Re: Deposits?
Has anyone had a client refuse to pay a deposit upon signing a contract? Clearly spelled out in the contract, " x% deposit due upon signing, x% due upon equipment delivery, remainder due at completion". Now it's time to sign, client would like to pay equipment as delivered, billed weekly (!) for labor, x% of design fee, etc.
Was there an initial quote or proposal that identified those terms or is this the first they were presented and discussed? Are they refusing the terms or trying to negotiate?
I don't think there is a 'standard' for payment terms. At one point the Board of Regents here implemented a 0%/100% policy where you got paid nothing until the work was 100% and your choices were to not do any BoR work or come up with creative solutions like breaking a project up into multiple smaller projects, i.e. the equipment being one contract, the installation a second contract and the design and testing a third contract. For larger construction projects it is common to have some initial 'mobilization' fee and 10%-20% retainage, with other milestone or progress billing in between.
I think the size and scope of the project may be a major factor in the payment terms. How you approach a $10k, one week project that will beginning to end be less than a month may be quite different than how you approach a multi-million dollar, years long project. The 50% upfront and 50% at completion approach Helge noted would potentially place both parties at rather extreme risk on a large, long time period project and thus likely be rather inappropriate for such projects.
The Client may also be a significant factor. Many of my corporate and government clients have standard terms and Contracts, it doesn't really matter what you propose, you have to agree to their standard terms and perhaps their standard Contract while negotiating any deviations can be difficult.
Performance Bond could also be a factor. A Performance Bond helps protect the Owner in case a Contractor is unable to complete the contracted work and is basically a way for the Owner to be covered for the costs to get another comparably qualified Contractor to complete the work should the original Contractor be unable to do so and to get that relief without a lengthy and expensive legal process. On any sizable project I do not see an Owner agreeing to a large down payment without having some similar form of protection.
Caleb, you may want to be careful on the DSP programming. The understanding I have is that some states have taken the stance that if the programming is required for the device to operate and if what you sold is a functional system then the programming is essentially an integral part of the device. Basically, you can sell a DSP as a box or you can sell a DSP that can provide certain functionality and in those cases the programming is not an integral element, however if you sell a DSP that will provide certain functionality then the program required to do that may be viewed as an integral part of the product. While far from foolproof, that is one reason I think it is not a bad practice to have programming, system tuning, etc. as separate line items thus helping delineate their being independent of providing the device itself.
