Quote vs. Proposal: Which One Should You Use?

A potential client is considering using your company to provide IT services for a project. Do you offer them a quote or a proposal? The answer hinges on the nature of the client’s request. A few discovery questions should identify which document best suits their needs. Is the client clear on the specific services they require and simply looking for a cost? Or are they seeking an MSP that takes a consultative approach and develops a tailored solution on their behalf? Understanding the differences between a quote and a proposal and knowing when to use each can position your company to convert more sales leads into active clients.

What is a quote?

A quote provides a client with the cost of a specific service or product. In the IT services industry, quotes typically outline hardware, software, licensing, and labor costs. Before generating a quote, stakeholders usually meet to clarify the scope and requirements. With this understanding, the MSP can then list the costs for each deliverable.

Sometimes, a client only wants a ballpark quote to ensure it’s within budget. This is common when the client has a large budget for IT work, and the scope of work is relatively small, minimizing the risk of exceeding the budget. The quote should reflect pricing based on the client’s requirements, as discussed during the initial consultation. However, best practices suggest formalizing the scope to reduce variance and improve accuracy.

Learn more: What is CPQ? Configure, Price, Quote Explained

What is a proposal?

A proposal provides a comprehensive solution and process for solving a client’s problem or need. It goes beyond the information in a quote by including the project cost and detailing the MSP’s approach, methodology, and value proposition. A proposal aims to explain the “how” and “why” behind the suggested services. This document may include timelines, milestones, and a detailed price breakdown.

Proposals are more detailed than quotes because they cover all aspects of the project, from start to finish. Additionally, they have room to let an MSP’s ethos shine through. Since IT projects can span months to even years, clients may seek an IT service provider whose company culture aligns with their own. A proposal includes information like employee expertise, mission statements, and project details to build a stronger connection with the client.

Learn more: Statement of Work, Proposal, Contract: What’s the Difference?

When to use a quote

Quotes are ideal for situations when the scope of work is clearly defined. For example, if a client needs a new server setup with specified storage and processing capabilities, an IT service provider could offer a scope listing the hardware costs, installation fees, and additional services like ongoing maintenance or support.

Though any project can encounter unexpected obstacles, some tasks are straightforward and routine for the service provider. These standard services have predictable costs, which makes creating a quote for these services decently accurate. This also helps a client who wants a quick turnaround on price to make a fast decision.

When to use a proposal

Proposals are best suited for situations where a client has a goal but isn’t sure exactly what they need to achieve it. For instance, a company experiencing 200% annual growth for the last three years might know they have growing pains and need to expand their IT infrastructure, but they might be uncertain about the specifics. This is a great opportunity for an MSP to provide consultative expertise and lay out the following steps, such as outlining specific network upgrades and security measures that would benefit the company.

Proposals showcase your understanding of the client's requirements and how you intend to meet them, helping to persuade the client why your MSP is the best choice for the project. When dealing with complex projects and undefined client needs, using a proposal allows you to differentiate yourself from the competition.

What should be included in a quote?

A well-constructed quote should be clear, concise, and cover all the necessary details. Using a quote template or even a CPQ can help expedite quote creation. While a client might have a specific request that requires customizing the template, a typical quote should include the following:

1. Project description

Provide a brief description of the project work, services, and deliverables. For IT services, this might include hardware components, software licenses, and labor.

2. Pricing

List the quantities and unit prices for relevant products, along with the associated costs for each item or service. Indicate whether these are fixed costs or subject to change.

3. Terms, conditions, and timelines

Include the detailed terms for payment schedules, such as when billing would occur. Additionally, as quotes for IT services include labor costs, the client should know the expected length of time the MSP thinks is needed to complete the project.

4. Validity period

Sometimes, clients may ask for work they don’t plan to start for a while. Include an expiration date for the quote so the client understands that the prices may no longer be valid if they decide to start the project months or even years later.

Incorporating these elements ensures that the quote is professional, easy for the client to understand, and efficient so you can focus more on active projects.

Example of an IT service quote

Quote for Network Upgrade

Cisco Catalyst 9300 48-port switch (2 units) - $8,000 each
Installation and configuration - 8 hours @ $150/hour
Network testing and documentation - 4 hours @ $150/hour

Subtotal: $17,800

Tax (8%): $1,424

Total: $19,224

Work is to be completed within two weeks of the scheduled start date.

