Statement of Work (SOW)
A formal contract document that defines the full terms of an engagement including scope, deliverables, timeline, pricing, and acceptance criteria.
Why It Matters
A signed SOW protects both parties by creating a legally binding agreement on what will be delivered, when, and for how much.
How It Works
The SOW is drafted during the sales or negotiation process and includes project overview, detailed scope, deliverables list, milestones, payment schedule, assumptions, and termination terms. Both parties sign before work begins.
Real-World Example
A 12-page SOW for a marketing automation implementation details 4 milestones, 3 payment installments, and a 90-day timeline with specific acceptance criteria for each deliverable.
Common Mistakes
Starting work before the SOW is signed by both parties
Not including assumptions and exclusions that prevent disputes
Related Terms
A detailed description of the tasks, deliverables, timeline, and boundaries for a specific project or engagement.
A contract where a client pays a recurring fee to secure ongoing access to a service provider's time and expertise.
Time & materials bills for actual hours worked plus expenses, while fixed price charges a set fee for a defined scope of work.
Statement of Work (SOW) FAQs
Is a statement of work legally binding?
Yes, a signed SOW is a legally binding contract that can be enforced in court if either party fails to meet their obligations.
What should always be included in a SOW?
Scope, deliverables, timeline, pricing, payment terms, acceptance criteria, change order process, and termination clause.
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