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Why to secure a deposit to start a project

Posted by Ilise Benun on

You’ve heard that you need to get a deposit or advance from a client — especially a new one — before starting work on their project. But did you ever stop to think about why it’s so important?

In my recent book, "The Creative Professional’s Guide to Money,” I wrote about how each party antes up something: you ante up your time and your prospect antes up some money. That way you both have some “skin in the game” as they say.

It’s one thing to understand the logic and another thing to have a cogent answer ready when a prospect asks, “Why do we have to give you a deposit in advance?”

From the latest edition of the Creative Business newsletter. Editor, Cameron Foote, suggests this response:

Professional service firms like ours are very labor intensive. We invest many hours in projects before our clients see tangible results, and projects often extend over months. Meanwhile, we have to meet payroll and other expenses. 

If we didn’t require a deposit and progress payments, our fees would have to go up dramatically.We would also put our stock in trade—our unique ideas—at risk of being appropriated without payment. So we follow the standard practices of our industry—a third of an estimate up front, one third at the time of first creative submission, and one third at delivery.

In his August 2011 edition, he also covers these questions:

• Can we try your services before buying?
• But what if you can’t come up with something we’re happy with?
• Will you guarantee your price?
• You have no experience in our field. How can you produce something that will work well for us?
• Would you also solicit business from others in our field?

Jam-packed with insightful information, this edition also covers these topics:

  • Reinforcing A Firm’s Professional Distinctiveness
  • Helping Clients Stay Competitive In DownturnsHow (Your Firm) Defines Value-Oriented Designo
  • Why Professional Copy Is More Than Worth The Cost
  • Using Illustration For Differentiation & Impact
  • Explaining What Makes Internet Marketing Different

Use the Marketing Mentor Partner discount when you subscribe to the Creative Business newsletter here. It only costs $129/year PDF or $139/year Print, and includes unlimited free advice (phone + email) from Cameron Foote.

Also, check out The Pricing Bundle, which includes an interview with Cameron and many of his key articles on pricing. (Sale extended! Just $79 through Friday, 9/2!)

Want to “grill the pricing experts”? Join me, Cameron Foote and Emily Ruth Cohen for the Function Fox pricing panel on Sept 20

The post Why to secure a deposit to start a project appeared first on The Marketing Mix.

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