Do you require a deposit?

[Sonny Boy]

Say a percentage of the total cost of the job.

How much do you ask for?

[bkludecke]

Don't know about WA but in CA you may ask for 10% or $1000 whichever is LESS. Personally I never ask for a downpayment or deposit and my customers appreciate the trust & usually pay very quickly when they get the invoice.

[mdshunk]

Depends on the size, scope, and timeline of the work. Generally, I do not finance other people's projects.

[celtic]

I try and get 100% upfront...I have had 0% results on that ;)

I shoot for 30% - 50%....30% from people I know; 50% from those I don't...either way, I'm not a bank and I am not financing YOUR project or adding value to YOUR home/business at my own expense.

[mxslick]

..usually 50% down, 25% on power-up of the equipment and the balance when all the alignments and demo screening has been run. Never had any problems with that. This is for installations/major upgrades. (For those who don't know, I do screening rooms and film/video projection and sound systems.)

For projection services (actually running a film/video screening) it's always 100% at the time of show. The sole exception is for the University I contract with, they issue a quarterly purchase order that I bill from.

[lbwireman]

I've been known to tell a customer who was slow or reluctant to "settle up", that we have an agreement with our local F&M Bank. They don't do electrical wiring; we don't lend money. Usually gets a laugh (and a check). I also make the point, on the front end, that we don't ask for "down payments, money for materials/excavators, permits, etc., all we ask for is two things; your signature on the contract before we start and your signature on a check when we're done." I've only had to file liens twice in the past 10 yrs, didn't have to go to court on either one and got paid on both. Check the WA lien laws. Hint: You might go to L&I in Olympia and ask for a little guidance. Good Luck;)

[brian john]

Depends: If there is a lot of up front expenses YES, many times the short duration of our jobs does not allow for this. I mean 30 day paymnets are unheard of anymore, 45-60 seem the norm. But as more customers move to credit cards the small percentage charge by the credit card company is mnor in relation to the prompt payment.

[allenwayne]

60 % on rough in, 40 % on trim out.

[hardworkingstiff]

I usually ask for 25% down, and progress payments on milestones.

[A1cbr]

allenwayne is that 60% up front or after the rough in is complete?

[dcooper]

1/3 when you sign a contract ...this buys material
1/3 when you get a rough inspection.....this pays my helps time and some of my time.
1/3 upon substantial completion. I use substantial completion in a contract so if the carpenter or painter is holding up the job (by a good amount of time) and all I have left is say....undercounter lights or puting on plates, something small....I can ask for a final payment....and most of the time I get a good % of the final payment and then I get an inspection and the rest of my payment.
usaully that last 1/3 is all my profit.

[brian john]

Celtic:

I have one customer with a yearly contract 4 visits a year, they pay 100% at contract renewal.

[celtic]

Celtic:

I have one customer with a yearly contract 4 visits a year, they pay 100% at contract renewal.

Is that service work or new construction?

[brian john]

Service, mostly labor, some misc material and test equipment rental fee.

[petersonra]

Say a percentage of the total cost of the job.

How much do you ask for?

From the consumer side, I expect that a deposit would be required for any substantial work that I contracted for, just to prove I am serious about it, if nothing else. Maybe 25%.

For relatively small amounts (say < $1000), I would not expect to pay a deposit.

[Paul B]

I do about the same as dcooper with the EC and GC businesses.

[satcom]

For relatively small amounts (say < $1000), I would not expect to pay a deposit.

Don't expect to be in business long, if you do any job without a deposit! and if it is a day job, more then $300 and a new customer, I recommend you get their drivers lic, infor, and a verified credit card voucher signed, before you start the job, we still have to lock our doors in this area of the country.

For most small business, $300 is a lot of money, a thousand loss can be a train wreck, most small contractors 70% of the charges are for pay outs, money they pay others to operate the business, a $300 bill to the customer may give the contractor $90 if he is lucky, residential customers usually think in terms of their hourly rate, they usually do not understand the cost of doing business, on the other side of the issue, commercial customers that are operating a business, do understand your position.

