FROM MY DESK
Your fees aren't your payment schedule
Your fees – what you charge for your work – are not the same as your payment schedule.
They can be closely tied, or not.
They’re both variables that you control, and they come with tradeoffs.
You can ask for 100% up front – but what does the client get for taking on that risk? (Pro tip: structuring payments this way, or with a similarly large amount early on, is handy when prospects get a grant, are slow to act, and need to “spend the money” before a particular date.)
You can bill hourly, ensuring your effort lines up with your pay. But invoicing usually ends up being more work.
You can do 50% up front, as many do, to “offset the risk.” (I’d argue that having solid guidelines around overdue invoices accomplishes the same thing.) But you’ll end up with months of no cashflow related to that project.
At my firm, we settled on a basic method: equal payments over the (assumed) length of the contract. So if we were going to get paid $180k for a web app that we estimated at six months, we’d bill $30k a month for six months.
Simple to understand, steady cashflow, and critically, not tied to any approval of deliverables. I’d guess 90–95% of clients signed on to that schedule with no pushback.
The point is: fees and payment schedule are two different things. Two variables that can be negotiated or stipulated up front in a sales call, depending on the scenario you’re in. If you need cash quickly, ask for more up front in exchange for a benefit to the client (usually a small discount). If you prefer steady cashflow with low effort and easy forecasting, try the equal payments method above.
They’re two more knobs you can dial to get the mix right. Don’t overlook them.
