Professional Services Contract: How To Close More Deals (Template Included)

This post was originally published on this site

What is a professional services contract, and how might you use one in your consulting business?

When you provide your skills or expertise to a client, you must first establish the parameters of the relationship going forward.

By setting expectations and clarifying the obligations of both parties, you lay the foundation for a healthy, collaborative partnership.

What Is a Professional Services Contract?

To lay this foundation, you can create a professional services contract.

A professional services contract is a form of legally binding contract that defines the nature of the working relationship between a skilled professional and a client.

A professional services contract is used to outline the scope and timelines for a specific project, as well as compensation and expectations for both parties.

In this article, we will look at what a professional services contract is, when to use one, and how to create one.

By the end, you will know everything you need to know about a professional services contract: including what they look like, what to put in them, and best practices for ensuring you get paid on time.

Let’s get started.

Professional Services Contract Template

(NOTE: This article is for informational purposes. It is not legal advice. Consult with an attorney before drafting and sending your consulting agreement/contract.)

All contracts are not created equal. A well-designed professional services contract demonstrates your expertise, boosts client confidence in your abilities, and creates a clear roadmap for engagement that will lead to ROI for them.

Professional Services Contract: Quick Links

Different Forms of Consulting Agreements 

The purpose of a professional services contract is to formalize a project that you have outlined in your proposal. Once the contract is signed by you and the client, the project has officially begun.

Professional Services (Consulting) Proposal

Your consulting proposal comes first. This document clarifies the engagement between you and the client. At this point, you have already discussed the project with the client. The proposal simply confirms details like your fee, goals, and the desired outcome.

Professional Services Agreement

Once you have a professional services proposal, your professional services agreement formalizes the engagement and legally binds both you and the client to fees, deadlines, and a delivery schedule.

Many consultants do not use a separate proposal and agreement. Rather, their proposal also acts as a professional services contract.

How likely is it that a proposal will lead to a contract?

Many of our clients win 80%+ of the proposals they send. We’ve worked with hundreds of consultants in our coaching program who have landed 5 and 6-figure deals using our approach.

If you want to win over clients with your proposal and get them to sign your professional services contract, we recommend using our template and best practices.

What Is a Statement of Work (SOW)?

Sometimes, a client wants a detailed professional services contract that clearly describes every step of the project a consultant is delivering. In that case, you can use a statement of work, which is a type of contract that outlines who does what and by when.

Master Services Agreement

Another type of professional services contract is called a “master service agreement,” which is a contract between a client and a vendor that establishes terms for future agreements, including project details and expectations.

Should you use a proposal, statement of work, or a master services agreement?

Which form you use depends largely on your industry, expertise, the type of work being done, and your relationship with a client.

Just remember, a professional services contract is your opportunity to demonstrate and confirm the value of what you’re doing.

Make sure your contract clearly shows how this engagement is going to lead to clear ROI for the client.

The Difference Between a Professional Services Agreement & Professional Services Proposal

Many consultants use their proposal as their professional services agreement, so you might wonder what the difference is between these two kinds of documents.

Should you use both?

In our experience, it depends on your consulting business.

You can still generate hundreds of thousands of dollars working with large organizations even when your proposal serves as the agreement. How?

  • By outlining the terms of your engagement
  • By breaking down the responsibilities of both parties
  • By listing all project goals
  • By clearly defining the success metrics
  • By demonstrating the path to ROI
  • By providing a place for both parties to sign

You can use the same professional services contract template that we share in our Clarity Coaching Program, which has been used by thousands of consultants to generate hundreds of millions of dollars.

A good reason to use your professional services proposal as your professional services agreement is to shorten the sales cycle and move the project forward much sooner.

Are there any reasons why you might not want to combine your proposal and agreement? There are a few:

  • You haven’t yet established a strong relationship at the executive level and you’re working through the procurement department.
  • The project is highly technical, with many moving parts, and you need to provide exacting details about what is and isn’t included to prevent “scope creep.”

If you’re unsure, you can ask your client about this.

First, you could say something like, “I will provide you with a proposal that outlines the details we’ve discussed along with some options for how we can best work to achieve this outcome.”

Then you can review the proposal with the buyer and include an area for them to sign.

If they resist signing or request a longer or more “standard” agreement, then you can explain that you like to keep things simple to get started on the project sooner. That means faster results for them. Often, this explanation will be enough for them to agree.

If you can’t combine your professional services agreement and proposal, then be prepared to create two separate documents.

