A term sheet is a short, often non-binding summary of the key commercial terms of a deal — price, scope, duration, payment terms, and any concessions — agreed in principle before the full contract is drafted. It focuses the negotiation on the few numbers that matter and hands legal and procurement a clean brief. The proposal sells the value; the term sheet locks the shape of the deal.
In plain English
A term sheet is the "big picture" agreement everyone signs off on first, so the long contract becomes paperwork instead of a second negotiation. It answers: what are we selling, for how much, for how long, and on what payment terms. Get those right and the closing is usually smooth.
Why it matters to you
Term sheets compress the scariest part of a deal — money — into a page you can control. Reps who put a clear term sheet in front of the buyer early avoid endless contract red-lining and surprise discount demands at the end. Learn what your company's standard terms are so you never invent pricing or discounting on the fly.
For keeping an agreed deal moving to signature, see When the Deal Stalls Before It Signs.