Upfront payments: how do you handle it?

28 replies
So I've heard here and there, about how people generally take 50% upfront and 50% upon completion in web design. For the most part, a lot of my jobs have been referrals and word of mouth, and there was never any urgency for the money.

But I think it's time for me to evolve and try to take upfront payments. Ideally, 50% (~$500 usually)

The common objection I can think of is that people don't want to just pay somebody they have never met before (I do out of state cold calling) for a job that's not even started yet.

How would you guys handle that? Do you just toss/qualify out those that do NOT want to pay that upfront fee?

What do you think?
#handle #payments #upfront
  • Profile picture of the author DavePalermo
    My experience is this...

    Pay up front.
    X amount of redesigns. (Because God knows you'll never get it right the first time)

    99 percent of the time my customers are happy.
    But always account for the types that are never satisfied.
    {{ DiscussionBoard.errors[6985589].message }}
  • Profile picture of the author kenmichaels
    I ask for all of it upfront.

    I never give them an option for payments. Unless

    They cannot afford it all at once.

    or

    It will help push some one over the fence.

    i.e. the money is the ONLY thing holding them back from purchasing today.
    Signature

    Selling Ain't for Sissies!
    {{ DiscussionBoard.errors[6985624].message }}
    • Profile picture of the author gti7
      You have to speak in a way that helps them trust you. You also have to present everything you have for them to verify your legitimate existence such as a professional website, some logos on the website from trusted companies, positive online reviews, incorporation for the state you do business out of, etc.
      {{ DiscussionBoard.errors[6985671].message }}
  • Profile picture of the author justbenoticed
    Yeah i'd get at least 50% upfront, if you're getting referrals by word of mouth you shouldn't have a problem with the people trusting you. If you do, you can show them your portfolio and tell them you've had many happy clients and you've always delivered.
    Signature
    Managed VPS - tmzVPS.com - Florida, US/Los Angeles, US/United Kingdom Locations - INSTANT Setup
    Unmanaged VPS - Quality Unmanaged VPS hosting
    14 day money back guarantee | 5+ Years in Business
    {{ DiscussionBoard.errors[6985673].message }}
  • Profile picture of the author Slave1
    Imaging going to Best Buy and saying "Let me pay you once I get the plasma hanging on the wall..."
    {{ DiscussionBoard.errors[6985742].message }}
  • Profile picture of the author socialbacklink
    If people balk at not paying some part of it at the very least up front they aren't the type of customer you want. They will skip out on payment at some point.This comes from experience.
    Signature
    Get The Best In Paid Traffic Training - PPC Superstar!
    17 Years Experience As A Professional Internet Marketer
    {{ DiscussionBoard.errors[6985777].message }}
    • Profile picture of the author LaLaLives
      Originally Posted by socialbacklink View Post

      If people balk at not paying some part of it at the very least up front they aren't the type of customer you want. They will skip out on payment at some point.This comes from experience.
      Spot on!

      Earlier this year, I began requiring upfront payments in full. I also raised my rates. While I will still negotiate on rates (only for customers who are requesting regular bulk work), I don't negotiate on upfront payments. It's all or nothing. As a result, I have clients that pay for regular weekly content an entire month in advance, which is very nice.

      I've also noticed a rise in the caliber of my clients since adopting these policies. To say the least, the clients that I have now are a lot more respectful of my business and my time. They are also more professional, overall.

      One piece of advice that I might share here is that it is easiest to request higher rates and upfront payments at a time when you don't exactly need extra work. A lot of freelancers don't make time to market themselves or search for new gigs until they've lost a client and need to find a replacement. It's at this point that a lot of freelancers are desperate to make up for a loss and will often compromise on rates and payment terms in order to do so.

      I advocate the exact opposite. When business is good and you're not starving for new work is the best time to look for it. For one, your confidence levels tend to be a bit higher because it won't make or break you if a prospect doesn't want to agree to your terms. It's kinda like the advice not to go grocery shopping on an empty stomach or without a shopping list because you tend to overspend on impulse purchases. If you set a firm business model for yourself and "shop for new clients" at a time that you can afford to pass on less than desirable terms, you'll be better off in the long run.

      As for the original question on how I handle it, I just state my fees and terms. If someone balks at upfront payment, I simply tell them that their offer (whatever it is) doesn't fit my business model. The wording that I've used before goes something like: "I have to decline your offer since it doesn't meet my current business standards, but good luck to you in finding someone more suitable for the work and terms proposed. If I can be of any help to you in the future, please let me know." Stating it this way let's them know that I'm very firm in my own business practices and that I take my business seriously.

      It took me a long time to muster the courage to ask for upfront payments (and to raise my rates), but doing so has set my business on a far more steady course.
      {{ DiscussionBoard.errors[6996647].message }}
  • Profile picture of the author Marcus Demanse
    Contract signed and a Credit Card form which we link them to.
    (I basically just tell them the link to the contract and payment form over the phone).

    Like it was stated above, if they balk at paying up front.... Run...

    {{ DiscussionBoard.errors[6985838].message }}
    • Profile picture of the author justmerob
      I agree with everyone else. If they are balking at the payment, then move on. I always get 50% upfront on any work and the other when completed.

