Asking Clients for Full Payment Upfront [AQfG]
As part of my A Question for Graham series [AQfG], Chris from PixelHatch, emailed me a follow-up question with regards to an earlier post of mine on the topic of asking clients for the full payment upfront, opposed to the more usual deposit/balance format.
"I read your blog post on charging 100% up front and this is something I'd like to do in the future. In my mind it doesn't make any sense to work on a deposit since it's always possible for the client to just not pay you at the end and there's not really much you can do about it.
My only concern is that because the idea of a deposit and payment on completion is so accepted in the industry I'm scared of putting clients off. Do you have a particular way that you explain this to new clients without scaring them away? Would be very grateful for any advice."
There's no denying that asking for full payment upfront for a logo design, or any graphic design for that matter, often has this perception of being a rather 'cheeky, and/or taking the piss' method of cash collection. Alternatively, when asking for full payment is not appropriate, I tend to stick with my Deposit & Progress Payment Strategy.
I can only really go on my own personal experience of charging the full whack up front, and hope that this might offer up something useful for other designers who feel this is worth considering.
For context, in my early days, I was simply ripped off too many times by clients not paying the final invoice after I had delivered my end of the deal. A lot of that was a result my own inexperience of being self-employed, but also I had a tendency to over-trust people. What a personal failing, I know…
I tried, over a few years, various methods to protect myself against non-paying clients, but it's simply impossible to do 100% of the time due to the sheer vulnerability of 'putting your idea out there' before securing some, or all of your money. Once you show that logo design idea it simply leaves each and every one of us super vulnerable to being cast aside.
On one hand: some clients feel untrusting towards a designer to pay the full amount upfront (even a heft deposit!), and equally a designer may be untrusting of a client to pay the final balance when it is due.
Where is the trust
My feeling is that if a client approaches you to do them a logo design, then it's simply up to them to find the trust to place in you, not the other way around. Maybe you have a great portfolio, loads of testimonials, a regular and transparent social networking presence, various communication methods etc: all of these things ought to provide comfort to a possible client. If they still have trust issues that you will not deliver, then I wouldn't personally want to work with them in the first place.
Assuming that both parties have done their due diligence with each other: client checking out the designer, and the designer asking the right questions and providing adequate information, then there should be no reason why a client will not consider paying the full amount up front. Other than the obvious: not having that sort of cash laying around, but if that's the case who's to say they will have it 4-8 weeks down the line? If they don't have it all now, who's to say they'll have it a few weeks later, and I do think many clients end up in this problem of hiring a logo designer, paying the deposit but simply unable. or unwilling, to then pay the rest.
Just look at how our society ends up in constant debt by buying things they can't afford with credit and overdrafts, all the time having the noble awareness and intent of settling that debt at the end of the month. If some of us struggle to pay off that card for a new car we have just purchased, then I also slightly worry about the importance placed on paying up for a logo design once it's been done. After all, once it's been done, the designer has shown it to you, the novelty sort of wears off, and you are then faced with the reality of forking up more money. OK, so that's a somewhat cynical view, but it's also not really all that far from reality.
As a materialistic society, once we have what we want and have not yet fully paid for it, then trouble is just around the corner when we are faced with that final invoice/credit card statement etc. I have seen this, been a victim of clients simply not having the funds when the time came, and I just got royally brassed off about it.
Hence the full payment up-front seems to actually prevent more problems than more common methods.
Clients DO like paying all up front
And, do you know what? Since I offered this on my initial proposals easily over 80% of all my past clients have offered to pay the full amount, rather than the traditional 2-part deposit/balance approach. Oftentimes we are talking about a client finding, and happily paying between £1000-£8000 before they have even talked to me on the phone!
Now that is what reinvigorated my sense of trust in people. I have been continually bowled over by the continued, and seemingly lack of distrust, that all my past clients have exhibited towards me. So, if I have worked with clients that have, historically, shown no apprehension whatsoever to pay the full amount up front then it surely shouldn't be such a taboo subject to raise?
Just want to make it clear that I don't DEMAND full payment, although I did go through a period of a few months when this was the case. I provide two options of payment, but with a nice little incentive for a client to pay the full amount. Don't underestimate the hassle some larger companies have when it comes to paying, or having to arrange with their finance department, their own invoices etc. It's been explained to me by more than one client that it was simply case of, paying the full amount up front that is, being easier to arrange than two staggered payments. Plus, of course, they go get a genuine reduction, which the bigger the budget, the more it makes sense.
So my main chunk of advice, if you are worried about asking clients to pay all up front, especially if the project is going to take a few months, then at least offer both options. When doing so provide ample reasons and incentives for them to pay the full amount up front, but don't box them into a corner.
Once you get your first client accepting full payment, then you'll find more confidence to ask the next time round and so on and so on, which was pretty much the case for me. I certainly did feel cheeky asking for the full amount the first few times, but once the first few clients happily obliged, it became routine.
The other way to try is to simply have a FAQ page that gives fair warning to a client about your payment options before they might even get in contact. They are not forced into using you, or accepting your terms, but they are your terms and your business, and if they want you as a designer then they'll need to seriously think about trusting you. It's mostly as simple at that.
