A fee proposal is a document a professional services firm sends to a prospective client to describe a piece of work and state what it will cost. Consulting, engineering and architecture firms use fee proposals to win projects. Once the client accepts it, the proposal often becomes the reference point for the engagement.
What a fee proposal contains
Most fee proposals cover the same ground, in roughly this order:
- Cover and introduction. The client, the project and the firm making the proposal.
- Understanding of the project. A short restatement of what the client needs, in the firm's words. It shows the client you listened.
- Scope of services. What the firm will do, broken into phases, tasks or deliverables.
- Schedule. When each phase starts and finishes, or how long the work will take.
- Fee. The price of the work, usually in a fee table, with the basis for each line (fixed fee, hourly or another basis) and how expenses are handled.
- Assumptions and exclusions. What the fee depends on and what it does not include.
- Terms and acceptance. Payment terms, the firm's standard terms and how the client accepts.
Fee proposal, quote and estimate
The three terms are often used loosely. In professional services they usually mean different things.
| Document | What it does | Typical content |
|---|---|---|
| Fee proposal | Proposes a scope of work and a fee for it, and asks the client to accept | Scope, schedule, fee table, assumptions, terms |
| Quote | States a price for a defined item or service | Line items and a total, often with a validity date |
| Estimate | Gives an expected cost that may change as work proceeds | A figure or range and the basis for it |
A fee proposal can contain estimates. A line priced on an hourly basis is usually an estimate, while a fixed fee line is a price.
How the fee is presented
The fee is usually shown in a fee table: one row per phase, task or deliverable, with the basis and the amount for each, and a total. A clear fee table lets the client see what each part of the work costs and makes it easier to discuss changes to the scope. See how to structure a professional services fee table.
The basis matters as much as the amount. A fixed fee and a time and materials estimate of the same size put different risks on the firm and the client. See fixed fee vs time and materials.
Internal review before sending
Many firms have a partner or principal review a proposal before it goes out. The reviewer checks that the scope is achievable, the fee covers it and the terms are the firm's standard terms. A consistent review step catches underpriced work before the client sees it. See how a proposal approval workflow should work.
Acceptance
A fee proposal ends by asking the client to accept it. Some firms ask for a countersigned copy. Others accept a written confirmation or an online acceptance. Either way, the firm should keep a record of exactly which version the client accepted and when.
Common problems
- A scope that is too vague to price, which leads to disputes about what was included.
- A fee that does not tie back to the scope, so the client cannot see what each part costs.
- Missing assumptions, such as the number of meetings or design revisions included.
- Formatting that changes from one proposal to the next, which makes the firm look less organized than it is.
Feebeaver: Feebeaver builds fee tables from your firm's fee structures, routes the proposal for internal approval and sends it for the client to accept online, with a PDF that matches the screen.