What Must an Offer Contain?

Being able to formulate persuasive offers to prospective clients is essential to the success of your business. An offer represents a commitment, triggering a potential binding agreement between the parties involved. Aside from its function as a legal agreement, a well-crafted offer can also serve as a marketing tool and indicator of expertise and reliability. In this blog, we help you understand the key elements of an offer, including what it contains and important issues surrounding enforceability and charges. We also outline some vital tips and pitfalls to keep in mind when creating an offer.

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Highlights

  • Offer as a legally binding offer and marketing instrument
  • Binding nature becomes legally valid with the acceptance of the offer
  • Contents of an offer: Identification of the parties, product details, conditions
  • Acceptance methods include written and oral consent
  • Legal requirements and transparency in the design of offers

Content

  • What Must an Offer Contain?
  • Highlights & content
  • What is an offer?
  • Is an offer binding?
  • What must be included in a business offer?
  • Can you charge a fee for preparing an offer?
  • Tips and Pitfalls
  • Make perfect offers with Nexova

What is an offer?

An offer, in legal terms, is a promise or commitment made by one party to another with the intention of forming a legally binding agreement. For a company, offers usually take the form of a “proposal” inviting the customer to purchase goods or services under the conditions stated in the offer. It outlines the terms and conditions under which the offeror (the party making the offer) is willing to enter into a contract with the offeree (the party receiving the offer). An offer can be made explicitly through written or verbal communication, or implicitly through conduct, but it must demonstrate a clear intent to create a legal agreement.

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Is an offer binding?

In general, an offer is legally binding for both parties once it is accepted by the offeree. Until acceptance occurs, the offeror may retain the right to revoke or modify the offer, unless it is irrevocable or contains a specific time limit for acceptance. The latter is often the case with offers made to customers.

If you, as the offeror, do not want to commit to providing the product or service at a specific price, the offer must be clearly marked as “non-binding” or should at least include the words “additional costs and price deviations reserved”. In the case that the offer provides an approximate estimate, the customer must accept price deviations of about 10 percent. If you discover that the estimated price in the offer was too low, you must notify the customer immediately, otherwise they are not obligated to accept the higher invoice.

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What must be included in a business offer?

While there is room for slight variation in the content that you choose to include, a well-crafted offer should include at least the following key elements to ensure clarity and enforceability:

  1. Identification of the parties: Clearly state the identities and addresses of the company (offeror) and the customer (offeree) to avoid confusion and ambiguity.
  2. Subject matter: Describe the products or services being offered in detail to provide a comprehensive understanding of the proposed agreement. Include any necessary specifications to avoid disputes or misunderstandings. It can be useful to include a description of your Unique Selling Point (USP), which helps persuade the customer to accept your offer in favor of others on the market.
  3. Terms and conditions: Outline the specific terms and conditions governing the offer, including price, payment terms, delivery schedules, and any relevant disclaimers, warranties or guarantees.
  4. Duration of validity of the offer: Specify the period during which the offer is valid to prevent misunderstandings and ensure a timely response from the customer.
  5. Method of acceptance: Define the acceptable methods by which the customer can communicate their acceptance of the offer, whether through written confirmation, verbal agreement, or other means.
  6. Legal information: Ensure the offer complies with legal information requirements in Switzerland, such as the inclusion of a legal notice or other required information.
  7. Revocation, termination, or modification clause: If the offer is revocable, include a clause indicating the circumstances under which the company may revoke, terminate, or modify the offer before or after it has been accepted.
  8. Jurisdiction and governing law: Specify the applicable jurisdiction and governing law that will govern the interpretation and enforcement of the offer contract.
  9. Additional details: Any relevant information in addition to the key points mentioned above should be included in the offer or in a separate document that is specifically referred to in the offer contract. This could include information on usage rights, additional expenses or charges, etc.
  10. Call to action: Conclude your offer with a call to action, encouraging the customer to communicate their acceptance or to contact you for further discussion or clarification. Make it easy for the customer to follow up and ensure they clearly understand what the next logical steps are to accept the offer.
  11. Signature and company stamp: Include the signature of the authorized representative/s of the offering company along with the company stamp or seal if applicable.

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Can you charge a fee for preparing an offer?

Ordinarily, companies should not charge a fee just for preparing an offer. However, in some cases, businesses may incur costs associated with the preparation and presentation of offers, such as labor, materials, and administrative expenses. It may then be acceptable to recoup these costs by charging a fee for creating an offer, especially in industries where the preparation of detailed proposals is standard practice and where charging for these costs is customary.

