Deposits to Start Work: Deciding How Much to Ask For
Most of us know that we need to ask for deposits in order to start work, particularly with a new client: a deposit guarantees that even if something goes wrong, we won’t be completely without recompense for the work we do.
But more than a few of us put off making a deposit a standard part of working with a new client, unless we’ve already been stung. Part of the problem is that it’s not really clear how much to ask in terms of a deposit.
Just like with setting your prices as a freelancer, there’s no one true way to handling the deposit process. In fact, there are plenty of freelancers who may never take a deposit in their entire careers without a major problem — despite most of us agreeing that requiring deposits is a sensible practice.
How Much Can You Ask For?
You can ask for a third or half of your project fee upfront. You can ask for all of it — although I know only two freelancers who do so as a standard practice. You can ask for a flat deposit, no matter how much you’ve estimated the project will actually cost. You can ask for just about anything you want.
As long as your client is used to paying his vendors half (or whatever your deposit rate is) upfront, the amount is less of an issue.
Whether you’ll get it doesn’t seem to be as dependent on the actual amount you’re asking for as you might think. Rather, it’s more a question of what the norm is for the industry your client works in. As long as your client is used to paying his vendors half (or whatever your deposit rate is) upfront, the amount is less of an issue. That is, of course, assuming that the client has the money in the first place.
Do some research into the industry or niche you work in. While specialization makes sense from a marketing point of view, this is one of the times that it’s also practical from a mechanical perspective. It’s pretty hard to maintain different policies for different types of clients, so if you’re working to bring in the same types of clients over and over again, it’s easier to set payment policies.
Choosing Your Deposit Comfort Zone
The goal of a deposit is to make sure that you feel comfortable with starting on a new project. If you’re constantly worried about getting paid, after all, you can’t do your best possible work. If what’s considered industry-standard isn’t enough to make you feel sure that a new client isn’t wasting your time, feel free to raise your deposit requirements. As long as you do good work that your clients feel is worth paying for, most won’t quibble too much over a deposit.
In an ideal world, any deposit you receive should be enough to cover your work form now until the next time you will receive payment. It doesn’t really work out that way: if you get half upfront with half due upon completion, than there’s a chance that half the payment will wind up needing to cover the total time you work on a project. Unless your rates are pretty high, that probably won’t work out.
Your clients probably won’t go for a setup like that, either: unless you’ve worked together, a deposit is a compromise because their ideal situation is having you do all the work upfront with no payment — the mindset is that an untrustworthy freelancer could always disappear with a large deposit.
You’re looking for balance: a deposit that helps reassure you that a project is going to go well, while showing clients that you’re a professional who will take their project seriously.
The Mechanics of the Deposit
No matter how much you decide to require for a deposit, it should be a universal decision. Without fail, you should collect that deposit from each client. It’s easy to get out of the habit of worrying about deposits if you make a lot of exceptions.
Put your deposit policy in writing, even if you expect that you’ll be the only person who ever sees it. Having that sort of description, along with the reasons why you know asking for a deposit is important, makes it easier to ask for it. It wouldn’t hurt to add a clause regarding the deposit to your standard contract, either.