[ceknight]

Don't expect to be in business long, if you do any job without a deposit! .......

I've been in business for, oh, 13 years or so and I don't take deposits in general. How soon can I expect to go out of business? :)

I only do residential, don't work for GCs, and all of my customers come by referral, so I've already minimized my risk considerably. My general terms are "payment due upon satisfactory completion of work". And I don't mean "upon final inspection", I mean "when the customer's satisfied."

In specific cases I'll take a deposit for expensive special-order equipment, but for me that's pretty rare. When it does happen, it's a deposit in the true sense of the word: I'll get a check, but I don't cash it. It's just a security to cover my outlay in case they change their mind about non-returnable stuff or suddenly get a divorce or some such.

I know that business model won't work for many of you, but I have a very small business built on reputation and trust. It works for me. And I'm saved the hassle of having to manage escrow accounts... :)

[bjp_ne_elec]

I get 50% up front when proposal is signed (this is to cover material), 25% after rough-in inspection and the balance (including extras) when complete. I figure if I get burned - and I haven't yet - that I'd at least have the material covered as I don't start the job until I drop the material and get my first check.

[busman]

My deposit is usually just what it takes to cover the material and I won't ask for if it is not $300 or more. That's about as much hard-cash exposure as I'm comfortable with.

Mark

[bkludecke]

[QUOTE=ceknight]I've been in business for, oh, 13 years or so and I don't take deposits in general. How soon can I expect to go out of business? :)

Amen! I've been in business in the same community for 29years and I don't ask for deposits either (I actually refuse them when offered). So I guess I'm on borrowed time. As I wrote earlier in this thread, the restrictions in CA for taking a down oayment are such that it's not worth it anyway.

[Sonny Boy]

I ask for 30-50%. Lets me know ahead of time of the check will clear the bank.
Heard a story from a bank teller that her son just started a business and got ripped for 5600 buckos after completing the job. I asked her if he got a deposit. Her answer was No.

[petersonra]

Don't expect to be in business long, if you do any job without a deposit! and if it is a day job, more then $300 and a new customer, I recommend you get their drivers lic, infor, and a verified credit card voucher signed, before you start the job, we still have to lock our doors in this area of the country.

For most small business, $300 is a lot of money, a thousand loss can be a train wreck, most small contractors 70% of the charges are for pay outs, money they pay others to operate the business, a $300 bill to the customer may give the contractor $90 if he is lucky, residential customers usually think in terms of their hourly rate, they usually do not understand the cost of doing business, on the other side of the issue, commercial customers that are operating a business, do understand your position.

I am talking from a consumer side. Most $1000 jobs are one day things where the upfront parts cost exposure on a contractor's part is limited to a few hours. I write them a check and they away paid in full. Got my new water heater that way, furnace and A/C, new gas line out to the garage, etc.

Only times I went the deposit way was a bathroom, siding, and deck. All three were a nightmare.

[satcom]

"I am talking from a consumer side. Most $1000 jobs are one day things where the upfront parts cost exposure on a contractor's part is limited to a few hours"

On service calls, i can understand. But I am not in the banking business, and all the work we do other then service calls are contracts, which require a deposit to enforce, in my state.

Many companies here want payment up front for service calls, or a credit check, before doing a service call, Our washer needed repair, they wanted a $90 payment on the credit card, before making the call. When our sewer backed up they wanted a $120 payment on a credit card before comming. I remember when the wind took off part of the roof, called 5 roofers, they all wanted $150 to $200 just for an estimate, Try to get any construction job done around here and they want from 30 to 50% down with few exceptions.

Very intresting to see how different business works, in other parts of the country.

[jjhoward]

I now always ask (and get) a deposit for projects that require $500 or more in materials. I do only residential, and when I started I did not ask for the desposits. I found myself holding materials while waiting for permits and homeowners schedules to line up....
With a deposit in hand, it is OK if I have to wait 2 weeks for a permit or for the scheduling of the job to get finalizied. The amount of the deposit that I ask for is an estimate of the materials needed.