Keep your professional services agreement as short as possible, with only the key details necessary to move the project forward.

What To Include in Your Professional Services Agreement

Your professional services agreement should be customized to the project and client (unless you are offering a productized service).

Your consulting agreement might be very similar to your proposal. However, the agreement will include more details about the project.

In general, your professional services agreement needs to include the following:

  1. Parties: who the agreement is made by and between.
  2. Services Provided: the services you’ll be providing the client.
  3. Term: when the agreement begins, and when the project is completed.
  4. Services Provided: the services you’ll be providing the client.
  5. Fees: what you will be paid for your work, and when.
  6. Expenses: who’s responsible for the expenses of the project.
  7. Intellectual Property: who owns the project deliverables.
  8. Confidentiality: what information is not to be made public.
  9. Termination: what would cause the project to be terminated.

Remember to keep your professional services agreement as short as possible, only including necessary key details. The longer you make it, the more likely it is that your client will get a lawyer or legal team involved.

While lawyers might be necessary for certain consulting projects, they tend to slow down the sales process and delay the start date.

Let’s look at a few templates and examples you can use as a starting point for your professional services agreement.

Consulting Agreement Template & Example

The following are a few professional services agreements and consulting templates we’ve found to help you get started.

consulting agreement proposal

If you plan to use your proposal as your agreement, use our template. It’s been used by thousands of consultants to close millions of dollars in new business.

Once you’ve created your proposal, we recommend getting on a call with the buyer to review it. 39% of consultants deliver their proposals this way. In our experience, it leads to a much higher win rate.

sample-consulting-agreement-eforms

We also recommend this Professional Services Agreement template from Eforms.

Professional Services Agreement Template

statement of work template consulting

Additionally, if you intend to create a statement of work, this template from Zapier provides an excellent example for outlining all of the tasks you will do (and not do) to prevent scope creep. This will put you and your client on the same page in terms of the project deliverables.

Statement Of Work (SOW) Template

master service consulting agreement
Finally, here is a template for a Master Service Agreement from NitroPDF that clearly spells out the expectations for both you and your client during the project. This template provides plenty of space for you to customize it for your consulting projects.

Master Services Agreement (MSA) Template

Consulting in your industry might expose you to a high level of risk or liability, in which case it’s a good idea to hire an attorney to prepare your professional services agreement template. Peace of mind and legal protection are worth the investment.

Feel free to take any of the templates we have provided and tweak them so they work for you and your consulting business.

How To Close Out a Professional Services Contract

Once you’ve finished your work for a client, you need to close out the contract and get paid.

To do that, you should first schedule a time to meet with your client. At the meeting, review the work you’ve done, including:

  • The progress you’ve made
  • The deliverables you’ve sent
  • The results you’ve created
  • What’s next

In doing this, you are covering the past, present, and future: where you started, what you’re doing now, and what you can create for them in the future.

Reference the agreement or proposal to prove that you completed the work by the specified dates. This formally closes out the engagement. Now is the opportunity to discuss if you can create even more value for your client — and pick up extra business.

Remember, the greatest source of new business is existing clients, and the best time to talk to them about new business is when you’ve just successfully completed a project.

Maybe you’ve already identified areas where you can create additional value for them. Don’t be afraid to bring it up.

  • Can you provide them with ongoing support?
  • Can you help them grow even more?
  • Can you solve other problems for them?

Show them clearly how you delivered exactly what you said you would deliver, then help them see future opportunities that would come from continuing to work with you.

This is also the best time to ask your client for referrals and a testimonial, both of which can help you acquire new business.

Get Help Creating a Bulletproof Professional Services Agreement

Your professional services agreements and contracts make the consulting process easier, and they ensure you get paid on time.

They also help you to strengthen your relationship with your clients.

No single template works for every type of consultant on every type of project, so you (or your attorney) will need to create one that works for your unique consulting business modelconsulting offersfee structure, and so on.

If you’d like help creating bulletproof proposals that will help you win consulting projects at the highest rate and ensure you never leave money on the table, while building strong relationships with your clients, then our customized Clarity Coaching Program is for you.

Learn More About Clarity Coaching

We’ll work hands-on with you to develop a strategic plan and then dive deep and work through your ideal client clarity, strategic messaging, consulting offers, fees and pricing, business model optimization, and help you to set up your marketing engine and lead generation system to consistently attract ideal clients.

Schedule a FREE growth session today to apply for our limited-capacity Clarity Coaching Program by clicking here.

Skip to content