Sometimes my gut tells my I need to tread cautiously with a particular client, so in these cases I might just offer up the Full Payment Upfront, and no 2-part option. Obviously always a risk they'll move on and find another client, but I've learnt to trust my gut and also not sweat it if a client gets narky about your payment options.
I probably have three or so proposal templates, and tailor each one depending on the vibes I get back from the potential client, as well as taking into consideration the budget, scope and length of time I expect to be on it. If it's going to be closer to two months on one logo design project, then I'll make sure I'll either get the full payment up front, or at least ensure I have a staggered Progress Payment in play.
My current proposal layout
I'm continually changing the layouts of my proposals, but the current version shows you how I typically will present the full payment option to the client. You can see that I first offer up the total cost, in this case £3800. Then I choose to provide a standard 2-part Deposit and Balance method with the Full Payment option underneath with a nice little discount as an incentive.
I often get asked why my logo design process seems to differ from many other freelance logo designers. I don't take your money, scurry away for a week then present you with 4 gleaming logo design ideas for you to choose from. You choose one, offer up some remarks then I scurry away again and make several rounds of alterations and changes. After a few days, I come back to you with a more complete logo. Then possibly a few more changes before completing the project. Finally, hoping to get paid.
This seems to be a common approach for many logo designers I know. There is a set cost, set number of ideas and revisions and possibly some extras thrown in like basic stationery designs, letterhead, business cards etc.
This process is solid and it works for many clients, so this is not a criticism of this approach. I am outlining my own approach and how it differs from the above and how it might, for some clients, be a more interesting and enlightening approach.
I was hoping to get the whole process in one post, but as usual, my inability to keep it short and sweet has lead me to section the idea. Rather than offer a quick overview, I have gone into excruciating detail on each significant part of the process. So this first part focuses on the first contact, when a client approaches me with a view to hire me for their logo design needs. I hope it offers some insight into how I work and might offer some ideas for you to implement yourself.
From the get-go
I place a lot of importance on communications at the beginning of a project, way before any money has parted hands and long before I even know the project is secured. I usually first find out about a possible job through a potential client filling in one of two online quote forms, or mini brief. A set of questions designed to get the client to think about what they need and for me to get a solid understanding of their requirements.
I use Google Docs for my online quote form, it's not the prettiest but works well.
As the quote form is quite long, I do suggest that clients can call first. This might be useful if they need some help with aspects of the logo design process, rather than sit down filling in a heap of questions. If the filling in the form is the only option available, if might very well put them off contacting me. So I encourage them to contact me in whatever way they feel comfortable with, then we can take it from there.
Better to call
Even though this is the usual first contact, I do encourage people to call me first. Nothing can substitute actually hearing about a project, listening to the hopeful new client explain their business. It is easier to offer thoughts, suggestions and advice. A deeper level of understanding can be gleaned from a call than filling in the quote form, so this is my preference.
I know of some logo designers who prefer to deal with clients only via online methods, not the telephone. There are some projects where a decent chat is essential, especially if you are working on a personal brand. You need to hear the voice, find out about their personality and drive. No matter how much you email and IM, you will never fully 'get' the person if you don't at least talk on the phone.
Once we have chatted, we usually work on filling in the online quote form. To sum up what has been discussed and to put down in writing the various aspects needed for this project.
Specify a budget
I don't have a set price package so to speak. I feel it's not for me to determine how much a client should place on the branding of their company. If their image is important to them then I would like to see this come voluntarily from them, rather than me suggesting a price. Only they can place a true value on their business.
Often a client just has no idea on the value of design, how much it should cost. This is not to say they will be looking for the cheapest option. Far from it. In fact, they often just need some guidance, some explanations of the importance of a solid brand identity and also a explanation of what is really involved with a logo design project. Once you lay all this on the table, they are often happier to consider a higher budget.
Fortunately for me, clients on average voluntarily put up anything between £750 - £2000 for a logo design project, this is without any interference from me, and this gives me a lot of hope in general. Not all clients are looking to get logo design on the cheap, in my experience over the last 6 months, quite the opposite. So this is encouraging for the industry and for any freelance logo designer.
Here I will get a good idea on how a potential client perceives the value of design.
I do consider lower price work if approached directly, there maybe a icon or simple badge to create opposed to a full blow logo design. But for simplicity, I keep my online form focused on the bigger picture.
It is true that aligning your work with higher prices helps the client perceive you and your work in a certain way, opposed to a bargain basement approach. There are pro's and con's to both, but for me I have decided to focus on aligning my reputation and work at the middle/higher end.
Some clients appreciate seeing higher prices as a sign of experience and quality. Some clients will just run a mile and find the cheapest designer they can get their hands on. But the work in your portfolio is the real focus, if they like your work but you are not the cheapest, you still stand a chance to secure them as a client. They want to feel they will know the type of work you will likely do for them and this will help them make that decision on how much to spend.
