How to structure payments?

Deposit, balance on completion, etc.

[zulu_dude]

I've read loads of amazing posts on the issue of how much to charge clients for my services.

However, one thing that I haven't picked up (possibly cos it wasn't discussed, or because I'm overlooked it) was how to structure the clients payments.

i.e. Is there a deposit before commencing work (if so, how much), a further payment at a significant milestone (again, how much) and then balance on completion of the site?

Would be interested to find out how various people hand this side of the money issue... how do YOU structure it?

[JohnKelly]

50% deposit, 50% due on estimated completion date (tie payment to date milestone, in case client holds material or phase approval).

Larger projects could be split up 33/33/33 or 25/25/25/25. Smaller projects (for new clients) I ask for 100% up front, for projects say less then $1000.

[travelin cat]

As JohnKelly said, 50/50. Pretty standard. If the client is unwilling to pay 50% upfront, dump them.... you will probably never see the second 50% with somebody like that....

[zulu_dude]

Thanks for the responses, much appreciated!

[DXL]

I get 50% up front, 50% within two weeks of completion. In some cases I go 33% and then two more equal payments during and after project development, or they can pay 33% and the balance when its done.

I give clients an opportunity to expedite project development by paying 100% up front, but that's only if they mention to me that they have a tight deadline.

I need to work out a disclaimer that I need to get paid if they hold a project up. I've got two projects open right now, I can't complete them until the clients send photos to add to the site, and they've put off doing so for weeks now.

[Sobriquet]

100% advance in case of tiny $99 sites.

50% upfront, 50% in 2 weeks of completion for most cases.

35%, 35%, 30%, tied to milestones in larger cases.

150% advance from clients who refuse to learn the process and say 'i just want this - how many days - i wud pay once i get the job'.

[zulu_dude]

Hehe, 150%! I would love to be able to charge a 150% deposit and then another 150% on completion of the site! Then I would only have to work one third as much as I am :-)

As this is my first major client as a freelancer and I don't have a 'reputation' if you like, I think they might be freaked out if I ask for 50% upfront (I'm charging quite a bit). For all they know, I could be a fly-by-night and could run off to Vegas with their money.

So, I think the 33% (or maybe even 25%) deposit and then balance on completion is probably the model that I'm going to go for. I will be hosting the site as well, so there is always that little bit of control that I have, should they not cough up the balance.

Once I have some serious sites under my belt and have established myself, I can probably go for the 50% upfront, or maybe the the 150%.

[DXL]

I've had clients try to talk me down on a deposit or do work on spec. When I first started, I did a few things on consignment and got burned. I had one client try to talk to down to a 15% payment to start, and I walked out of his office. He called back a week later willing to put half down, but I opted to pass on the project altogether because he seemed like he was going to be problematic from the start.

[incrediBILL]

50/50 - but the 50% completion should be YOUR completion, not the customers as whether or not they take the completed site live is none of your concern. The best way to get screwed is to develop the site on the customer's server. Host it on your server until the job is complete and paid, once it's paid you can transfer the site.

In the event of ecommerce sites they may not go live until they finish entering their catalog, etc. so make sure you stipulate you get paid the balance when your work is completed and they sign off YOUR work only.

[papabear1126]

4 years day and night at design, seo, sem, I will never see it all I'm sure. But here are some hard learned lessons.

I do 55% down, balance due in 30 days of contract signing complete or not. Upon balance being paid, the site is loaded onto their server.
(For 50.00 a month you can get a virtual private server at OLM.com, tons of space, 5 unique IP's, se friendly hosting, FPSE, 24/7/human toll free tech support, I have 19 sites on one IP address alone so it more than pays for itself)

Also, If the client cancels I have a statement that the deposit is retained, if more than half the work is done the balance will be due in full.
And if they bat an eyelash when I tell them, I walk.

I learned everything the hard way.
If they act even a little funny when it comes to talking about paying you, watch out, if they even hint at changing the pricing structure, I run.

I found that even if you loose some jobs, your better off, you can spend that time improving your business or skills or finding better clients.
I spend the first 2 years cold calling co.s door to door until I learned enough to get business via my co. website and now my referals are good too f=bringing me more than I can do.
hth, it did me,
Frank

[Buzbe]

50/50 is pretty standard, so it splitting payments along milestones...

it might be worth looking into a method of programming/handling clients called xtreme programming. Has done me wonders in how to deal with clients and set milestones.

[paladin]

For new clients I do something a bit different then what most of you have posted:
30% deposit
30% upon completion of first draft
40% 2 weeks after completion

The big thing here is definition of the "first draft". I usualy define in in the contract as me completing all the functionality, and waiting for client approval and additional materials where necessary.

When I was younger (and even more stupid than I am now) I did a few sites for friends or family of friends. After getting burned twice with client loosing interest, I started the 30%, 30%, 40% approach. It has been working for quite a while now (knock on wood).