How do you manage client "deposits" of money?


U

UXUI

New Member
#1
If you get a 50% deposit upfront and the client cancels the job later? Either a week later, or further down the track?

1. Do you take expenses out of the deposit if they cancel early on and then return the balance? Eg, if they cancel a week into it and you have already done a few hours work?

2. Or, do you make your deposit completely non refundable?

Also, is 50% deposit, then 30% and 20% good breakdowns before final files are supplied?

I need to know as I will be writing this into my contract.

Thanks in advance!
 
Paul Murray

Paul Murray

Moderator
Staff member
#3
Non-refundable. I tend to do 50% up front and 50% on completion, i.e. when the job is complete and before I hand over files or make a site live. Sometimes I'll break it down into smaller milestone payments too if it's a longer job, it often makes the client more comfortable to pay in chunks, and it means you're never working too much out of pocket. If you've taken a deposit and the client doesn't pay the second half when you're done, you've essentially done 100% of the job but are only being compensated for 50% of your time. But if you break it down into smaller payments and charge before you start a new stage of a job, you're never working without payment.
 
L

lostminds

New Member
#4
I'd say it depends on the length of the job and how "fixed" it is in length. For a shorter simple job a 50% non-refundable payment up front may be a good way if you want to share the risk and the client agrees. For longer or more loosely defined jobs (which is what I usually have) I usually go for an hourly rate and agree with the client for rough estimates of hours for each milestone/delivery/iteration, and bill them monthly for hours worked (pro tip: estimate a little more and bill a little less to keep everyone happy). If a client cancels or a project ends prematurely you simply bill for the hours up to that point as per your agreement.
 
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