      I've had many that have me do one job, pay the 50% up front and then want something else done and ask to pay later. I just tell them that in my industry it's standard to be paid for Job 1 in full first and get the 50% for Job 2 before starting any work.

      So far, no problems with this method.
      Signature
      "There are no magic wands, no hidden tricks, and no secret handshakes that can bring you immediate success, but with time, energy, and determination you can get there."
      -- Darren Rowse, Founder - Problogger
      {{ DiscussionBoard.errors[6985943].message }}
  • Profile picture of the author Mwind076
    We also do cold calling so we have clients all over the US. We accept up front payment ONLY via paypal.

    Here's what we tell people, we work on a weekly pay basis. We send out invoices on Thursday night, they must be paid by Sunday afternoon to be guaranteed hours on the next week of scheduling. We have clients that pay 1 week, 2 weeks and 1 month blocks ahead of time. The reason we do this is that it protects us, and them. We have our payment, and if they aren't happy with the service, they don't pay for it for the next week.

    There are always the few that aren't happy, but in general, you can't go anywhere or get anything without paying for it. Try walking into a car dealership and saying you will pay nothing down and want to drive the car for a month...not happening. Try going to Walmart and asking to leave with your cart of groceries so you can see how they taste before you pay.

    The bottom line is, there is money out there, they can pay it, and if they don't want to, you should be very skeptical of them and their desire to invest in their own product. I can't sell your product for you, I can make the appointments - it's up to you to get on the phone and sell it. So, my production has no bearing on what you can do.

    Also, since you do what we do...suggest to them to call any telemarketing company or call center and see if they can compare rates with you, or better yet, let them find out that they must pay ahead of time for a block of calls.
    Signature

    Looking for answers on how to SUCCESSFULLY market your company?
    Cold Calling, Appointment Setting, Training, Consulting - we do it all!
    PM for more information

    {{ DiscussionBoard.errors[6985953].message }}
  • Profile picture of the author sdentrepreneur
    Depends on the Project: If it includes web design, then 50% upfront and balance upon completion. If its monthly SEM, SEO and SMM, they I get either 1 or 2 months up front.
    Signature

    Learn Digital, Internet and Social Media Marketing For Your Business
    Click here to learn more - Digital and Social Media Marketing Training Course

    {{ DiscussionBoard.errors[6986005].message }}
  • Profile picture of the author Jason Kanigan
    Again, you're qualifying here.

    People who won't pay at least 50% up front have a reason. Like they don't have the money.

    You want to work with people who will pay you well and on time. It's an instant barometer of seriousness and trustworthiness. If they don't trust you...why are they having you do the work?
    {{ DiscussionBoard.errors[6986088].message }}
  • {{ DiscussionBoard.errors[6986269].message }}
    • Profile picture of the author kenmichaels
      Originally Posted by iAmNameLess View Post

      I always, ALWAYS take full payment up front. There is no other way.
      Are you saying you don't ever take split payments?
      Signature

      Selling Ain't for Sissies!
      {{ DiscussionBoard.errors[6986378].message }}
  • Profile picture of the author bluecoyotemedia
    we take 50% down and we bill them automatically in 30 days for the balance. via check by fax.


    we usually have the site up and running within a week to 10 days.

    when in doubt follow the winners like I am nameless.

    he is one of the few that actually walks the talk or is it talks the walk

    something like that
    Signature

    Skunkworks: noun. informal.

    A clandestine group operating without any external intervention or oversight. Such groups achieve significant breakthroughs rarely discussed in public because they operate "outside the box".
    https://short-stuff.com/-Mjk0fDExOA==

    {{ DiscussionBoard.errors[6986419].message }}
  • Profile picture of the author vndnbrgj
    I usually charge it all up front...
    If they don't have the cash in hand for the project, I do a different project
    that doesn't require as much cash upfront.
    Signature
    Life Begins At The End Of Your Comfort Zone
    - Neale Donald Wilson -
    {{ DiscussionBoard.errors[6986883].message }}
  • Profile picture of the author PeacefulCalamity
    Well, this got a bit more responses than I was expecting.

    My gratitude for all those that responded.

    Looks like I'll just be qualifying those that don't want to pay upfront, out. If anyone objects, I'll just politely state it the way Slave1 did: that you wouldn't GET something before you paid for it.

    We'll see how that goes.
    Signature

    The very existence of flame-throwers proves that some time, somewhere, someone said to themselves, "you know, I want to set those people over there on fire, but I'm just not close enough to get the job done."

    {{ DiscussionBoard.errors[6987272].message }}
    • Profile picture of the author iAmNameLess
      Originally Posted by kenmichaels View Post

      Are you saying you don't ever take split payments?
      I used to... Now I don't. I'm tired of the headaches that come with it. If they don't have all the money, they likely won't in a month either. I'd rather just not deal with it.

      Every single time I split payments, there is a problem with it. So I just don't do it anymore. Even 50/50, you have to chase people down, or they think the remaining 50% is enough to be able to push their way into getting a few extras in.

      I DID, however, accept payments from someone, took 3 months but also let them know we won't start until everything is paid in full.

