Receive money BEFORE you work
This is the first of a series of articles written to help designers charge for their work. It was written whilst I was a director at Multiple States.
It is always surprising what people agree to and working before they receive money is one of the most common. I work with the rule — Never move before money is in the bank. It has been the key to the survival of the studio and my family.
We take 40% of the project fee before the start of work. We then work 40% of the project hours. There we stop and charge another 40% to continue the work. We then complete the project, ie. we work the remaining 60% of the project hours. We then do not launch the project until the final 20% of the project fee is paid.
It is a very simple formula and can be adjusted to suit your needs but the one thing that should not change is that by the end of the project the majority of the fee should already have been paid — an accountant friend who works for Ernst & Young drummed this into me.
Designers often tell me that their client’s would never agree to this. I have never had any experience of this happening. Client’s have always seen this as fair and paid us in this way. One or two of the bigger agencies we have worked with have asked us to launch without the final payment and once or twice in our infancy we acquiesced. Despite the promise of quick payment in exchange for bending our rules this has always led to the opposite — huge delays in the final payment. Subsequently we never do this anymore. These clients are now used to this process and have no trouble paying in that way.
Despite their best intentions people can’t help but be late with payments if they have already received the product. The payment just does not sit at the top of their priority list. However, if they still do not have the product then the payment quickly becomes the first thing on that list. It is amazing how quickly people pay in this situation.
I suppose it is likely that some clients will not agree to this (usually the big, cool clients). You need to think carefully about whether you take on this work. Because if a client is refusing this pay structure I would suggest that getting any payment out of them at any stage is going to be very difficult.
- Never work before money is in the bank
- Ensure that by the end of the project the majority of the fee has already been paid
- Put your payment at the top of people’s priority list by never delivering the product before payment