As a freelancer or consultant, you should always charge at least a percent of your total project free upfront. This has two immediate advantages:
- It makes your client put some skin in the game. Paying a deposit makes your client take you and the project more seriously, and they're much less likely to not go through the project.
- A deposit let's you safely put time aside for the client instead of having to continue to look for work to sustain yourself in the meantime. You're no longer looking for a light at the end of the tunnel of the most-likely multiple month long engagement. This method also helps you lock in engagements in the future if you're too busy right now and it almost guarantees that you'll have work in the future.
As a rule of thumb, I estimate the time needed for my projects ahead of time, and create a payment schedule accordingly. This means the length of the project affects how often and how much the client pays me.
For example, If I scope out a project for a client which is going to cost over $10k, I know that while working on other projects as well ( I usually do around 3 projects at a time), it will take me at least a couple of months from the kickoff meeting to the delivering the fully-developed website. Since I don't want to /can't wait to be paid after 2 or 3 months, I have a payment schedule based on specific milestones.
Here's my payment schedule for projects over $10k:
- Deposit upon proposal approval / project kickoff: 25%
- Wireframe Approval: 25%
- Design Approval: 25%
- Development Approval/ Site Upload: 25%
The projects I usually get are under $10k, and typically take under a month to complete. This means I can get paid in bigger chunks, so the payment schedule is typically something like this:
- Deposit/ Project Kickoff: 50%
- Project Completion: 50%
Of course, while I only bill them twice through the whole project process, I always keep the clients updated on the specific milestones as above.
Lastly, for any projects under $1,000 I always charge 100% upfront because it usually takes me less than a week to finish.
While these examples pertain to my web design and development consulting, this payment schedule works beautifully for any service that includes a multi-step process. For example, if you're a logo designer, you could have one of your milestones be a hand-drawn sketch and a color palette, then a mockup of your logo, then a mockup, then different marketing materials designed using that logo and color palette.
While I've only been consulting for a little less than 4 years, I've used this payment schedule from day 1 and have never had a client call complain about or question this schedule. This is because it helps them spread their risk too. If they think thats the project isn't working out, they cancel it without having to spend the entire project budget on a freelancer who wasn't a good fit.
Another hidden advantage of this is that during our initial meeting, the split payment schedule helps address pricing objections because most of the time, when they're not sure whether to pay so much for a project, they're really thinking about whether or not the the money will be an investment they can see a return on, or whether it will be money that's going down the drain. Splitting up payments helps them mitigate the risk.
Finally, another method I've seen other consultants do is charge 100% upfront but include a 10% discount in the price. I don't typically recommend this as its very risk averse for the client, and it devalues your work, as you had no reason to charge the extra 10% other than having a higher risk of not getting paid.
If you're starting out I highly recommend you charge 50% upfront regardless of you bill per project or pre-hour (in which case, estimate how many hours the project will take, then divide that by 2) and 50% once you've shown the deliverable and before you actually deliver it.