The decision to charge a fee for creating an offer ultimately depends on the norms of the industry, the expectations of the parties involved, and the competitive landscape. Some businesses may choose to absorb the cost of preparing offers as a marketing expense to attract potential clients, while others may view it as an opportunity to recoup expenses or even generate revenue.

If you do opt to charge a fee for preparing offers, it’s essential to ensure transparency and clarity regarding the associated costs and communicate them upfront to the prospective client. Failure to do so could lead to misunderstandings, distrust, and ultimately, the loss of business opportunities.

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Tips and Pitfalls

How you craft your offers can have a massive impact on acceptance rates, and therefore on profitability. An offer should itself be seen as a marketing tool which needs to convince customers to do business with you as much as it needs to clearly define a legal contract.

Creating a compelling offer requires careful consideration and attention to detail. Here are some tips for creating a winning offer and common pitfalls to avoid:

Tips for creating a winning offer

  1. Understand the client’s needs: Take the time to thoroughly understand the client’s requirements, preferences, and pain points before crafting the offer. Tailor the proposal to address their specific needs and demonstrate how your solution provides value.
  2. Highlight unique selling points: Clearly articulate the unique features, benefits, and advantages of your product or service compared to competitors. Focus on the qualities that set your company and offer apart and why the client should choose you.
  3. Be transparent and honest: Provide accurate and truthful information in your offer, including pricing, capabilities, and deliverables. Avoid exaggerations or misleading statements that could damage your credibility, especially those that you are unable to deliver on. It is especially important to provide a comprehensive and clear cost breakdown, avoiding hidden costs that could erode customer trust.
  4. Include supporting materials: If appropriate, supplement your offer with relevant supporting materials, such as case studies, testimonials, or product demonstrations, to bolster credibility and build trust with the client.
  5. Customize your offers: Offer templates can be useful tools to save time but avoid carbon-copy and standardized offers. An easy way to prove to the customer that you have clearly understood their unique requirements is by tailoring the offer for them. Addressing a personalized offer to a customer shows that you care about their needs and helps build trust.
  6. Call to action: Close your offer with a clear call to action which inspires the customer to follow through with accepting your offer and helps provide them with the means to do so.
  7. Follow up promptly: After submitting the offer, follow up promptly with the client to address any questions or concerns they may have and demonstrate your commitment to their satisfaction. This step is as important as the initial offer itself and will greatly increase customer acceptance rates.

Common mistakes to avoid

  1. Standardized approach: Avoid using generic, templated offers that fail to address the unique needs and preferences of each client. Instead, customize the offer to reflect the client’s specific requirements and circumstances.
  2. Overpromising and underdelivering: Resist the temptation to promise more than you can deliver in an attempt to win the client’s business. Set realistic expectations and ensure that you can fulfill the commitments outlined in the offer.
  3. Underestimating costs: You may include a clause which states that costs are approximate and subject to change, but it is still just as important to provide a reliable estimate. Consistently underestimating costs and having to later revise them upwards is a sure way to lose otherwise loyal customers.
  4. Ignoring legal and regulatory requirements: Failure to comply with relevant legal and regulatory requirements can have serious consequences, including legal disputes, fines, and reputational damage. Ensure that your offer adheres to applicable laws and industry regulations.
  5. Poor presentation: A poorly presented offer can detract from its effectiveness and undermine the professionalism of your business. Take the time to structure and format the offer neatly, proofread for errors, and use clear and concise language.
  6. Lack of follow-up: Neglecting to follow up with the client after submitting the offer can signal disinterest or lack of commitment. Stay engaged and proactive throughout the negotiation process to maximize your chances of success.

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Make perfect offers with Nexova

Learning the art of offer creation and negotiation can be challenging, but with the right tools and support, businesses can streamline the process and enhance their success rate. With our extensive experience in helping startups and SMEs navigate a variety of complex issues, Nexova is your number one ally for traversing the Swiss business landscape.

Use our free customizable template, along with our trusted guidance, to help you generate professional-looking offers in minutes. We can help you optimize your processes with automated reminders and notifications which ensure timely follow-up and communication with clients, maximizing conversion rates and accelerating deal closure.

Whether you’re a small startup or an established enterprise, Nexova equips you with the tools and resources you need to make perfect offers every time. Contact us today to find out more about our comprehensive suite of services.

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