Securing the project
After I have received the completed quote form, I will assess all the information and compare the work needed with their proposed budget. If the work required to complete a successful logo project is substantially more than the proposed budget, I will write back to the client and explain that their is a shortfall. In order to provide the client with logo based on their information they will ideally need to raise the budget. If this is a problem for them, either cash is limited or they just don't want to pay what is needed, then we look at ways to reduce the time needed to complete the project. But this is not always easy to do. For me, I cant always justify spending unpaid hours on a project with a small budget.
If there is still a deadlock with the budget, then I will take a view on a per project basis. I will not necessarily refuse the job, it may be a good job and client to have on board and I may accept I will have to spend more time than I am getting paid. This is ultimately my choice. If there is a massive discrepancy, or the client just seems to not value design or I get a sense it could lead to a somewhat challenging client designer relationship, then I will politely bow out.
Proposal and Budget
After any initial conversations on the phone or Skype, or regular email correspondence we will look to take the next step. Once I have the brief, a verbal acceptance on the budget, I will approach the subject of payment. This is a slightly sensitive issue, so I tread carefully here. It is clear on my quote form where I stand with regards to the deposit and full payment scenario. So hopefully, any clients still on board with me at this point are aware of my policy. But I still tread carefully.
If the client is overseas I will send them a polite email gently reminding them that in their case I will require payment up front. I will explain my reasons for having this policy, that it's a general rule and not personal. I finish the email by simply asking them if they have any concerns over this arrangement, rather than simply saying take it or leave it. I am always open to negotiation at this stage, but thankfully for me, every over seas client thus far has not had a problem with paying upfront.
Assuming we have the all clear for payment up front then I will send a basic proposal detailing the work to be done, with contact information and a basic run down of a few key points. I cover cancellation, refunds, ownership of the artwork. The proposal is created in InDesign, a simple 2 page affair. Client and project information on one side, with costs and brief project outline. The reverse has the basic small print. Nothing complicated or lengthy to read.
I don't have a contract. To take action over a client who has done the dirty costs money, money that most freelancers don't have.
There are situations where a contract would make sense, but right now, I don't I need one. Most of my clients are overseas, enforcing a contact for a overseas client, in times of dispute would be problematic, time consuming and expensive. They may give you peace of mind, but I think it's a wasted peace of mind. As my business grows, and the type of identity work I take on increases in complexity, then I will re-visit the contract issue.
My proposal form does contain the usual things such as cancellation, copyright, ownership. These I can explain in a small paragraph to avoid confusion that a heavy contract can give.
Payment up front is my insurance.
Now I have all peace of mind any freelancer can have by getting paid up front. I am able to rest easy, and totally focus on the job at hand without any of the low level anxiety we all face when it comes to invoicing at the project end.
So assuming all the above points have been dealt with, I need to secure this client. I can't rest easy until I see money in my hands.
Presently, I keep this simple. Paypal or direct bank transfer, I still prefer Paypal. Even though the fee's are a little high, the flexibility and near instant transactions with Paypal are worth it. I use Freshbooks to manage all my invoices, this means I can send personalized invoices, with a PayPal link via email. This makes it very quick and easy for a client to pay the deposit, assuming they have PayPal of course.
The deposit needs to be received before I will seriously start working on a project, although it doesn't stop me from thinking and tinkering around with a project before I have the deposit. This usually depends on if I have a good feeling about the client's commitment to the project.
Waiting for the deposit or payment
Some time may have passed from the clients first contact to the point where you have sent the invoice. Some times it have been a number of weeks of communications and messaging. Some clients need quite a bit of reassurance, especially if they are investing upwards of £1000 in their identity, totally understandable. So I try not to rush them, although at the same time, I would like to get the deposit secured. So I do all I can to create an atmosphere of trust with them.
Some 'dead certain' projects fall by the way side, this is normal. Can be frustrating, but you just wait for the next one to come along. Maybe you could look at how you conducted yourself, did you reply promptly? Did you communicate effectively? There are any number of reasons why a client may change their mind, some will just be down to their own personal or professional circumstances. Personally, I have had problems with time management and I know I have lost a few clients because of this. Once you realise your own faults, accept and acknowledge them, you can at least do something about it. I am far from being perfect, but I continually try hard to improve my service.
Once you have the payment or deposit in your account, then you can at least breath a sigh of relief. I have recently started sending a PayPal receipt, acknowledging the payment. If you have sent someone money, it's reassuring to know they received it, and of course it is useful for their own records.
Now you can start the project.
End of part 1
So this would be a good place to end this first part. Hope this gave you some insight into how I work my freelancing. Everyone has different methods, so this is by no means a 'you should do it this way'. It's also not exhaustive and comprehensive, although it's pretty close. Part 2 will focus on my method of working from the research aspect, sketching and idea formulation and interactions with the client through-out the logo project.
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The Logo Smith : Freelance Logo Designer, Brand Identity & Graphic Design Studio
Providing PR Services with The PR Room: Technology PR, Smart Home PR, Internet of Things PR and Lifestyle PR Agency.
25 Years Experience in: Logo & Brand Identity Design, Graphic Design, Advertising, Marketing, and Commercial Print.