What is the difference between proposal and engagement letter?

A proposal pitches; an engagement letter confirms. The proposal comes first: it describes what you could do, how, and for roughly what price, and the client is free to decline it. The engagement letter follows acceptance: it states what you will do, for exactly what fee, and becomes binding when countersigned.

They are not the same document wearing two names. A proposal is marketing with numbers; an engagement letter is a contract with manners.

The clean sequence for service work: proposal, client says yes, engagement letter or contract, then the work. Skipping the second step means starting a project on the strength of a sales document, and proposals are written to persuade, not to govern disputes. Convert the yes into signed terms before the first deliverable.

A combined proposal and contract template collapses those two steps into one signable document.