A profitable job isn't the same as a paid job. You buy the materials on Monday, spend the week on site, send an invoice Friday, and wait. If the customer takes three weeks, you've spent those three weeks funding their project out of your own pocket. Pricing tells you how much to charge. Payment terms decide when you see the money. Both need to be right.
Why a deposit is normal
A deposit does two jobs. It covers what you have to spend before the work starts, mainly materials, and it shows the customer is committed. When you order a custom part or book out a week of your calendar, you've taken on real risk. A deposit shares that risk.
Customers see this all the time. Many trades and contractors ask for money up front on larger jobs, so a clear, matter-of-fact request rarely surprises anyone. Surprises come from asking late or not asking at all.
How big should the deposit be?
There's no standard figure. Anchor it to your exposure: what you must pay out before you can be paid. For most jobs that's the materials, plus any special-order or permit costs.
Take the ten-hour job from our price-increase example: $400 of materials at cost, a job price of $1,696.25. Covering the materials alone works out to about 24% of the price. A round 25% deposit is $424.06, which covers the parts and leaves you slightly ahead.
Add up what you have to spend before you get paid: materials, special orders, and any fees you pay in advance. Divide by the job price. Round up to a clean number. That's a deposit you can explain in one sentence: "It covers the materials so I can order them."
Splitting a bigger job into payments
For longer jobs, a single invoice at the end leaves you carrying the whole project. Progress payments tie money to milestones the customer can see. The milestones should be things that are finished or delivered, not vague percentages of "done."
| Deposit before starting (25%) | $424.06 |
|---|---|
| Progress payment when materials are on site and work is under way (40%) | $678.50 |
| Final balance on completion (35%) | $593.69 |
| Total | $1,696.25 |
Illustrative example — figures chosen to show the method, not a quote. How we source figures.
Nothing about the split is fixed. What matters is that each payment is tied to something specific and written into the estimate, so the customer knows the schedule before saying yes. Keep the final payment meaningful. If almost everything is paid before the finish, you lose the incentive to leave the customer fully happy, and they lose theirs to have you fix small things.
Payment terms to write down
Terms are the rules for paying an invoice. Spell them out on the estimate and again on the invoice, so nothing is a surprise:
- When payment is due. "Due on completion," "due within 14 days," or a schedule of dates. Pick one and state it as a date or a number of days, not "promptly."
- How they can pay. List the methods you accept. Fewer friction points means faster payment.
- What the deposit covers. Say whether it is applied to the final balance and whether it is refundable if the customer cancels. Decide this ahead of time and put it in writing.
- What happens if payment is late. If you charge a late fee or pause work, state it up front. Rules on late fees and on how much you may collect in advance differ by location, so check yours before you write it in.
How to ask without it being awkward
Asking for a deposit only feels awkward when it's improvised. Make it part of your standard process and it becomes routine:
- Put it on the estimate. A deposit line and a payment schedule are part of the document, not a separate conversation.
- Explain it in one sentence. "The deposit covers the materials, and I order them as soon as it's in."
- Ask everyone the same way. Same rule for every customer. It stops looking personal.
- Invoice promptly. The clock on a payment starts when the invoice goes out. Sending it the day the work finishes, not the following week, shortens the wait.
Request the deposit and track what's still owed
In TradeReady you can request a deposit on an invoice as a fixed dollar amount or a percentage, and record payments as they arrive: a deposit, progress payments, and the final balance. The invoice shows what has been paid and what's still owed. Collecting the money is a separate step from creating the invoice, so nothing is charged automatically.
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The bottom line
Get the timing of the money right, not just the amount. Size the deposit to what you must spend before you're paid, tie progress payments to visible milestones, and write the terms on the estimate so they're agreed before work starts. The same job, priced the same way, becomes far easier to run when you aren't financing it yourself.
Common questions
How much deposit should I ask for?
There is no standard figure. Size it to what you have to spend before you get paid, mainly materials and any special orders or advance fees, then divide by the job price. In the example above, $400 of materials on a $1,696.25 job is about 24%, so a 25% deposit covers the parts. Rules on how much you may collect in advance vary by location, so check yours.
Is it normal for a tradesperson to ask for a deposit?
Yes. Many trades and contractors ask for money up front on larger jobs, especially when materials must be bought or ordered in advance. A clear, early request, made the same way for every customer, is usually accepted without fuss.
What are progress payments?
Progress payments split a larger job into several payments tied to visible milestones, such as a deposit before starting, a payment when materials are on site and work is under way, and a final balance on completion. They keep you from funding the whole project yourself and give the customer a clear schedule.
Should the deposit be refundable?
That's your decision, and it should be written down before the job starts. Some tradespeople apply the deposit to the final balance and keep it if the customer cancels after materials are ordered; others refund the unspent part. Cancellation and refund rules can be shaped by local law and your contract, so confirm what applies to you.
What payment terms should go on an invoice?
State when payment is due as a date or a number of days, the payment methods you accept, how any deposit is applied, and what happens if payment is late. Put the terms on the estimate as well as the invoice so they are agreed before the work begins.
Can I charge a late fee?
Some tradespeople do, but rules on late fees vary by location and contract. If you want one, state it clearly in writing before the job starts and check the local rules that apply to you. Many find that a prompt invoice and clear due date do more to speed up payment than a penalty.
- The figures above are arithmetic worked through on a sample job to show how a deposit and payment schedule divide a price; the method is basic percentage math. See how we research these guides.
- No standard deposit percentage is offered as fact. Rules on deposits, payment schedules, late fees, and refunds vary by location, license type, and contract. Confirm what applies in your jurisdiction.
- Product notes describe TradeReady as it works today: request a deposit on an invoice as an amount or percentage, and record partial payments. Payment collection is a separate step and nothing is charged automatically.