is being executed
- To ensure that the agreed upon payments are served on time
- And lastly, if any legal dispute arises, the legal agreement listed helps you resolve the matter/ or it is easier to end the business agreement.
How to Craft Effective Proposals
A good professional software helps with an effective and seamless process towards creating an error-free, legally binding proposal. Here is how you can make one:
- Start by understanding what the client wants and what problems they need to solve. Customize your proposal to meet their needs.
- Clearly explain what you’re offering like what you’ll deliver, how much time it will take, and what the cost would be.
Want to make writing proposals easier? Use Cone’s ready-made templates to quickly create professional-looking proposals. Just pick a template that works for you, add your company’s info, and you’re set. Do give CONE a try, and you will see much easier it can be, because here you get customized templates saving your time and effort. Plus you make a strong impression with potential clients.
- Highlight how your service or product will help the client. Use CONE’s features to make these benefits stand out.
- Track and follow uUp on the software to see when the client views your proposal and set reminders to follow up. This automated process will ensure that you do not miss any leads.
- Prepare for the Next Step - Once the client accepts your proposal, a good software like CONE can automatically create a contract with all the agreed details. This makes everything smooth and organized.
- Do not miss adding client reviews like quotes or success stories from other happy clients. This builds trust and shows you’re reliable.
Best Practices to Create Contract
- Use simple language to outline terms and responsibilities promised inside the business pitch. And for this the service outlined must be in text that is easily understandable to both parties and their teams.
- Start with a reliable template that is easily found inside professional softwares; these ensure nothing critical is missed out from your eyes.
- Specify deliverables, deadlines, and payment terms. This ensures that both parties know the expectations as well as the remunerations towards the same.
- Cover legal agreement aspects like dispute resolution and termination conditions so that in case any of the parties breaches the terms, you can either resolve the matter legally or terminate the contract without a chaos.
- A formal tone and clean layout of the legal contract will convey the importance of the document and ensure that it’s taken seriously.
- Carefully review the contract before submission to ensure that it is error-free or it has no scope of any confusion. Have the most experienced member of your team or your legal advisor review the same for you.
- After the final review, compare it with the proposal sheet and deal made, to assure your legal terms and obligations align with what you had promised in the business pitch/ service outline.
- Ensure both parties e-sign and date the contract, so that the business pitch converts into a legal agreement, leaving least scope for any dispute later.
Is a proposal a contract?
No. Contract is a Legal agreement that comes into existence usually after a proposal is accepted. It sets out the rules and legal agreement of the deal. And it is also a legal binding version of what both you and the client are expecting from each other in terms of work and commitments. Refer below table for key differences between them.
Key differences between a Proposal and Contract
How to turn a proposal into a contract?
Go nowhere, simply use a professional business proposal making and billing software. It will help you at all the stages below:
- Assist in outlining your offer, pricing, and terms.
- Once the client reviews and accepts the proposal, CONE automatically processes the acceptance.
- The software then converts the accepted proposal into a formal contract, including all agreed details.
- Both parties can review the contract within this software and electronically sign it.
- As the last step, you will use tracking features to monitor the contract’s status and manage any updates or follow-ups.
Conclusion
We assure you that CONE will end your dilemma of Proposal vs Contract, forever. Try Cone today to make proposal and contract creation simpler and more effective. Cone is your all-in-one solution for proposals as well as contract creation, along with billing. It’s designed to save you time and reduce errors. Your job gets easier and clients become happier. We have different plans to fit your needs. Select one that suffices your needs or contact us for more details.
Frequently Asked Questions:
Does a contract supersede a proposal?
Yes, once a proposal is accepted, a contract formalizes the agreement with detailed terms and legal obligations, taking precedence over the proposal.
How do you turn a proposal into a contract?
If done manually, it is a very time absorbing task. But if you use CONE, once the proposal is accepted, it automatically converts into a contract with all agreed details.
Can you combine a proposal and contract?
Yes, CONE allows you to combine both into a single document. This integration simplifies the process and ensures all terms are captured in one place.
Is a proposal the same as an offer?
A proposal is a detailed offer outlining terms and pricing. It suggests a deal but is not legally binding until accepted with legal agreements.
Are signed proposals legally binding like contracts?
No, signed proposals are not as legally binding as contracts. A signed proposal is only a commitment to negotiate towards a final deal.
Do you send a contract with a proposal?
Not required; typically, you send a proposal first. Once accepted, CONE can automatically generate and send the contract to finalize the agreement with all the agreed terms.
What is a signed proposal?
A signed proposal indicates agreement on binding terms and intent to proceed. It serves as a basis for creating a formal legally binding contract.