Asking Clients to pay Advance Payment?

Question

I am a freelance Android Developer in India. Normally I get local clients, from India only. When I talk about the payment, I ask all my clients to make 50% payment before initiating the project, because in some of my past experience with local clients, even though I complete their project, they refused to pay. So I would like to know if this is a good approach.

Answer 1

With new clients that approach me, I ask for a non-refundable deposit up front. Usually it ranges from 30% to 50% depending on the overall project cost. I tend to waive the deposit for any client I've previously worked for and not experienced payment issues with.

When asked, or if the client balks at this, I explain that the deposit is to cover the work which must be performed before client approval is sought. And, after approval adjustment, changes, etc would be encompassed by the remaining payment.

Many clients fail to realize that several hours of work must be performed and only then can they be contacted for approval or further direction.

If a client declines the deposit or refuses to pay it... I don't do the work. It's that simple.

To use an analogy.... if I were a caterer hired to cater a banquet. I would ask for a non-refundable deposit up front to cover the cost of food and materials and the hours of preparation that take place before the scheduled event. Then the remaining payment would be for services at the event. If the final event never happens, I still would have purchased all the necessary items and spent time scheduling and preparing for the event. So, I should not be expected to cover the cost of my work prior to the event - thus the deposit and why it is non-refundable.

Answer 2

You're doing just fine. Think of other business models where the client's trust and credibility is on the line BEFORE any services are performed:

• Here in the US, and probably everywhere, you can't rent a car without a deposit or a pre-charge against a credit card
• You can't rent an apartment without a deposit
• You can't contract for utilities, a cell phone, cable / DirecTV without providing a deposit or at least having credit good enough to show that you're likely to pay when the bill comes.

So congratulations, your business is in order!!! You're smarter than many others.

Answer 3

As others have pointed out it is fair, reasonable and professional to charge an up-front fee of 50% or similar.

This helps cover any initial costs and hopefully covers at least some of your time if the client does not wish to proceed for whatever reason.

Changing an up-front fee also means the client is taking a stake in the project and has a vested interest in continuing to completion. If the client has no stake in the outcome, then it makes it easy for the client to walk away if their circumstances change leaving you out of pocket.