This is something many developers and designers can connect with. For the purpose of this article, I shall be focusing on the developer’s point of view (mainly because I am a developer).
As I imagine many of you do, I have a scheme to handle payments which is used in a good 80-90% of the projects I take on. Due to the nature of development work, projects can be anywhere from a week to 6 months long, but, in my experience, they more often than not come in around the 1-2 month mark. Bearing this mind, most clients with find it unacceptable for the entire project to be paid outright before any work is undertaken, and many developers will find it unacceptable to work for 2 months with no payment whatsoever.
- Client’s point of view – If everything is paid upfront, then there’s no guarantee that work will be done, and the individual and/or company involved won’t simply disappear with the money, and it’s very daunting to see a large sum suddenly leave your account.
- Developer’s point of view – If the project is large enough to require almost full attention continually for the duration of the project, then there will be no income over this time and (obviously) bills will need to be paid. This also being said, there’s a chance that you can complete the work and have the client refuse to pay, meaning you have wasted a lot of time and have a system that doesn’t really have a purpose.
With these points in mind, and in hope of keeping all parties happy, I offer a 4-payment scheme, which is broken down as follows:
- 25% – Non-refundable deposit to guarantee my time
- 25% – Once the design has been signed off
- 25% – Once the system is complete
- 25% – When the site goes live/Site is handed to client
A lot of the time, the last two payments fall at the same time, but on occasion, though a system will be complete, a client will want to do various other things (perhaps marketing) before the system is actually released. As standard practise, I will not hand over the code and IPR (if required) until the final sum is cleared.
The scheme above will be used as the basis for the rest of this article.
The deposit is an initial payment (more commonly weighing in at 25% of the total cost), which guarantees the time to work on your project, by covering the developer(s) for the first quarter of the project. As a personal rule, I won’t start work on a project until the deposit is made; as many of you can relate, at any one time I’ll have several quotes out, and to be perfectly honest, if I were to start a project with no deposit and another quote were accepted with a deposit, I’d be torn between two states of mind. I’d want to continue the work because I’d already started, but want to go on to the other project because (obviously) the client paid, and turning down money is just downright stupid.
Notes on deposits for clients
Please remember that simply saying that the deposit has been made isn’t sufficient. If the deposit hasn’t arrived in the account, then work simply won’t start on the project, and if it has been sent by cheque (we’ll get to these shortly) then work won’t start until I have set time aside to pay the cheque into the bank, and it has cleared successfully.
Always remember to pay your deposit via a BACS transfer (which is instant), and in a swift manner, so the work can be started.
Oh, cheques—where to start with you little buggers!
Simply, cheques are the bane of my life. As a self-employed individual who doesn’t drive, I have to walk to the town centre to pay the cheque into the bank. It’s not the walking that bothers me; it’s the fact that the journey itself, there and back, will take me a total of an hour, plus the 10-30 minute wait in the bank to speak to somebody to get the cheque paid in. This means, in total, I have wasted around two hours—and simply walking to town and paying the cheque in and then walking back is a TOTAL waste of time.
So when I need to pay a cheque in, I have to schedule everything so people are aware I won’t be available for the majority of the day, and so I can do everything I need to do in the bank/town centre when I go up there, so not to waste a visit. All the while, I’m hoping that a client doesn’t attempt to contact me about something urgent or some new work.
Another thing is that cheques will more commonly be sent via post, and mysteriously disappear somewhere in the Royal Mail system. The rule of thumb here is that 9 times out of 10, if you post a cheque into a postbox before the postman empties it, it’ll be on the recipient’s desk by the following day—so using this as a way to delay paying is pointless. Also, a little side note for you:when a letter is received by Royal Mail, they stamp it, so when I received your cheque (posted two weeks ago, if I ever receive it, that is), I know that it wasn’t, in fact, posted, until the day before I received it.
I’d also like to point out, that of the 4 payments in my career that were made via a cheque, and sent via Royal Mail, I have received a grand total of 0.
Notes on cheques for clients
If you HAVE to send a cheque and there is no way around it, either deliver it yourself, or have it sent via recorded delivery. This way, you can check on the status as well as see who received it, as recorded deliveries require a recipient signature.
Do not say that the cheque has been sent, then actually send it a week or two later, because that gives us (the developers) the impression that you think we’re stupid, which is never a good start.
The final payments are very important, especially if you actually want what you’ve paid for so far. Trying to skip out on these just simply won’t work.
If you agreed to the original cost, and if there were any extra work involved, and there is written (email) proof that you acknowledged and accepted these charges, you simply cannot get out of paying. You can threaten legal action as much as you want, but I find it hard to believe, that, no matter how good a legal team you have, any court in its right mind would sanction an individual and/or company to hand over something that hasn’t been paid for in full, according to the original verbal/written contract, and according to any further amendments.
It’s my understanding that, in the eyes of the law, the IPR would reside with the developer until all payments are made and the requirements of the original contract are met.
More often than not, a client KNOWS that he’d stand no chance in a court, but simply threatens it because he wants to scare you into giving him the code so he can keep his money. Think about it like this: if he’s willing to pay the fees to have this taken to court, then why not just pay the goddamn final payments? Seriously!
Notes on final payments for client
If you refuse to pay the final payment, you can kick up as much of a fuss as you want. You just simply won’t be given the code—plain and simple.
But before you try to avoid paying for something you agreed to, take this hypothetical situation into consideration:
All the code has been done, and you’ve paid 3 of the 4 payments and you outright refuse to pay the fourth. As I stated previously, you’d have no grounds to force the developer to give you the code.
The developer now has a system that’s complete. He needs to get the money back for the work he’s done, and, providing there were no NDA’s and there is no reference, no logos, trademarks, copyrights or intellectual property of your company’s within this system, the developer can do as he pleases. At this point, he has three choices.
- Write it off as unpaid and let the system sink to some directory on some backup hard drive
- If the system is a nice one, and something that could be easily run and used as another source of income, he could rebrand it and set it up himself.
- He could sell the system in hope of getting back the hours, if not making a nice little profit.
The first option is obviously the best from your point of view, but the worst from the developers point of view.
The second option is obviously bad for you. as you’ll need to spend time finding new developers to rip off; meanwhile, your old developer will be making money through a system originally built for you.
Now, if your business is in direct competition with another, then the chances are this system has something you competitors don’t—different features, or features based on theirs, but improved. Whatever the case, if this system were to go up for sale and the developer advertised it properly, individuals likely to be interested would be in the same sector as you, meaning that this system could simply be sold on to your biggest competitor and you’d have lost your edge, which will affect your business considerably.
My point here is to try to (hopefully) explain to those of you who try to skip out on deposits, or delay paying developers because you don’t have the funds, or you’d simply rather they did it for nothing, how this can have a negative affect on yourselves.
My understanding (which may be somewhat limited) is that all of the above practises are legal, if done correctly. (If this is not the case, feel free to contact me and clear some points up!)
If some points in this article appear somewhat harsh, or you believe that I am being unprofessional, I urge you to take a look around you and your own business. Everything mentioned here is pretty standard business practise, and, as harsh as it may seem, it’s just the way the world works.
Summary for clients on above section
Pay your developer, or you’ll get shafted—and the law will be on the developer’s side.