Ditching Hourly

Hello and welcome to Ditching Hourly. I'm Jonathan Stark. Today I'm going to talk about getting paid for projects 100% upfront. Folks who have downloaded my proposal template are often surprised by one of the points in the payment terms, which is that I ask for 100% upfront payment for projects. People often ask me why I do that or how often I, air quotes, get away with it and what to do when clients push back. So I'm going to answer those questions today. Before I do that, there's one thing that you really need to know that is pretty important in this regard, and that is that I never, ever lower my prices once I've submitted a proposal. I will not do it. I might write a new proposal for them, but I will never lower the prices. So since I refuse to budge on price, I need to give myself some room to negotiate in other areas, and that's where the payment terms come in. I'd say roughly 80% of the time, 75-80% of the time, clients agree to pay 100% upfront with no question. They just send the check. In the 20 or 25% of cases where the client doesn't agree, their reply is usually one of the following. Either, are you crazy? Or, how about 50% now and 50% on completion? So the first one is basically sticker shock, and the second one is 50-50 terms. So let me talk about both of those. In the sticker shock scenario, my prices were just way too high, and the prospects suffering from sticker shock. It's almost impossible to revive the deal at that point. So I usually just thank them for their time and move on. Maybe in some rare cases where I want to keep the client, I have a backup approach that can sometimes revive the deal, but that's something I'll talk about in another episode. Much more commonly, I'll get the 50-50 terms request. So they'll say, how about 50% now and 50% on completion? And what that means is that my prices are in the ballpark, but I haven't built up quite enough trust with the client, or I haven't differentiated myself enough, or I haven't articulated the value to them enough, or I haven't quite calculated it correctly. So they're just a little bit not sure, and they want to hedge their bets. They feel like they're hedging their bets with the 50-50 terms. So that's what they'll say. How about we do 50% upfront and 50% when it's done? Or some other percentage, some milestone-based thing or whatever. When we talk about this, I'm polite. I say we can discuss it, but I don't think it's in your best interest because we aren't going to know exactly when the project is done. There'll be a day when it ships, but it won't be done on that day. There'll still be things to do. If we tie the final payment to the delivery date, it'll put pressure on you to sign off too soon. If some bug crops up in some weird corner case, like a quarterly report or something after you sign off, I'd rather just fix it for free under the terms of this agreement versus what most other consultants do, which are like, they'll say, sorry, you signed off. I can fix it, but it's going to cost you. They nickel and dime you after delivery. So to remove the sign-off issue, I suggest 50-50. That's fine. 50-50 is fine. But how about instead of tying the second payment to some arbitrary delivery date, we say 50% upfront and 50% in 30 days or 45 days or 60 days, whatever you think, you know, based on the size of the project. If it's a two-year-long project, then probably 60 days even is a little bit too soon. But if it's a three- to four-month project, something like that, I think 50% upfront and 50% in 30 days is fine. Now almost every prospect that I've suggested this alternative to has accepted it. Once or twice I've had a prospect balk at the suggested date, like they're like, oh, 30 days, for whatever reason. They're like, no, that's too soon. I'll just say that's fine. The exact date doesn't matter to me. Pick whatever date you think is reasonable and we can get started. So that it puts all of the control in their hands and they can pick some date. So in this case, what they'll usually do is pick a date around when they think the project will be completed. This date is almost always too early. It's almost always before the project will actually be completed because projects take longer than clients think usually. But since we've agreed to a specific fixed date for the final payment, it allows everybody to relax about the sign-off because there won't be one. So an awesome side effect of this agreement is that if the client goes dark, you don't really care because it doesn't delay the final payment. A lot of times as a project gets closer and closer to done, it gets less and less urgent because it's already been delivered and you're probably in some maintenance or bug fixing phase or you've just got some nice-to-have features that you're working on and it gets a lot less urgent for the client. So they're not doing design reviews as often or...

Maybe some holidays come up and they might just disappear, but you won't care because you can just work on something else. You already have your money. They don't have to worry about it. There's no final sign-off. There's no final design review. So they can take all the time in the world to respond for requests for feedback or provide copy changes or whatever else they need to do for you. It doesn't matter to you because you still get paid in full on a known schedule and you can do other work while you wait for them to get back to you. So it's no pressure for you and no pressure for them. All right, that's it for today. I'm Jonathan Stark and this is Ditching Hourly. See you next time. If you would like to download my five-page proposal template that has my 100% upfront terms in it, you can get it at expensiveproblem.com slash five. That's the number five. Again, that URL is expensiveproblem.com slash five. Check it out the next time a client asks you for a proposal. Hey, Jonathan again. Do you have questions about how to improve your business? Things like value pricing your work instead of billing for your time or positioning yourself as the go-to person in your space or maybe productizing your services so you never have to have another awkward sales call or spend hours writing another custom proposal. Book a one-on-one coaching call with me and get answers to these questions and others in the time it takes you to get ready for work in the morning. Best of all, you're covered by my 100% satisfaction guarantee. If at the end of the call you don't feel like it was worth it, just say the word and I'll refund your purchase in full. To book your one-on-one coaching call, go to jonathanstark.com slash call, C-A-L-L. That URL again is jonathanstark.com slash call. Hope to see you there.