Some jargon clarification
Some of you might be wondering what a down-payment is; not because you are unfamiliar with the concept, but because you call it something else. Some people refer to a down-payment as a prepayment, a security, or a deposit. Essentially, a down-payment is money that you design client gives to you prior to completing any work. Many organizations and companies use the concept of a down-payment; i.e. when buying a house, taking out a loan, or hiring a lawyer for example. Throughout the article I might refer to a down-payment as any of the above terms. Just know, it all means the same thing.
Why charge a down-payment?
There are a few good reasons why you might decide to adopt the tradition of charging your design clients a down-payment prior to completing any work (and I’s also love to hear your suggestions and additions to the following suggestions):
DOWN-PAYMENTS KEEP BOTH PARTIES HONEST
A down-payment is a way for your client to say “We trust you with the project and plan to see it through to the end”. It makes it more difficult to bail out after work has been completed and keeps both you and your client working hard toward the final goal of project completion.
DOWN-PAYMENTS MOTIVATE EACH PARTY
In addition to keeping you and your client honest with one another, down-payments motivate each of you to complete your portions of the project on time and correctly. Ideally, you will create a contract that both you and your client sign that explains what each of you will do and when. The condition of this contract should be the retaining of the down-payment.
DOWN-PAYMENTS ESTABLISH A RELATIONSHIP OF TRUST
A down-payment can be a great way to establish a relationship of trust with your client. They are offering their trust to you by paying you for work you haven’t even completed yet. Imagine what kind of trust that requires, especially depending on the price of the down-payment. Paying someone hundreds or thousands of dollars prior to completion of a project shows trust and confidence that the project will be completed quickly and well.
DOWN-PAYMENTS ENABLE YOU TO MAKE PROJECT-RELATED PURCHASES
Another issue you frequently face as a designer is dealing with project-related costs. Whether you need to purchase hosting for your client’s web site, print mock-ups, or simply pay rent on your office, down-payments can keep you in business so you can complete the project for your client without going in to tremendous debt. A word of warning, however: do not spend your deposits right away. If you spend your deposits on rent, for example, and then your client falls through, contract terms are breached, or you cannot withhold your end of the bargain, you’ll need to return the deposit. If you’ve already spent it, you might be up a creek without a paddle.
The real question: Do designers DESERVE down-payments?
Great, we’re starting to understand why you might consider requiring down-payments from your design clients. But let’s get down to the issue at hand: do designers really deserve down-payments? Is it really something you can pull-off successfully as a designer to charge your clients half the total estimated project cost before you even do anything for them?
Some would argue that charging a down-payment on design work is a little excessive. After all, most times you only charge a down-payment on something huge, like a house, a car, an office building, right? Depending on the scope of your project, actually, a down-payment could be a perfect solution for you. You are a hard-working designer with a very busy schedule. You deserve to know that your clients are serious about their projects and will pay when the time comes. For you, time is money and if you work countless hours on a project and then receive no pay for your work, you have been degraded and treated poorly. As a designer, of course you deserve a down-payment from your clients!
I am curious to see how you feel about down-payments and whether or not designers should charge their clients a deposit. Feel free to add your agreements, disagreements, etc. in the comments on this article. I think the discussion on this topic can really be quite interesting.
How to go about obtaining a good down-payment
Now that we have established the fact that you deserve to charge a down-payment to your clients, let’s explore the best way to go about doing it. After all, some of you might be an independent freelance designer just starting out. Why should your clients trust you at all?
The solution? A good, solid contract.
You’ve heard me preach frequently about the importance of contracts when working with clients. If you aren’t using a contract in your design business, you are running the risk of not getting paid, being sued, getting paid too little, getting paid late, or doing way more work than originally intended without any increase in pay. Frankly, if you are working as a designer and don’t have a standard agreement and contract procedure, you’re crazy. (By the way, I love to chat with designers about their contracts and other aspects of their design business. Feel free to drop me a line about any contract questions you have, concerns you face, or suggestions you have. I’d love to chat with you.)
Anyway, your contract or terms of agreement should include how much your down-payment is, when it is due, what happens if it doesn’t get paid and other important details. It is also important to explain to your client why you require a deposit. Help them understand some of the points we have discussed today and you’ll be well on your way to getting paid what you deserve as a hard-working designer.
Do you think designers deserve down-payments? Add your thoughts.
I’d love to hear your thoughts on the matter so feel free to discuss how you go about getting a decent down-payment, any success stories or tips you might have, and questions or concerns you need resolved. I’m excited to hear your thoughts and comments. Thanks for sharing.