Home – New Forums Money matters If you’re a service provider, do you charge an upfront deposit?

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  • #979416
    Ange79
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    Hey Everybody,

    This is a question for those of you who provide a service, as opposed to a tangible product. Do you charge an upfront deposit or do you do the work first and invoice for the total?

    I do charge an upfront deposit and the system has worked well for me for the last nine years. :)

    Cheers!

    #1114140
    AgentMail
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    Hi Ange,

    We have not charged an upfront deposit in the past, but after having a few payment dramas, I have started to introduce it for clients I have not had dealings with before. It’s not full proof, but it does seem to make the relationship start off in the right direction.

    I have a few customers who I have pushed out to 30days, just because I get so sick and tired of chasing them, but they are loyal and just not good with shorter payment terms.

    In essence, I think it depends on the customer

    #1114141
    clintmaher
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    All my businesses require payment upfront, monthly in advance (where applicable).

    Has never been questioned, and have been going a few years now.

    #1114142
    The Copy Chick
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    Pretty much every copywriter I know charges at least a 50% deposit up front, myself included, with the remainder payable on completion of the project.

    I know some service providers who charge the full amount up front.

    Most people don’t seem to have an issue with this concept.

    #1114143
    Michael [The Mac Experts]
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    I think it depends on what service you are providing. For our on-site residential services, we used to require up-front payments and it had a negative effect on us.

    We now actually bill all residential clients on a 3-day invoice. So we provide the service, then give them 3-days to pay their invoice. This method has had a positive effect on customer satisfaction, has increased lead-to-sale conversions and essentially instills more confidence into our prospects minds.

    However with that said, this strategy works for us because we’re visiting the clients house – we know where they live, and they know it. So if they don’t pay their bill, we know exactly where to come knocking!

    My advice is, if you’re providing a type of service where you can limit how many customers will default on their bill. Don’t up-front bill, it will drive customers away.

    #1114144
    Michael [The Mac Experts]
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    The Copy Chick, post: 127920 wrote:
    Pretty much every copywriter I know charges at least a 50% deposit up front, myself included, with the remainder payable on completion of the project.

    I know some service providers who charge the full amount up front.

    Most people don’t seem to have an issue with this concept.

    I’ll chip in here, I have a problem with this concept. The copyrighter we hired for our website rewrite (local Canberra copyrighter) is more expensive, but took no upfront payment. He provided a “teaser” amount of material on completion, where I paid him the full payment to obtain the full copy.

    I choose him because until he delivered, I had no trust in him or his services. He’s worked for major reputable companies in Canberra, but given I’ve never previously dealt with him – I was nervous with shelling out $800 for something that may or may not be what I was after.

    Remember, risk is a two-way street. I am taking risk in a new unproven service and the business is taking a risk with not requiring an upfront payment (negated by only releasing teaser material). However this risk paid off for my copyrighter because I was happy with the teaser material, and even thou he charges more than his competition – he’s got a repeat customer in me.

    Just some food for thought!

    #1114145
    clintmaher
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    For what it’s worth, we pay our premium copywriters 100% in advance, then wait for delivery. No problem at all with me.

    On the other hand, our not so premium writers invoice us with 7 day terms. No problem with me.

    It’s all a matter of attitude.

    If you know your copy rocks then act like it and charge accordingly, upfront :)

    #1114146
    Greg_M
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    I don’t usually bill up front but a lot of my work is on an hourly rate ( a whole other argument) for regular client’s, also I tend to have a high number of “projects” against a low no. of client’s, I think it would start to get up their nose pretty quickly if I pre billed.

    If I was doing a large job that was going to make my time exclusive, I will scope it and quote it, part of the scope would be a schedule of payment against milestones.

    I generally require 14 days nett, so I just auto send everything off the time sheet or completed fixed price stuff on the middle and end of the month, find that serves a couple of uses, it makes two set days when I bill regardless of where I’m at and serves as a reminder to the client if there’s anything outstanding.

    I don’t get a perfect strike rate every 14 days, sometimes client’s push it a bit but in an industry where 60 days is the norm (and even that’s only with better companies) I don’t think I’ll do much better.

    Money up front, does sound nice though.

    #1114147
    tonyk
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    It really depends on the client and what sort of job it is, as I do offer buy in bulk packages, but my preference is to have 50 per cent payment upfront and then the other 50 upon completion of the job.

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