When interacting with customers and clients, there are many types of documents to choose from, depending on the situation. We will explain each type of business document related to quotes and proposals, so you’ll know exactly which one to use.

What is Quote?

A quote in business is a formal offer that outlines the price and details of products or services. It includes descriptions, pricing, terms, and validity, helping customers understand costs and make informed decisions. Quotes are usually valid for a limited time and are not legally binding until accepted, at which point they may lead to an invoice or contract.

What is Proposal?

A business proposal is a formal document offering a solution to a problem or need for a client or partner. It explains the problem, the proposed solution, benefits, timeline, and cost, and shows why the business is qualified to handle it. There are two main types of proposals: solicited (requested by the client) and unsolicited (sent by the business without a request). Proposals are used to persuade potential clients to accept an offer, clarify project details, and set expectations for terms and costs.

The Difference Between a Quote and Proposal

The main difference between a proposal and a quotation lies in their purpose and content:

Proposal:

Purpose: A proposal is a persuasive document that presents a solution to a problem or opportunity. Its goal is to convince the client or stakeholder to accept a particular plan or approach.
Content: Proposals are detailed and often include the project’s objectives, methodology, timeline, expected outcomes, and benefits. They may also cover costs, but the primary focus is on the solution’s value and strategy.
Length: Proposals are typically longer and more comprehensive, as they include various sections that explain the project in-depth.
When Used: Proposals are used when seeking approval or buy-in for a complex project or initiative, often before any pricing discussions.

Quotation:

Purpose: A quotation is a formal, specific document that provides an exact price for goods or services. Its purpose is to clearly communicate the cost of a particular product or service.
Content: Quotations focus primarily on pricing details, such as unit costs, total cost, taxes, payment terms, and delivery timelines. They may also outline conditions for the sale.
Length: Quotations are short and to the point, focusing solely on costs and terms.
When Used: Quotations are typically used when a customer requests pricing for a specific set of products or services before they make a purchase.

Summary:

Proposal A broad document that aims to present a solution and its value. Quotation A precise, financial document focused on pricing specific goods or services.

In short, a proposal is about selling an idea or plan, while a quotation is about selling a specific product or service at a set price.