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What are the differences between commodity/product and service/solution proposals?
Commodities or off-the-shelf offerings are much easier to bid than solutions or complex services. While the terms are often used interchangeably, commodities are often purchased via “bids” instead of “proposals.” A bid is essentially a pricing quote for a known item. A proposal is required when you must describe the item being bid. A subtle, but important difference.
A commodity bid or proposal consists mainly of identifying what will be delivered as line items and pricing them. A solution or service proposal must not only describe what will be done and what will be delivered, but must also describe how things will be done. The explanation is as important as the price.
A solution or service proposal often starts with figuring out what you are going to propose doing. With a commodity proposal, you know from the outset what you are going to deliver.
| Characteristics | Commodities/Products | Solutions/Services |
| What to bid? | Pick the right mix of line items | Figure out an approach |
| Pricing | Add it up | Estimate the level of effort, then calculate the true cost of the labor. |
| Teaming | Not applicable | You may need to bring in other companies to provide specialized expertise. |
| Proposal Outline | Based on tangible requirements and goods. | Based on your approach, processes, and capabilities. |
| Writing | Very little original content. One proposal looks like the next. | Every proposal is unique. Very little content can be re-used without significant customization. |
| Production | It’s an assembly line | It’s more like research and development. |
| Bottom Line | Just because it’s an assembly line, don’t forget that the best persuasion is only possible when the proposal revolves around the customers needs. | Figuring it out, describing it, and presenting it before the proposal is due is a significant management challenge. |
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