      Just my preference.
      {{ DiscussionBoard.errors[6987445].message }}
  • Profile picture of the author WeavingThoughts
    I usually charge 100% upfront.
    {{ DiscussionBoard.errors[6991021].message }}
  • Profile picture of the author PeacefulCalamity
    Quick question to all those that return: when do you drop the news on them? As you're closing them?

    Another: I'm planning on doing the whole "100% refund policy" thing, based on the assumption that most people just won't ask for that refund. Bad idea or good idea?
    Signature

    The very existence of flame-throwers proves that some time, somewhere, someone said to themselves, "you know, I want to set those people over there on fire, but I'm just not close enough to get the job done."

    {{ DiscussionBoard.errors[6991547].message }}
    • Profile picture of the author kenmichaels
      Originally Posted by PeacefulCalamity View Post

      Quick question to all those that return: when do you drop the news on them? As you're closing them?

      Another: I'm planning on doing the whole "100% refund policy" thing, based on the assumption that most people just won't ask for that refund. Bad idea or good idea?
      You have an unfounded faith in humanity, if you think no one
      is going to take advantage of a 100% refund policy.

      Bad, bad idea.

      As far as when you tell them , you don't need to.

      You simply say ... it's X amount of dollars, go grab your credit card,
      or check book.. whatever your (PeacefulCalamity)'s preferred form of payment is.
      Signature

      Selling Ain't for Sissies!
      {{ DiscussionBoard.errors[6991574].message }}
      • Profile picture of the author PeacefulCalamity
        Originally Posted by kenmichaels View Post

        You have an unfounded faith in humanity, if you think no on
        is going to take advantage of a 100% refund policy.

        Bad, bad idea.

        As far as when you tell them , you don't need to.

        You simply say ... it's X amount of dollars, go grab your credit card,
        or check book.. whatever your (PeacefulCalamity)'s preferred form of payment is.
        Bad idea is bad idea, then! I thought it would be fine since I remember reading up on how others implemented, and it worked fine for them. Eh, maybe they were just lucky.
        Signature

        The very existence of flame-throwers proves that some time, somewhere, someone said to themselves, "you know, I want to set those people over there on fire, but I'm just not close enough to get the job done."

        {{ DiscussionBoard.errors[6991775].message }}
        • Profile picture of the author kenmichaels
          Originally Posted by PeacefulCalamity View Post

          Bad idea is bad idea, then! I thought it would be fine since I remember reading up on how others implemented, and it worked fine for them. Eh, maybe they were just lucky.
          TBH i hear people say they do it all the time.

          I think most of them are full of BS.

          not all, most.

          I have been around the block a few times, and i have never seen
          "pitching a refund " policy turn out good in the long run.

          I have actually seen a few business go out of business using that model
          because, in the beginning it looks great, money is rolling in...

          and then the charge backs / refunds start coming in .. as fast
          or in some cases faster then new money..
          Signature

          Selling Ain't for Sissies!
          {{ DiscussionBoard.errors[6991812].message }}
  • Profile picture of the author digichik
    Keep in mind many people you will deal with will think that you can just sit down at a computer and do a website for free. They don't really see the value in what you are doing, that a website is a 24/7 lead, customer and profit generating tool for their business. Many just see it as online artwork, even after you have taken the time to explain all of this in elementary terms. Most small business owners are completely clueless when it comes to marketing their businesses, yet think they have all the answers.

    When they have their business cards, brochures and stationery printed, they have to pay upfront, they do so without even thinking about it, because they know these things are valuable to their business. The same should be true of what you are doing for their business. Make them respect you from the start.

    You will have to adjust your business accordingly:

    -COLLECT PAYMENT UPFRONT
    -NO REFUNDS (unless you don't plan on staying in business)

    You have been given really good advice here, by people who have offline businesses and work at them everyday. It's not about what you've read, it's about actual experience. Don't ignore the gift of knowledge they have so freely given to you.
    Signature



    {{ DiscussionBoard.errors[6992590].message }}
  • Profile picture of the author Mwind076
    No refunds. That puts you at the mercy of what OTHER people think your work should look like. Outline carefully what you offer up front, and accept payment for it, give it to them. If they are not happy, they will not return. Some will talk smack, and even try to get a refund because they are shady...you don't want to work with them anyways.
    Signature

    Looking for answers on how to SUCCESSFULLY market your company?
    Cold Calling, Appointment Setting, Training, Consulting - we do it all!
    PM for more information

    {{ DiscussionBoard.errors[6992795].message }}
  • Profile picture of the author WinmanRoss
    Banned
    I usually go with 100% upfront. This way I build a relationship of trust with my clients.
    {{ DiscussionBoard.errors[6994656].message }}
  • Profile picture of the author RK Corbes
    I always do 50% upfront and 50% when completely done. Since the clients are outside your state, why not accept through paypal invoice and let them know that they can refund the money if the services is not delivered. I know it's hard thing to do because you've spent time dealing with them but man, if you have word of honor, hard working and do good design, you will never have to worry.
    {{ DiscussionBoard.errors[6994862].message }}

Trending Topics