Require deposit?

[Romq]

I've noticed that some designers demand a deposit/percentage of their fees immediately they get the go-ahead from a client. It seems a good idea but I wondered if this is general practice? And what percentage do you ask for?

I'm dealing with my first overseas client. I did not ask for a deposit and now the site is at proof stage, I'm getting a little nervous (he could steal my artwork and small claims would be hard to pursue overseas!). Do I merely show him screenshots (in JPG) of the proofs and insist he pays an interim payment before I go any further?

[BC]

Eeeeeeeek! Demand a deposit! Demand a deposit!

It is absolutely standard practice and ensures two things :

1. You get some money at the very least should the client suddenly pull out for whatever reason.

2. The client is sure he wants to go ahead (thus he won't pull out).

In your case... I wonder if it may be too late for you to demand a deposit.

[Romq]

BC, many thanks for your reply and advice.

I think I felt it was a bit like a solictor's/lawyer's fees - i.e. the client doesn't receive an invoice until AFTER the work is done. Of course, a lawyer - by definition - is in a stronger, more intimidating position than a web designer should the client resent paying!

However, I may be able to get away with what builders often do: spread the cost over staged payments. A bit late to call it a "deposit" of course but if I request payment for "stage 1" it should be okay.

Well, I'm hoping so anyway. Next time I'll ask for a deposit upfront. What %age do you ask?

[BC]

Staged payments is usually a very good idea (and what I do in my own consultancy). However you should alert your client ASAP and be up-front about the costs.

%wise, it will vary between designer to designer but I have seen some go as low as 20%, and some as high as 50%.

My personal figure is about 25-40% depending on the magnitude of the project being undertaken. Be flexible and choose a figure you feel comfortable.

[fashola]

I had an experience which i will never forget because i started the project, did the awareness report, layout and did half of the work when the client suddently became uninterested.

And this gave me the idea of insisting on a 50% deposit once i have the go ahead for the project. The deposit is not given to me but to the accountant handling my bookeeping and i tell you this formula is worth the efforts/anxiety of people leaving you to hold everything in case of emergency.

The most important trick is to say it in clean and clear terms when you discuss domain name charges, hosting fees and who is going to be responsible for photography and editorial materials. And saying it loud and clear makes you look professional.

[creole]

50% up front, the rest due upon receipt of deliverables. That is the process my company uses. Of course we are willing to negotiate if we really want the business. Sometimes we will go lower if the client asks us to.

[Jason_Therrien]

DEMAND A % UP FRONT!!

Believe me, you don't want to learn the hard way...
Also, draw up a contract with the payment terms listed on them and get it signed!

Be careful how much you ask for up front, because too much will seem suspicious to the client if they have never done work with you before.

GOOD LUCK!!
Jason
www.SmartWebBusiness.com:
"What other type of Web Business would you run?"

[Nicky]

I have never required a deposit upfront. As long as you have a clear contract then it should be legally binding. Somehow, I feel that demanding money up front is slightly unprofessional. I wouldn't want anyone to pay me for something that I haven't done and they ahven't received yet! I certainly wouldn't pay for something before I received it and was happy with it and I wouldn't expect others to do either.

[creole]

if you don't get anything up front, then you should work a kill-fee into your contract. Something that says if the client decides to drop the project x days into the project then they have to pay you $Y for the work you have done up to that point.

[Jason_Therrien]

Good Point Creole!

You might also want to work in how long they are under contract with you for any services that you have provided to them. For example, once you have supplied them a template, they might try to get rid of you and build the content within your template themselves. If they are under contract for a period of time, they cannot have anyone else do it buy you.

Jason
www.SmartWebBusiness.com:
"what other type of web business would you run?"

[Nicky]

Well, the way I usually work is that I quote a set fee for the work the client wants doing, obviously with the option of the client choosing extra additions to the site at a set hourly fee.

FICTIONAL EXAMPLE:

Requirement

Build a website from scratch to showcase the stock available in the shop. The website should encourage online ordering and help raise sales. At this moment in time a fully fledged e-commerce solution is not required, however, the design should allow for this upgrade in the future.



Production Costs

Based on our discussion the estimated production cost includes the following:

~Concept Design (at least three different concepts to choose from)
~Images (creating new ones and adapting existing ones - up to 35)
~Web pages - a reasonable number of pages in the first instance is between 20 and 30.
~Setting up of templates for future maintenance by staff
~Submitting to Search Engines and other Indexes (500+)
~3 hour training session to demonstrate how to maintain the website
~One year’s web hosting for website
~Continuous support provided either by telephone or email as long as the website is hosted with us


Estimated production costs: £1595




With Compliments


Urban Studios have pleasure in supplying you with this quotation for the services we can provide.

The above prices are based on the proposals outlined, however, we can tailor the above services and products to suit any budget. If you would like to discuss this further, please do not hesitate to contact me.

We trust our prices are competitive and look forward to the opportunity of working with you.

All prices shown in this quotation exclude VAT & are valid for 30 days from receipt of this quotation.

I look forward to hearing from you soon,


Regards


Nicole Danino

[johntabita]

We recently talked to a company about developing a promotional CD-ROM for us. Their policy is 40/30/30... 40% up front, 30% upon final approval of their comp, and 30% upon completion of the project. I kind of like this approach and may adopt it myself.

I recently developed a temporary site for a client (because he was in a hurry) and even got it hosted without getting any money upfront. When the client dropped out of sight and wasn't returning my calls, I figured I was screwed.

Fortunately, he re-surfaced and I got some money from him, but I'll never put myself in that position again!

[lynlimz]

Excellent thread guys. Learnt alot from here.

Thanks!

[fashola]

I support the position of Creole, understood the posting saying that too much money will be seen as as suspicious and noted with interest that Nicky is against the payment of deposit.

Where there is that real interest to do the job and what lawyers call "willingness to contract," the practice of a certain amount of money at a stage/when one is sure the work will be completed is a good business practice.

Nicky is lucky to be working with people who will pay instantly once they receive her invoice. But in situations where somebody has to approve the work, another person has to authorize the payment and the accounts department has to write the check. And you have to telephone to know the status of your payment over a long period. Believe me, once you experience this kind of situation you will want a deposit.Finally, once a deposit is paid it's easier to get the balance and at the end of the job if you are asking for a whole payment you might be unlucky to find something there trying to pull you down.

[Romq]

Many thanks for all the thoughtful responses. I've learnt a lot!