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Forum topic by woodworkingdrew posted 04-25-2014 03:46 AM 1015 views 0 times favorited 25 replies Add to Favorites Watch
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woodworkingdrew

165 posts in 297 days


04-25-2014 03:46 AM

I was wondering how most folks deal with up front payment. Do you ask for any money up front or just accept the full payment in the end? What happens if you buy all the material and then the customer backs out?

-- Andrew, California


25 replies so far

View Paul's profile

Paul

536 posts in 253 days


#1 posted 04-25-2014 03:58 AM

The customer base I work with is for the most part wealthy. I will normally buy all materials on the accounts I hold at the yard or handyman, paint store etc.

When I venture outside of my pricy comfort zone I normally require 50% of the completed overall price upfront.

If you buy the materials and the customer backs out without a signed agreement you own what you bought.

Paul

View Mark Shymanski's profile

Mark Shymanski

5113 posts in 2401 days


#2 posted 04-25-2014 03:59 AM

I guess it depends on how big of an investment the project is for you and on your tolerance of risk. I would think that on larger projects a deposit would be a good place to start. To keep everyone happy decide with your client just exactly what is being done at each stage/payment interval before money changes hands so you aren’t stuck holding a product you can’t sell or the client keeps arguing about each payment. Clarity is a huge asset in these kinds of deals.

-- "Checking for square? What madness is this! The cabinet is square because I will it to be so!" Jeremy Greiner LJ Topic#20953 2011 Feb 2

View Monte Pittman's profile

Monte Pittman

14587 posts in 1026 days


#3 posted 04-25-2014 04:25 AM

I get 50% down. Rest on delivery.

-- Mother Nature created it, I just assemble it.

View Tedster's profile

Tedster

2271 posts in 899 days


#4 posted 04-25-2014 05:10 AM

It really depends on your situation and your relationship with the client. I try to always make sure at least the bulk of the materials are covered. For longer projects, I also require payments at specified milestones.

That said, you have a written contract to cover such matters of the customer backing out, or paying for services rendered. If you’re contracting work on their home and they don’t honor the contract, you can place a mechanics lean on their house. However, the contract may be worthless if you are not a licensed contractor. In Illinois, for example, the court will not recognize the contract if you are not licensed.

-- I support the 28th Amendment. http://www.wolf-pac.com/28th

View Jim Finn's profile

Jim Finn

1700 posts in 1610 days


#5 posted 04-25-2014 01:22 PM

I do inlays in the lids of small boxes. Mostly images. When someone orders a name I get 100% up front because I cannot sell them to anyone else nor change them. I have had a few orders of more than 25 boxes with different names inlaid into them. If somelone orders one of my images in a special wood I accept full payment on delivery. If they do not pay I can sell that to someone else.

-- In God We Trust

View Knothead62's profile

Knothead62

2364 posts in 1649 days


#6 posted 04-25-2014 01:27 PM

When I sold custom fishing rods (getting back in next week), I required 50% up front and the remainder before shipping. Lowe’s requires 100% prepay on special orders generated at the store.

View rrww's profile

rrww

263 posts in 801 days


#7 posted 04-25-2014 02:32 PM

50% down on everything over $600
100% prepayment on everything under

A couple very good customers that I have done a ton of business with can pay when the project is done – but these are far and few between.

View JesseTutt's profile

JesseTutt

811 posts in 799 days


#8 posted 04-25-2014 02:48 PM

If it is custom or something I could not easily sell elsewhere then cost of materials + hardware + finishing supplies + shop cost ($5 for helping with utilities).

Definitely need a written contract where payment is clearly defined. Don’t forget to include bounced checks, etc.

Validity of a contract depends on the jurisdiction. I recall a case where a pool installer traveled to California to install a pool and the customer refused to pay. The court decided that the installer needed a business license in the local where the pool was in order for the contract to be valid.

-- Jesse, Saint Louis, Missouri

View woodworkingdrew's profile

woodworkingdrew

165 posts in 297 days


#9 posted 04-25-2014 03:05 PM

This is just a side business for me. All my material purchases per project total less than 500.00

-- Andrew, California

View waho6o9's profile

waho6o9

5082 posts in 1265 days


#10 posted 04-25-2014 03:14 PM

A .99 cent hamburger can not be had without

payment up front.

Oops

View huff's profile

huff

2804 posts in 1973 days


#11 posted 04-25-2014 03:59 PM

Andrew,

I always presented my customer with a proposal with the price and payment terms stated. Since all my work was custom, I would require a deposit to “schedule the work and order materials”, then depending on the size of the project would determine the amount of deposit and if there would be a draw during the building process or would wait until delivered.