Valid for 30 days. 50% deposit required to begin work.

What should be included in a proposal?

A proposal is more detailed than a quote, as it covers more aspects of the project. It should outline a clear path to solving the client’s needs, relying on expert experience to help amend any problems and accomplish the larger goals. If your client issued a “request for proposal (RFP),” then you should follow the specific outline provided by the client. In general, though, a well-drafted IT service proposal typically includes the following elements:

1. Executive summary

Provide a brief overview of the client’s needs, the proposed solution, and the benefits they can expect from the project’s completion.

2. Value proposition

Highlight your company's unique value to the project, such as expertise, innovation, or services. Explain why your company is a strong long-term partner and how this partnership will benefit the client.

3. Project scope

This section could also include a problem statement, demonstrating that you have a concise and clear idea of the high-level goals of the client. Beyond that, the scope should include a detailed project explanation, including tasks, milestones, and deliverables.

4. Proposed solution and methodology

Describe how you will approach the project and what you aim to achieve. This section may be lengthy, as it should provide significant detail to avoid misunderstandings. Include the strategies, relevant technologies, and services you will use to reach the desired outcomes.

5. Pricing and payment terms

Similar to a quote, this section should include the detailed pricing, cost per service and resource, and any associated payment terms and expectations.

6. Timelines

Lay out when IT team members will complete different phases of work. This could be a mock schedule or a breakdown of tasks with their individual time requirements. Include relevant deadlines and milestones.

7. Relevant experience

If the project is complex, examples of similar work done for past clients may be beneficial. Use case studies or examples of related projects to demonstrate your MSP’s capabilities and expertise.

8. Terms and conditions

Note if there are any contractual obligations stakeholders should know and if there are any factors that could affect the project’s cost or timeline, such as potential changes in the client’s IT infrastructure.

9. Next steps

Clearly outline the next steps the client needs to take if they choose to proceed with your proposal. Include details on subsequent meetings, signings, or other necessary actions.

Example outline of an IT service proposal

A complete proposal can range from a few pages to dozens, depending on the project’s complexity. Here is an outline though of what an IT service proposal would include on a high level:

Proposal for Implementing Cloud Migration

1. Executive Summary

2. Client's Current IT Infrastructure

3. Identified Challenges and Opportunities

4. Proposed Cloud Migration Strategy

4.1 Assessment Phase
4.2 Planning and Design
4.3 Migration Execution
4.4 Testing and Validation
4.5 Post-Migration Support

5. Project Timeline

6. Team Structure and Expertise

7. Investment and ROI Analysis

8. Case Studies: Similar Successful Migrations

9. Terms and Conditions

10. Next Steps and Implementation Plan

Quote vs proposal–Which is right for you?

Consider the needs of the client and the nature of the project. By looking at several factors on the matrix below, you can determine if you should use a quote or a proposal for each situation.

	Quote	Proposal
Project complexity	Simple, well-defined	Complex, multi-faceted, or the MSP needs to create the solutions
Client relationship	Existing clients or transactional	New or potential clients, especially those unfamiliar with IT services
Competition	Low competition	High competition or if you need to showcase your value proposition
Budget sensitivity	Client is making a decision primarily on price	Client is looking for the best value, not just the lowest cost
Time sensitivity	Quick turnaround	Longer decision-making process

Whether providing a quote or crafting a proposal, always ensure your communication is clear, concise, and tailored to the client’s needs. This approach will help you close more deals and build long-lasting relationships with your clients, positioning your company as a trusted partner in their IT journey.

Using CPQ software to create a quote and proposal

Both quotes and proposals need to discuss pricing and project costs. Using automation in ScopeStack’s CPQ software will reduce the time required to create the pricing portion of both documents. By pulling in pre-configured product and service options, pricing, and terms, the platform will allow your team faster turnaround times for client quotes and the freedom to focus on other parts of a more extended proposal. This also helps reduce human error, ensuring you’re giving accurate prices to your clients.

Customization and formatting options allow anyone to adjust templates easily and include unique client specifications while maintaining a consistent layout and configuration across documents. Additionally, our CPQ clearly outlines all pricing, terms, and conditions, providing transparency to clients and building trust in your offerings.