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What is a Bid Letter?

By Amy Radishofski
Updated: May 16, 2024

A bid letter serves as a form of communication between a company and an independent contractor, vendor, or freelance worker. The letter outlines the products or services the contractor or freelancer is able to deliver, and what the cost of those services or products will be. Bid letters also frequently include a specific date or timeframe for completion.

When a company wants a third party to perform certain tasks or provide specific products, generally, it will first clearly identify the services or products needed. Next, the company will put out a request for proposals. Interested contractors or freelancers will then draft a bid letter in response to the proposal request.

When drafting bid letters, understanding all of the company's requirements is crucial. A proposal tailored to the specific request typically helps increase the chances of a successful bid. The bidder should be able to handle all aspects of the assignment and, if a deadline wasn't set in the proposal request, the bidder should also be able to set a realistic delivery date.

Marketing is a key part of the bid letter, sometimes referred to as a bid proposal. Ideally, the author of the bid letter should be familiar with the market rates for the product or service being requested. This is important not only because rejection is likely for overpriced bids, but also because a bid that is too low will produce a smaller return on investment.

A simple Internet search will produce many bid letter samples. In fact, some sites offer bid templates. The templates are generic, but can be quickly customized to match any proposal request. These sites may also include professional writing software solutions that can assist in the drafting process and any follow up communication associated with the bidding process.

Of course, a perfectly drafted bid letter won't guarantee acceptance. Taking the time to research how to write a bid letter can speak to a person's professionalism and work ethic, but in the end, money is often the primary factor. Cutting costs is usually a much more powerful motivating force for a company than a bidder’s writing style. A great bid letter, with a reasonable delivery date and reasonable cost, however, should increase the bidder's chances of landing the project.

If a proposal is rejected, the hiring company usually sends a response back indicating why the bid was turned down. Maybe another vendor could do the job for less. Perhaps the successful bidder could deliver sooner. Either way, a rejection doesn’t have to be the end of the line. If the bid was attractive enough, the bidder may be the first person in mind the next time the company is in need of a similar product or service.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By arod2b42 — On Mar 01, 2011

Any person who works for himself needs to recognize that he is nevertheless bound by expectations if he expects to be paid. This is responsibility which is necessarily expressed in a bid letter, and implies strong responsibility. Responsibility is not merely a term on its own, but relates to a "response" to what one has been summoned to and is expected to do.

By Tufenkian925 — On Feb 28, 2011

A company will also want to make sure that the freelancer is trustworthy in an interview or in regular correspondence and testimonials. If a company hires a freelancer who is unable to deliver his service in time, not only will he be unpaid, but the company will have wasted time and investment in that service.

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