Example: Custom built entertainment as per attached drawing. $3,000.00 Deposit to schedule work and order materials; – $1,500.00 Balance due upon completion. – $1,500.00

Example: Custom built home office as per attached drawings. $6,000.00 1/3 deposit to schedule work and order materials; – $2,000.00 1/3 draw @ preview ( when project is built and ready for finish) – $2,000.00 Balance due upon completion. – $2,000.00

Example: Custom built Kitchen cabinets as per attached drawings. $20,000.00 30% Deposit to schedule work and order materials: – $6,000.00 30% Draw ( approx. 30 days) – $6,000.00 30% Draw @ preview ( when project is built and ready for finish) – $6,000.00 Balance due upon completion. – $2,000.00

The reason I would use a different amount depending on the size of the project was for both the customer’s benifit and my benifit also.

The bigger the job, the smaller the percentage of deposit at the beginning (Made it easier for the customer and was plenty for me to order materials ( since my material cost averaged approx. 20 to 22% of the total cost of any given project.).

Draws during the process gave both the customer and myself better management of money and how the building process was developing. ( This doesn’t work if you are just taking deposits and not actually building projects on the time schedule you quoted on a proposal).

“Preview draw” was a great time to invite the customer to my shop to see their project built and ready for finishing. Also a great time to make final choices on finish and hardware and being able to schedule a delivery and installation date. This also doesn’t work if you are trying to get money before the project is ready for preview. Another words, if you are not running a legit business or trying to take advantage of a customer, then you probably wouldn’t want to work under those terms.

My customers always knew I was honest and up front with them and I never had a problem getting paid.

30 Years in business, I never had to take anyone to court or file a lien to get my money.

You can set up your own terms, but make sure it’s clear and both parties know exactly what the terms are.

I also had a statement on the bottom of my proposal that stated:

All Custom orders are non-cancelable and non-refundable.

This is an original design and must not be released or copied unless applicable fee has been paid or job order placed.

Hope it will give you some ideas that may work for you.

Good luck

-- John @ http://www.thehuffordfurnituregroup.com

View rustfever's profile

rustfever

632 posts in 1998 days


#12 posted 04-25-2014 04:02 PM

Check the laws in your community and state. Some of those jurisdictions have very specific laws/rules/statutes. To venture beyond those rules may seriously compromise your ability to demand or enforce payment.

-- Rustfever, Central California

View Jorge G.'s profile

Jorge G.

1526 posts in 1163 days


#13 posted 04-25-2014 04:47 PM

It depends on your market and where you are. Here in Mexico carpenters and woodworkers are famous for being unreliable, so I can get away with asking for 70% up front. I explain to the customer that the additional 20% is used so that I can meet my personal expense and not have to go look for another job while I am doing theirs.

What happens if you buy all the material and then the customer backs out?

Like many here I have a clause in my contract that states that once we have agreed on the drawings and a deposit has been give it is non refundable. The truth of the matter is that I would rather negotiate with the customer and maintain good will and a good reputation, than being a hard ass about it.
The least desirable option is charging them for the work and materials you have done up to this time and refund the rest of the money and return of the materials purchased. Many a times friends or family have told the customer they were charged too much, then they call another woodworker or carpenter who will quote them the job for 30% less and then they want their money back. I don’t mind doing this because 9 times out of 10 the same customer will call me a few months later asking me to fix the mistakes done by the other guy.

The more preferable options are working a payment plan for the rest (of course with some guarantee for payment like post dated checks etc.)

The other option I try to work out is telling them I will “store” their materials in my shop “at no charge” (they always love to hear those words), and that when they are ready to continue with the project they can just give me a call. If they agree to this you don’t stop making the project. You finish it and then you ask them to stop by your shop because you want to show them something. More often than not, once they see their table/chairs/entertainment center finished, they call you in a few days telling you they have the money.

If they don’t call back then you call them and try to work once more a payment plan, telling them that their project is taking too much space in your shop and that you would rather deliver it so that it won’t get damaged.

In other words, in woodworking for a living, negotiation skills are as important as your woodworking skill, if not more. Woodworking is the easy part, getting the job and keeping the customer happy is the hardest thing in all this.

-- To surrender a dream leaves life as it is — and not as it could be.

View Shawn Masterson's profile

Shawn Masterson

1262 posts in 637 days


#14 posted 04-25-2014 08:43 PM

I always cover materials. Before I start a job I have the materials cost covered, so if there is a problem you aren’t totally screwed.

View Dave Carlisle's profile

Dave Carlisle

52 posts in 843 days


#15 posted 04-26-2014 04:25 AM

I build adirondack chairs, LOTS of them. I do not take a deposit. I get payment at delivery. But I have so many orders, if someone does back out, which has happened twice in two years, I just deliver to the next customer on the list. So it depends on what you are building and how custom it is…...Good luck!!

-- Woodworking Principal

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