Proposal vs Contract: Why Your Business Needs Both

My first project as a content strategy consultant taught me one painful lesson: not all documents are legally binding.

I lost $3,000 when a prospective client who loved my winning proposal, and requested multiple revisions, implemented my basic strategy with another agency. I'd completed the work, but I had no legal recourse because I'd only sent a proposal—not a formal contract.

A proposal and a contract each have different roles in business. Knowing the difference helps protect your income, clear up project details, and avoid costly financial disputes.

Let me share what I've learned about when to use each of these two documents and how to make them work together through mutual agreement.

What's a proposal?

A business proposal is a persuasive document that outlines what you plan to do for a client, but it's not inherently binding. It's essentially your sales pitch to attract the right client for your services.

As a content strategy consultant, I typically send proposals after initial discovery calls with potential SaaS clients.

What does a proposal include?

• Your relevant background and expertise
• An executive summary
• Project scope (what's included and excluded)
• Specific deliverables and outcomes
• Project timeline with milestones
• Pricing structure and payment terms
• Social proof (client testimonials and case studies)
• Tiered service packages at different price points
• Clear next steps and call to action
• Initial terms, conditions, and proposal expiration date

For example, here's a challenge page I add in my proposals to show potential clients I understand their struggles.

I customize each proposal based on what the new client actually needs.

For bigger companies, I might focus on long-term results and how we'll keep everything organized. For smaller startups, I'll talk more about quick wins and adapting as we go. This shows clients I paid attention to their situation instead of just sending a generic template.

What’s a contract?

A contract is a legally binding agreement between two or more parties that spells out exactly what both sides are promising to do. Unlike a proposal, which is persuasive, a written contract is protective and contains legally binding terms.

I send sales contracts only after the client says "yes" to my proposal. The proposal sells my services, while the contract ensures we're both on the same page about expectations and creates real accountability.

What does a contract include?

For small business owners and freelancers like me, contracts provide essential legal protection when clients change their minds or try to expand scope without additional payment.

In fact, these legal documents are often our only real protection against the wrong clients. Contracts leave no room for any confusion and plan for all contingencies.

For that, a valid contract includes the following essential elements:

• Names and contact information of all parties involved
• Detailed description of services and deliverables
• Clear payment terms (amounts, due dates, accepted payment methods)
• Project timeline with specific deadlines
• Ownership rights for the content created
• Confidentiality clauses to protect client information
• Revision policy (how many revisions are included, costs for additional revisions)
• Termination clause (notice periods, kill fees)
• Limitations of liability

When I work with SaaS companies, my legally binding contracts clearly state what content I'll deliver, when I'll deliver it, and how much they'll pay me. The formal agreement also covers terms like what happens if they cancel our project halfway through or if they want changes outside our original agreement.

Here’s a snippet of a legal contract I send clients:

Note: Contract laws vary depending on where you and your client are located, so what's enforceable in one place might not be in another.

How to add proposals and contracts to your business process

For the longest time, I operated without either document. I thought solid relationships with clients meant paperwork was unnecessary—who needs formalities when you're working with good people?

Experience taught me otherwise. Now, both a proposal and contract are essential parts of my client process. They don't just protect my business—they create legitimacy and show clients I take our work together seriously.

Step 1: Create templates for both documents

Creating a proposal takes an average of 17 minutes. Cut that time down by using basic proposal and contract templates you can customize for each client.

Qwilr's library has extensive ready-made templates, complete with interactive pricing and calendar links.

Need an event sponsorship proposal? Or how about one for software development? You'll find it in the library.

My pro tip: Create separate template versions for your service offerings. I maintain different templates for services like LinkedIn ghostwriting for founders, content strategy consulting, and ongoing content writing support.

Having separate versions saves me hours of work while ensuring I never miss important details specific to each service.

Step 2: Customize for each client

Beyond changing names and packages, tailor your documents to address the client's specific pain points, industry terminology, and business goals. I once embarrassingly sent a proposal with another client's industry challenges still listed!

My checklist now includes reviewing deliverable examples relevant to their industry, timelines aligned with their calendar, and payment terms that match their accounting cycles.

I add placeholders and search the brackets to double-check whether I’ve removed all of them.

I also pop in the final proposal in Claude before sending it to help catch errors my familiar eyes miss.

Step 3: Present the proposal first

I use Qwilr to send proposals directly from the platform, and it's been so convenient. All I do is copy-paste the collaborator link and send it to my prospects via email.

Sales contact analytics come in handy when you want to peek inside your prospect's brain and see when clients open the proposal, which sections they spend time on, and what they click.

Last week, I noticed a potential client reopened my proposal three times but always stopped at the timeline section.

When I followed up, I asked if they had concerns about the project schedule. They admitted they needed content sooner than they initially told me. We adjusted the timeline, and they signed right away. Without those insights, I might have lost the project without ever knowing why.

Step 4: Convert to contract after approval

Once the client gives me the green light, I switch to the legal side of things and convert the initial proposal into a contract in just a few minutes.

With Qwilr, I can add plain-text, print-friendly agreements—like contracts, privacy policies, and terms of service‚ directly to the same proposal.

Qwilr's document uploader makes it easy to turn existing PDF proposals into interactive Qwilr pages. While these converted files won’t automatically create plain-text agreements, they give you a head start by making your static PDF editable.

You can then add contract elements as needed, giving you flexibility whether you're starting fresh or updating an existing proposal.

This keeps everything in one place for the client and creates a smooth transition from "Here's what I can do" to "Let's make it official."

Step 5: Get signatures before starting work

By dragging and dropping the electronic signature block into the same document, I can use Qwilr's e-sign functionality to capture legally compliant digital signatures, making the contract legally valid.

Qwilr makes it easy to collect signatures from multiple stakeholders when needed—perfect for those corporate clients where the marketing director and legal team need to sign off.

When to use a proposal vs. a contract

While proposals may be optional in some situations (particularly when clients seek you out specifically), signed contracts are essential before beginning any work, regardless of your relationship with the client.

Draft interactive proposals and contracts with Qwilr

Knowing the difference between proposals and contracts has saved me from so many headaches and kept thousands of dollars in my pocket. When you use both documents the right way in your business, you protect yourself while making clients feel they're working with a true pro.

Just look at Destined, the Salesforce consulting agency that cut their document production time in half after switching to Qwilr. They cut proposal creation from hours to minutes using standardized templates and a content library—tripling their business in just 18 months.

Want to simplify your proposal and contract? Try Qwilr today to create professional, interactive documents that help you win clients and keep your business safe.