Custom-Made Expensive Products

[hasm]

I run a small ecommerce operation selling various housewares with a average order amount of $100, and we accept payment through a regular merchant account (Nova) and typically ship within 1-2 days. We are considering offering some custom made furniture pieces with a price ranging from $1000 to $3000. These items will be custom made by a supplier and will take close to 8 weeks to make.

I'm trying to figure out how to accept payment for these items. It doesn't seem fair to charge the customer in full at the time of order, and I don't think this is permitted under the merchant account policy anyways. The standard practice in the furniture industry seems to be charging a non-refundable deposit of 30-50% at the time of order with the remainder due at the time of shipment/delivery - but I don't think the merchant account policy allows us to take this sort of deposit either. Then there's the fact that the credit card authorization hold will expire in roughly 30 days.

I'm just wondering what other people have done for this type of item. How do you protect yourself from being stuck with a custom made item that you may not be able to sell to someone else? How do you accept payment? Do you specify that the normal return policy does not apply to these special items?

Any suggestions or feedback would be appreciated.

[CernyM]

Where in your merchant card agreement does it say you can't take a non-refundable deposit for custom made goods?

I've paid similar deposits numerous times in the past for goods.

--Mike

[AW_Learner]

You can brake up what you call the charges and instead of calling it a "deposit" call the 50% the "service fee" or "custom design fee" or "production fee". Something that shows that fee is for the custom service work that will start immediately on the furniture and therefore is non-refundable after the work is started. I've done freelance graphic design for years and always charge 50% upfront. It is a "service". Then you can charge the other 50% for the actual "product fee" right before you ship it. It is unlikely that the customer's will not want there item after paying 50% that they cannot get back. If you want to have a return policy after they get it and decide they don't like it and want to return it, I would offer a short 7 day or so return policy for a refund on the product fee only. Minus the 50% design labor fee and shipping.

[RedWolf]

It is fairly standard practice to do a 50% upfront payment for custom orders. Some break it into more than two payments. Maybe 25% initial payment, 25% at first design review, 25% before final production, and the final 25% at shipment. The last is usually for projects that require a lot of customer approvals/interaction.