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What’s the Difference Between a Proposal and a Contract?

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When I first started freelancing in 2009, I had little understanding of what proposals were or how to write a contract. But it didn’t take me long to realize that I needed to give my clients something more formal than an email before starting work.

So I did some research, found a few snippets of proposals and contracts I thought sounded good, stitched them together, and presented it to my client for signature.

Let’s just say this is not a strategy I’d recommend anymore…

🔀 The fundamental problem is that I was mixing my sales pitch with the terms and conditions of the project.

I received quite a bit of pushback and even lost some clients over how inexperienced my makeshift proposal made me look. But somehow I managed to get enough clients to keep my freelancing career moving forward and I tweaked my template slowly over time.

Proposals and contracts serve different purposes and should be presented to the client as two separate documents.

Then I went through a phase of growth where I actually refused to use a contract and collected 100% payment upfront instead.

That worked surprisingly well, but luck might have been on my side during those years. Today, I’d advise everyone to use at least a basic contract.

💡 It wasn’t until years later (sometime around 2016) that I finally realized that proposals and contracts serve different purposes and therefore should be presented to the client as two separate documents.

The Purpose of a Freelance Project Proposal

The purpose of a proposal is to present, or propose, the final project opportunity to the client. When a client approaches you with a need, it’s your job to ask the right questions, figure out what the best solution is for their business, and present that solution to them in the form of a project proposal.

Proposals are often conflated with sales pitches. In reality, your proposal should function more like a presentation that reinforces their desire to hire you.

That means your prospective client shouldn’t be surprised or taken back by anything they read in your proposal. All the project details, including business goals, budget, timeline, and scope of work should be discussed prior to sending a proposal.

💬 This is a valuable exercise in setting the right expectations with your client upfront.

How you communicate with your clients up to this point will impact how they respond to your proposal. Your prospective client should already want to hire you before they even see the final document.

In my experience, a highly effective proposal for most freelancers includes the following information:

  1. A summary of the problem or reason the client wants to do the project
  2. A summary of the goals this project intends to help the client achieve
  3. A summary of the solution you plan to deliver to solve the problem
  4. A reminder of why you’re the best for the project
  5. A few of your best recent work samples (images or links)
  6. Notable clients you’ve worked with (if applicable)
  7. The specific scope of work (what’s included and excluded)
  8. Multiple options for the project (if applicable)
  9. Pricing and payments (line items, payment due dates, total cost, etc)
  10. Short client testimonials (to reinforce their decision to hire you)
  11. An acceptance page with signature request

Pro Tip: I like including items 4, 5, 6, and 10 because sometimes your proposal might get passed to someone in the company you haven’t spoken with yet. For example, you might be discussing terms with a project manager who then presents your proposal to the CEO, who doesn’t yet understand your credibility.

What proposals should never include are terms and conditions such as the number of revisions, termination clauses, liability and confidentiality clauses, or details about how late payments should work. That’s what contracts are for!

The Purpose of a Freelance Project Contract

In contrast to proposals, contracts have a radically different purpose. This is where you outline, in detailed legal terms, the exact terms and conditions of the project. Ideally, your terms and conditions sheet should be written (or at least approved) by a legal professional.

📈 If your goal is to continue working with bigger and better freelance clients, it’s important that your contract is drafted by a professional. Clients may send your contract to their own legal team for review and they may ask for clarification or changes, so it’s important that you understand what it says!

Believe it or not, there is a way to write legally-binding terms and conditions in a way that doesn’t make your brain melt. Consider this short excerpt from my web design and development contract:

Change Request: If Client wants to change the Scope of Work after acceptance of this Agreement, Client shall send Designer a written Change Order describing the requested changes in detail. Within five days of receiving a Change Order, Designer will respond with a statement proposing designers availability, additional fees, changes to delivery dates, and any modification to the Terms and Conditions. Designer will evaluate each Change Order at its standard rate and charges.

That’s very easy for anyone to understand. But even if you find a contract template available for download online, it’s a good idea to have a real lawyer review it.

Why? It’s important that the terms and conditions in your contract make sense for your specific business in your specific industry.

Unless you’ve got experience writing legal documents, you shouldn’t adjust the terms and conditions without consulting a legal professional.

How do these two documents work together?

Now, you might be wondering how to “connect” these two documents so that they work together from a legal perspective. That part is actually quite simple!At the end of your proposal, simply include this phrase:

“Subject to the Terms and Conditions attached hereto, which is expressly agreed to be part of our Contract.”

Then you can simply attach the proposal and contract to an email and send them to your client for acceptance and approval.

If you’re using web software such as DocuSign or HelloSign, you can simply upload the two files and the system will combine them for you, which is even better!

Where can you find a good proposal and contract template?

Personally, I didn’t have much luck finding high-quality proposal or contract templates online. It took me years to figure all of this out and it wasn’t until recently that I finally paid a lawyer to draft a solid contract for me. Yet, my proposal and contract template have played a key role in taking my freelance business to the next level.

As you may have noticed throughout this article, I’ve made the exact project proposal and contract available to you at a fraction of what it cost me to create them. Considering all the hours I put into tweaking the proposal over the years and the $1,500 I paid a lawyer to write my contract, this bundle is a real bargain.

I’ve been able to close much higher-quality projects and my clients are always impressed with my proposal. When considering me against other freelancers, my proposals help me stand out.

When you appear professional, clients will be more confident in hiring you and paying higher rates. If you aren’t using a high-quality proposal or contract yet, I’d highly recommend checking these out!

Last updated on March 3rd, 2023

About Matt Olpinski
I've been freelancing since 2009 and have worked with over 100+ clients including some of the biggest brands in the world. I later started my own company Matthew’s Design Co. and now teaches 50,000+ freelancers each year how to succeed through his personal blog, newsletter, and community for freelancers.