The right time to ask for a deposit...

[Brian Penning]

If a client accepts that their project will take minimum 3-4 months for delivery and I wouldn't be actually making the piece for 3 months or so due to current orders, should I ask for a deposit now?
I wouldn't be buying any materials for 3 months either.
TIA for any and all replies.

[Joel Goodman]

If a client accepts that their project will take minimum 3-4 months for delivery and I wouldn't be actually making the piece for 3 months or so due to current orders, should I ask for a deposit now?
I wouldn't be buying any materials for 3 months either.
TIA for any and all replies.

I just paid a roofer a large deposit on signing the agreement. It seemed fair to me as he is blocking out the time for my job in his (and his crew's) schedule. The actual work will be done about 4 or 5 weeks after my deposit was paid. Often if no money changes hands people are not really committed and feel free to cancel. I will be interested to see what others think about this.

[Jamie Buxton]

I ask for a deposit now. If you wait, customers tend to drift away from the project, and three months from now they won't do it. If you have their deposit, they're somehow more committed to following through. This isn't an issue of grabbing their money so they have to go through with it. It is the issue of having them really emotionally committed to doing the project.

[Maik Tobin]

Seems to me that as long as you are honest with respect to the lead time, there is no reason to not take the deposit. If you wait, I would guess that there is a stronger likelyhood of loosing the project.

[Stephen Edwards]

If the customer knows the score and says that they understand, agree to the time frame and still want you to do the job, here's what I think is reasonable and how I generally do it if I'm booked for months in advance:

I get a 10% "good faith", non refundable deposit. As someone else pointed out, you'll be blocking out this period of time for their job. If you lose some other job because you've set aside that time period for the customer in question, and then they back out, you get the picture. When I'm ready to start the project I get another 40% of the total price. That means, I'll have received 50% when I start the job with the remaining 50% due upon delivery.

That might not work for everyone. But, that's how I do it. If they really want you to do the project, that's not unreasonable, in my opinion.

[Mike Henderson]

For furniture projects, I require 50% down (non-refundable unless I can't do the work -such as if I get sick or die). If I can't get to the project for months, I usually tell the client I won't deposit the check until I'm about ready to start the project. I like Stephen Edwards approach, however.

Mike

[Chris Kennedy]

I get a 10% "good faith", non refundable deposit. As someone else pointed out, you'll be blocking out this period of time for their job. If you lose some other job because you've set aside that time period for the customer in question, and then they back out, you get the picture. When I'm ready to start the project I get another 40% of the total price. That means, I'll have received 50% when I start the job with the remaining 50% due upon delivery.


I've been on the other side of this. As a customer, this approach seems perfectly fair to me. I have no problem putting something up front. I would have issue with putting up a significant amount when the contractor isn't going to be using the money or doing work for some time, but a good faith deposit is more than reasonable. From the customer's perspective, if I have paid good faith money, I figure the contractor is committed to the project as well.

Cheers,

Chris

[Tony Bilello]

I Generally require one quarter to one third down (non-refundable) whether I start it this week or an agreed upon future date. Reason being is that I feel that 25% to 33% is a substantial deposit and represents a good committment.
Just because we agreed on a 3 to 4 month time frame does not mean I am not working on that job off and on. I will do some design in spurts of spare time or as the mood hits me. I might combine the lumber with another order if I see some strikingly good looking wood.
I am also spending time on the phone and personal visits with the client, not at my calling but theirs because of the interest they have in the project.
All of the above efforts add up slowly, but they do add up.

[David DeCristoforo]

I do what Stephen does. I get a 10% "retainer" when we sign the deal. Then (and only then) I do whatever drawings and plans are required. Once all that is finalized and I'm actually ready to order the materials and/or begin the project, I get a 40% deposit. I make it very clear that the retainer is "non-refundable".

[Mike Henderson]

This is a bit off subject, but one additional thing I do on long projects is take progress pictures and place them in a side area of my web site. I give that address to the client so they can see what I'm doing on the project.

If I was the client, that would reassure me that things were progressing.

Mike

Example here (http://www.mikes-woodwork.com/Cabinets.htm)

[Brian Penning]

This is a bit off subject, but one additional thing I do on long projects is take progress pictures and place them in a side area of my web site. I give that address to the client so they can see what I'm doing on the project.

If I was the client, that would reassure me that things were progressing.

