How to Convert Lesson 8: Deposits


The last stage before you start any work I taking a deposit.

Money for nothing?!

Some of the newer freelancers I talk to are a little apprehensive about asking for a deposit. I can understand why, you’re asking a virtual stranger to give you money before doing anything. A deposit is standard industry practice, lowers your risk of working for nothing, and if someone can’t trust you enough to give you a deposit, then that should be a warning sign that it won’t work out.

How much up front?

Some people ask for half up front, others do it in thirds. For web development and app development a lot of people are now working in stages or ‘agile development’ where by they have a list of things that need to be done in order to complete the next stage, and then more money is released.

Half of a job

The main issue to consider with taking deposits is that there really isn’t such a thing as half a job or a third of a job. So although you might be taking an amount upfront, you may never get paid the full amount. Allow me to give you an example:

You take a 50% deposit for a job. You do the job and then the client starts to scope creep, they start trying to get more and more little changes from you. Suddenly you’re left with a dilemma. You don’t want to seem petty with these small requests, but you still want to get paid. At some stage you may need to say “no more changes, pay me now” the flip coin being of course that if the client isn’t happy they might not pay you at all.

This is why structuring your deposit and payment terms is important to the way you do business. Cash flow is the number one killer of small businesses. In many cases after you’ve done a few jobs with a client you can be far more trusting.

Do Take Though

The last thing to say on deposits, is make sure you take one. You should never set off on a piece of work without it. The main time I’ve found a deposit to be a sticking point is with those last minute rush jobs where someone NEEDS to get something done. Well if something NEEDS to get done, you NEEDS to get paid. You’re not in business to do favours.

With your deposit in hand, a firm brief and a signed contract, you can finally start working on your job. So what is good practice for client relationship? Let me give you some pointers next week.