In a perfect world, clients would have ample room in their budgets for design work and would happily pay you immediately upon project completion.
But who knows if they even have designers in Heaven, so let’s focus on life here on Earth: most clients, especially the start-ups and the entrepreneurs and the small businesses, fit design into their budget begrudgingly.
Simply put, the average client wants more work done than they can afford (or believe they can afford).
And since your awesome design work is only going to start rolling in the dough after the project is finished, convincing an already cash-strapped potential client whom you have no relationship with to invest buku bucks into a project can be nearly impossible.
So we designers have a tough choice to make:
- Tell ’em to forget it and find a cheap college student.
- Whittle our pricing down to what they believe they can afford.
Both kind of stink, don’t they? So let’s explore option 3…
3. Get creative with payment schedules
We are creatives, yes? So there’s no reason why we can’t use our awesome flexibility as freelancers to make projects more affordable without lowering our pricing.
Here are four payment schedules to consider when discussing alternative payment schedules** with a tight-fisted client:
**I’m defining the “normal” payment schedule as requiring a down payment/deposit to begin and the remainder due on receipt – the financial term for “upon completion.”
Especially for clients who have fluctuating cash flow (like we do) and/or for a large project with a vague completion date, net X is a great way to allow some wiggle room at the end of a project.
Net X means payment is due in a specific amount of time after the project has been completed.
Example: Net 30 means payment is due 30 days from completion.
% X net X
A twist to encourage quicker payments, % X net X provides a discount if the bill is paid within a specific period of time. Otherwise, the total amount is due in the amount of time specified.
Example: 1% / 10 net 30 means there is a 1% discount if the bill is paid within 10 days. Otherwise, the total amount is due within 30 days.
Monthly payments upon completion
For clients who can afford a project over time, consider offering a monthly payment plan to spread out design costs. This works particularly well for start-ups who need a lot (A LOT) of design work before they can start making money.
Example: For a $1000 logo redesign, your client pays you a deposit of $500, then upon completion pays you $100 per month for 5 months to remit the remainder.
More frequent, smaller payments
This option works best for long, large projects. Present the option to pay smaller, more affordable portions throughout the project (often based on meeting objectives to help keep the project on schedule) rather than half up front and half upon receipt.
Example: For a $3000 website, your client pays you $1000 to start, $1000 upon meeting defined, specific goals (be crystal clear about what these are), and $1000 upon completion.
VERY IMPORTANT NOTE: As with all conditions of a working agreement, be absolutely sure your agreed-upon terms are clearly stated in your contract! (Looking for some awesome contract secrets? Click here.) You must have written proof of these terms to hold a client accountable.
What’s your secret?
Have you ever offered an alternative payment schedule as a means of defraying design costs? Share your tips, success stories, or words from the wise in the comments!