Mike

Example here (http://www.mikes-woodwork.com/Cabinets.htm)


I sort of do that already by emailing photos with small progress reports.


I like that 10% idea.

[Matt Evans]

I ask for a deposit now. If you wait, customers tend to drift away from the project, and three months from now they won't do it. If you have their deposit, they're somehow more committed to following through. This isn't an issue of grabbing their money so they have to go through with it. It is the issue of having them really emotionally committed to doing the project.


Right on. Same way I do it, and for the same reasons. I have had too many jobs fall through otherwise.

[Robert Reece]

As a customer, I think 10% retainer is good. I'd go as high as 25% if it was something special and I was totally convinced by the person doing the work.

[johnny means]

I take 50% to get on "the list". My list is typically 4 to 6 months long. I consider this fair because I am turning down clients who can't wait that long. I see no reason to turn down work in the future if the potential client is still in the decision stage. I can't change my mind about that job that I sent to the next guy. 10% depsosits will get you screwed real quick. Imagine turning down 10k for a particular month only to have the client walk away from his $1000 deposit. Then your left scrambling to find work for the time you blocked off. Of course, this is all dependent on a certain level of demand.

[Peter Quinn]

I think 10%-25% is fair when an agreement is signed. It will shake off the window shoppers and give a little traction to to the serious but fickle. You can easily spend that much time drawing before any materials are purchased, so don't give that time away in any event. I have yet to have work done by any decent and professional contractors of any sort that didn't follow this basic scheme, and it is SOP at the shop where I work. Take the remainder to equal 50% before purchasing materials. Spell out at what point if any deposits are refundable. Progress reports are a good idea in the form of pictures or perhaps a visit/inspection if appropriate. If installation is required, payment in full for the goods should be received upon delivery but Before installation, which should be billed separately. Once something is attached to framing, repossession is not possible in many states and it turns into a court situation should anything go wrong.

If you get to the point that you can ask for 50% down with 6 months lead time before construction starts, good for you. In many cases that is a bit of a stretch for most clients to accept.

[Scott T Smith]

For furniture projects, I require 50% down (non-refundable unless I can't do the work -such as if I get sick or die). If I can't get to the project for months, I usually tell the client I won't deposit the check until I'm about ready to start the project. I like Stephen Edwards approach, however.

Mike

+1 on both Mike and Stephen's approaches.

My brother accepts deposits in his business, but does not actually deposit them until he starts work. That way he has the $ in hand, but does not get into trouble by spending it before he has earned it. Plus it locks in the client.

[Tom Veatch]

Take into account that it's not my livelyhood, and I normally don't care whether I "get the job" or not. But if someone likes something I've done and wants to commission me to build something for them, a non-refundable 50% crosses my palm with the commission, and the final 50% when they pick it up. And it goes in the bank immediately. No holding a personal check - they can be stopped if they haven't cleared.

If I were doing it for a living, and cared about being competitive, the 10%, 40%, 50% deposit, progress, and completion scenario sounds right - deposit and progress payments non-refundable, of course.

[David DeCristoforo]

"...not actually deposit them until he starts work. That way he has the $ in hand..."

Not necessarily. A check can be stopped at any time before it clears. Also, if you hold the check and the funds are no longer there when you finally deposit it (Can't happen? Uhhh...). Things can change and by taking a deposit, you are attempting to protect yourself from loosing time and possibly jobs by "reserving" a time slot. Deposit the check. Until you do, you have no deposit.... (just my MMHO)

[Karl Brogger]

As someone else noted, get the deposit now. So long as the customer understands the timetable, no reason not to. I do a 60% down payment. Typically that covers everything but labor on my jobs.

[Stephen Edwards]

....one additional thing I do on long projects is take progress pictures and place them in a side area of my web site. I give that address to the client so they can see what I'm doing on the project.

If I was the client, that would reassure me that things were progressing.

Mike

Example here (http://www.mikes-woodwork.com/Cabinets.htm)

Mike, Excellent idea and great documentation of the of the progress of the work. It also should help the client, and potential clients, to see the amount of work involved in a project. Again, Great Idea!!

[johnny means]

If you get to the point that you can ask for 50% down with 6 months lead time before construction starts, good for you. In many cases that is a bit of a stretch for most clients to accept.
This is true and it bugs me that the same buyer would have no problem paying an upper end store in full with 12 weeks lead.

