Just a few words on how I manage deposits and payment for the logo projects that have a budget of £2000 and over. For most projects I ask for full payment up front for most overseas clients and between 50% to 75% deposit for UK clients. However, when you get a job with a much higher budget, asking for full payment up front is a little cheeky to say the least.
If you are used to asking and getting a high deposit, say around 75% or even getting full payment, asking this on a £3000 is just not fair to the client. Equally for the designer, a project like this will require much more upfront work, research and commitment and to not get a fair deposit should things go South half way though is also unfair.
So a little give and take plus some haggling is usually in order.
How I work it
I'll use a recent project as a perfect example of how both the client and I were able to agree satisfactory terms on deposit and final balance.
When the job came in I was very pleased that a client would first of all, voluntarily indicate a budget of £3000 for a logo design, some icons and basic guidelines. This is not the first time, but each time a client puts up over £1000 it makes me feel really hopeful about the industry as a whole. There are clearly many potential clients out there who do fully appreciate the value of hiring a good designer.
In this case the client was overseas so I was hesitant to send them a proposal indicating full payment up front, especially for a project I would not be starting immediately. The first thing I did was to send them an initial email just outlining my usual procedure. Stating that in most cases for non UK clients, full payment is required.
I made a point of explaining that I knew asking for £3000 up front was probably a little unfair. Whilst at the same time explaining why I generally have to ask for such a high deposits.
I ended it by asking them their thoughts on the subject.
Asking them their views is important. You never know, they may be ore than happy to pay the complete fee up front, this has happened to me, so one never knows. Even if they are not prepared to do so, it shows you are appreciative of their situation and are open to suggestions.
The email back
Initially the email back was not favourable for me. The terms were unacceptable. No risk for them and all risk for me. It was close to bring 25% deposit and full payment on completion. For a project that would span 2 months, this was a huge risk with a client I did not know.
I counter offered, but my offer was fixed and I would not deviate.
My counter offer
My solution is based on a 3 step payment plan. First of all I get 50% deposit up front. This is a fair and reasonable amount. If a month in something happens and the client walks, I am covered. I based this on 2 months work, so half of the fee for 1 months work.
I then ask for a further 25% once we are half way through the project. So this is like a good will gesture form the client, they are seeing progress, hopefully, and it's a form of acceptance that the project is still very much on. Plus we all need money to pay rent, bills and other monthly outgoings, so this helps cover you into your 2nd month.
The 3rd step is the remaining 25% on project completion. Only once this is paid will I release all the digital files and sign over all rights to the client. If the client does a runner, then I have secured 75% of the budget, which is better than nothing.
Once I submitted the above offer, I was prepared to walk away from the project if this offer was turned down. I would not accept any variation of this, even a 40% upfront 20% half way in and 20% on completion.
I will not take 40/60 or 50/50. But I will take 50/25/25.
For me, this is a very fair solution, so if a client has a problem with this solution I just say 'I'm sorry, but this is how it will be or not at all'.
It is very important to stick to your guns with this. A client who has approached you for a sizable project is clearly keen on you and the work you have done. If they really want to work with you, they should have no problem accepting the above terms, unless they have cash flow problems in which case it's better for you that they don't. :)
I intend to use the 50/25/25 for most projects over £1500. If you land a project that will take more than 2 months, then you need to factor in the additional months.
So for example.
If I landed a £7500 project, and I estimated it would take 4 months. I would likely do something with a 4 way split, so basically ensuring monthly payments. Which again, is a fair enough thing to ask given how bills and things work. So it might be something like 40/20/10/10 or thereabouts. This is not to say turn down a hefty deposit if the client is prepared to pay it, but if not, this ratio is fair for both parties.
It's front loaded so that the initial risk, booking the project in, securing it and getting started is taken away.
2nd month payment nowhere to be seen?
If the client has problems paying the 2nd or 3rd month invoice, then you must stop all work and wait for it to be paid. There is no point doing the above if you then just backtrack on it. Either the client has genuine cash flow problems and just needs some time to get it cleared, or they are simply playing silly buggers with you.
Distant Project start date?
This is one other thing to consider that may affect the above. You may be super busy and your next clear slot is 6 - 8 weeks away although fortunately for you, the client is in no rush and happy to wait.
The trick here is to still get a deposit but in a way that is fair. Asking for a high deposit when you are not going to be even starting the project for 2 months is totally unfair. However, you still need to secure the project so that you can rely on it being there, as during this time you will no doubt have to turn other work away.
Being in the position of assuming a job will be there a month from now, turning down other work then only to find that the client has abandoned it or gone elsewhere is a real pain to say the least. You can never guarantee a client will hang around unless you get some money from them.
In these cases I ask for a small securing/holding deposit, usually a around £100 for projects under £1500 and around £200 for projects over. This is a fair sum to ask to secure the project so that the client feels commitment from you and also themselves committed to the project.
Once the start date draws closer, then you can revert to the 50/20/20 system above, just depends on the overall budget left and estimated time needed to complete it.
This all works for me and if you have similar circumstances, it should be of use to you also. Even if it's a local client, for a larger project like the above I would base it on the same 50/25/25.
It's only the sub £1500 - £1000 where I feel it's fair to front load a high deposit or even full payment.
Never be afraid to ask or hint at full payment first, as I said above, you never know how flush the client may be. It's worth sizing them up, talk to them on the phone, get a feel for their general behaviour. You may be able to suss out what is fair and what isn't.
I have had no problems with overseas clients prepared to pay £1500 up front so don't be afraid to ask. The client can only say no. I also know of clients who were prepared to pay a 75% on a £2500 project, so they are out there.
There are a lot of very reasonable and fair clients.
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