As you’ve heard in dozens of heartfelt, coming of age, father-son moments on television, “do what you love and the money will follow.” Well, little Timmy, you may love building websites but don’t do it for free! You’re creating REAL value and revenue opportunities for your clients and should be charging accordingly—but how exactly?
Let’s say you and your client have agreed on a flat cost for a website design project. Do you ask for the entire amount up front? Do you break it into installments or just wait until delivery and hope they have the cash? There are plenty of ways to structure payments and, in the end, it comes down to personal preference, level of comfort, and project circumstances.
Factors to Consider
Every project is different; making it tricky to adhere to any one payment structure or policy across the board. Here are some considerations to keep in mind before proposing financial terms to your client:
Whether or not a payment schedule is even necessary depends on the size of the project itself. If you’re designing a business card for $80, there’s probably no need to complicate the arrangement by overthinking the terms. On the other hand, payments for sizable projects with substantial scopes of work may need to be thoughtfully defined.
I’ve found my average website build from start to finish is about 60 days. I use that data to help predict the timeline of new projects and determine the most suitable payment structure as well. The longer a particular engagement is expected to take, the more room you have for milestones and installments.
The first project with a new is rough on both sides. There is very little trust earned between you—making the exchange of money a bit nerve wracking. The client, understandably, doesn’t wanna send a stranger a bunch of cash on a promise and you don’t wanna do countless hours of work for potentially no reward. This becomes way less of a factor down the road after you’ve established more of a relationship. Until then, be fair, hedge your bets, share the risk and get it done.
If you know beforehand that a web design project is going to require some capital on your part to execute, you’ll want to keep that in mind when determining the payment structure. For instance; stock media licenses, outsourced development, etc. These can add up so don’t front the cost all alone.
Personal Cash Flow
Let’s face it, sometimes that bank account tiptoes into the danger zone and you need cash fast. I’ve been there a million times myself. Conversely, if your coffers happen to be plentiful as you enter a new client agreement, you have the luxury of playing it a bit cooler with your request for funds.
Asking for too much money to kickoff a project can wave some red flags for clients. No company wants to work with a broke, desperate contractor. Suck it up, have some faith, and prolong the bigger payments until you’ve had a chance to dazzle and deliver.
Payment Structure Models
It can be scary asking a client to pay you—even if you both agree on the total project cost. You don’t wanna turn them off by recommending an unreasonable or unbalanced payment plan, but you also have to be fair to yourself and protect your own time investment. Here are a few payment structure models I’ve followed in my freelance business:
You all know I swear by running the meter when it comes to website maintenance and smaller requests. It’s less common, however, for a client to agree to this structure for big web design projects due to the financial unknowns. As a freelancer, you can quell their worries by proposing a cap not to be exceeded (as long as the project stays within the original scope). This way, you can sell them on the slight possibility that the actual cost may come in less than quoted if it takes fewer hours than expected. Another perk with the hourly option is being able to invoice this client on your normal billing schedule.
Example: $65 per hour (not to exceed $3,900 total)
Another payment structure is to establish project milestones that trigger invoices to proceed. In my experience, this can get hairy if you aren’t SUPER clear and specific about each milestone. Also be sure to specify if you get paid when you finish a milestone or if you get paid to begin a milestone. Personally, I prefer prepayment for each stage so you are paid in full before launch. What’s their rush to pay you if they already have their project delivered? With this route, I still recommend asking for a deposit to begin work. Don’t leave anything up to subjective scrutiny. After the project begins, strive to deliver (or even over-deliver) on every checkpoint so there is no room for technicalities to withhold funds.
Example: $800 due to begin wireframes & mockups; $2,400 due to begin WP development; $700 due to launch
This format is similar to the Milestones model above but can also apply to dates or other project checkpoints. The strategy is to keep the money flowing without leaving too much on the table at the end of the engagement. Think about a fledgling flower shop who you cut a break for and started building a $4,000 Squarespace site with only a 5% deposit (remainder due to launch). Now the site is complete and their outstanding balance is $3,800. That’s a lot of cash for a small business to produce in a lump sum. You are much better off splitting the full project cost into easy-to-digest bites. Now you get paid along the way and the flower shop only has to worry about writing a handful of smaller checks over the course of a few months.
Example: $1,300 due March 1; $1,300 due April 1; $1,300 due May 1
Pay Over Time
This isn’t terribly common but occasionally a client prefers to set up an installment plan to pay off their total project cost over time, regardless of how long it takes to build and launch. Maybe you quoted them $6,500 for a WooCommerce site but they are pre-revenue at the moment. Instead of telling them to kick rocks, you could get them to agree to 12 monthly payments of $542. That’s way more manageable for them and a good source of recurring income for you. Heck, you can even add some fees on top to accommodate the prolonged schedule.
Example: $341.25 due per month (includes 5% flexible payment fee)
Oooh boy, this one is risky—but if you are super confident in your ability to deliver and the client’s willingness to pay, why not? Go for it! Do the whole project and collect your winnings afterward. This is most certainly the client’s favorite payment structure because it requires so upfront risk on their part. As the freelancer, you are putting in all the blood, sweat & tears in the hope that they are satisfied enough in the end to pay without a fight.
Example: $3,900 due at completion and delivery of project
As you can see, there are several ways to arrange your project payments. Both you and your client have to give a little, trust a lot, and do right by the other. Keep that in mind and you can’t go wrong.