[Stephen Edwards]

I get a 10% "retainer" when we sign the deal. Then (and only then) I do whatever drawings and plans are required. Once all that is finalized and I'm actually ready to order the materials and/or begin the project, I get a 40% deposit. I make it very clear that the retainer is "non-refundable".

Yep, a landscaper friend of mine taught me that years ago. He does everything from run of the mill, moderately priced work to high end work. He shines on Japanese Gardens and stone work.

He told me that when he first started out that he drew a few plans without a deposit only to end up drawing the plans for free and someone else doing the work from his plans. Bummer. Then, he started the 10% non refundable "retainer". He tries to make that a fairly accurate estimate of the total cost of the job based on an initial consultation. But, it isn't written in stone(:D) at that point, that that will actually be 10% of the total cost of the job, in his business. I'm sure that varies from trade to trade.

You can also get shafted on "changes" during progress. It's very important to have all of that bidnez spelled out beforehand, too.

[Bryan Cowing]

As a hobby WW, I get the odd request to make something, usually try to get 60 to 75% cash so I can get the ruff stock and get it acclimatizing in the shop for a few months. I used to do 50% , but sometimes the material ran a lot more and would have to use some of my cash till the project was done.

[Brian Penning]

This is true and it bugs me that the same buyer would have no problem paying an upper end store in full with 12 weeks lead.

A slight but important difference is at the store you see exactly what you're going to get.

[Brent Smith]

A slight but important difference is at the store you see exactly what you're going to get.

That may be right Brian, but at the store you see exactly what you and 2,000 other people are going to get. You're making custom furniture. Your client is ordering custom furniture. The fact that they will have to wait a bit for it is a plus, you're obviously good enough that you have a waiting list. I don't think asking 20% down now to block out your time, 40% 1 month out to buy stock and let it acclimate, and the remainder on completion is asking to much at all from any serious client.

[Curt Harms]

but would some sort of escrow account be feasible? There have been criminal prosecutions in Pennsylvania due to contractors getting money and not finishing work paid for or in some cases not even starting it. If I were on the other side of the transaction I'd want assurance that my money would indeed be used for what I expect it to be used for.

[Chris Parks]

The whole issue of time and money outlaid by yourself may have another solution. Buying the timber and having that money outlaid even against a deposit is really not a good idea, why use your money? Take a deposit as a booking fee and say to the customer when I am ready to buy the timber I will get you to pay for it when it is delivered, you don't get the account the customer does and it is better than a deposit as they are truly tied into the project. They then own the timber and you don't have to outlay money and they can also see you are not making a huge profit on the materials. The only account they get from you is labour and incidentals like fixings etc. I know one person who has been doing this for years and it simplifies things no end.

[johnny means]

The whole issue of time and money outlaid by yourself may have another solution. Buying the timber and having that money outlaid even against a deposit is really not a good idea, why use your money? Take a deposit as a booking fee and say to the customer when I am ready to buy the timber I will get you to pay for it when it is delivered, you don't get the account the customer does and it is better than a deposit as they are truly tied into the project. They then own the timber and you don't have to outlay money and they can also see you are not making a huge profit on the materials. The only account they get from you is labour and incidentals like fixings etc. I know one person who has been doing this for years and it simplifies things no end.

This can backfire if your material cost, like mine, are extremely low. What reaction will I get if my clients new they were paying $15,000 for a $1000 pile of lumber. Or if your material cost are quite high, do you want the client trying to micromanage in order to cut their cost?

[Stephen Edwards]

This can backfire if your material cost, like mine, are extremely low. What reaction will I get if my clients new they were paying $15,000 for a $1000 pile of lumber. Or if your material cost are quite high, do you want the client trying to micromanage in order to cut their cost?

I agree. On most jobs that I do, but not all, (and I understand that different folks have different situations), I don't want the customer to know what I have in the materials for their job.

Sometimes I'll build a piece using material that I've had on hand for several years. On really special projects it might even be material that you can't buy. For example, I have some 100 year old barnwood, stacked in the loft of my barn, that just ain't available everywhere. Furthermore, I have a lot of work invested in getting off the side of a barn, cleaned up and stored in my barn.

I suppose it depends on the circumstances and the type of job. For the most part, I want to buy the material with their money.