# How much deposit should a freelancer take?
Size a freelance deposit from what you would lose if the client walked: hours worked before the next payment, time you cannot refill, and outside costs.
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A freelancer should take a deposit equal to what the freelancer would lose if the client walked away at the worst moment before the next payment: the hours already worked, the booked time that cannot be resold, and the outside costs already committed. That sum, divided by the project fee, gives the percentage, and it lands anywhere from under a third of the fee on a long project paid in stages to the whole fee on a small job delivered in one go.
The familiar figures, 25%, 30%, 50%, are conventions of trade, not measurements. They are familiar, which is useful, and they are wrong often enough to cost money in both directions. The method below replaces the habit with a calculation you can show a client line by line, which also happens to be the calculation consumer law expects when the client is a private individual.
Every figure in the examples is illustrative: a made-up fee, a made-up hourly rate and made-up costs, chosen so that the arithmetic is easy to follow and to redo with your own numbers. Amounts are in US dollars.
$3,000deposit on a $6,000 brand identity: 18 hours worked, 10 hours of unfilled calendar and $200 of licences
$7,800deposit on a $24,000 web build paid in stages, under a third of the fee
$12,800deposit on an $18,000 video production, because $9,000 of it goes to crew, location and equipment
Illustrative worked examples; the assumptions behind each figure are set out in the sections below.
## What is a deposit supposed to cover?
A freelance deposit covers the loss the freelancer would carry if the client cancelled or went silent before paying anything else. It is security against one specific event, the client walking, and its right size is the cost of that event, not a share of the fee picked for its roundness.
Thinking of the deposit as security changes the question. The useful question becomes: on the day before the client's next payment is due, how much of my money is in this project? Three things are in it by then.
The first is work done and not yet paid for. If the next payment comes on approval of the first deliverable, every hour up to that approval is at risk.
The second is time that was reserved and cannot be resold. A freelancer who blocks three weeks for a client and loses the project two days before the start does not refill those three weeks the same afternoon. Some of that calendar goes unbilled, and that gap is a real loss even though no work was done in it.
The third is money owed to other people: a subcontractor booked, a studio reserved, footage licensed. These are debts the freelancer owes whether or not the client pays.
A deposit that covers those three things leaves the freelancer whole if the client disappears. A deposit that covers less leaves the freelancer financing the client's project. A deposit that covers far more asks the client to finance the freelancer, and the client is entitled to wonder why.
## How do you calculate the right deposit for a project?
The right deposit is the sum of three figures: the hours you will work before the next payment multiplied by your rate, the hours of booked calendar you could not refill at short notice multiplied by your rate, and the outside costs you will have committed by then. If the sum exceeds the project fee, the deposit is the whole fee.
Work through the three in order.
- Hours worked before the next payment. Read your own payment schedule and find the first moment after the deposit when money is due. Count the hours you will have put in by that moment, including the onboarding call, the research and the briefing that precede visible work. Multiply by your rate.
- Unfillable hours. Estimate how much of the reserved time would stay empty if the project vanished at the last minute. A freelancer with a waiting list may answer zero. A freelancer who books projects end to end, weeks ahead, may answer one or two working weeks. Be honest here: this figure is an estimate, and a modest one is easier to defend than a generous one. Multiply by your rate.
- Outside costs committed. List what you will have ordered, booked or paid for on the client's behalf before the next payment, and keep only the part you could not cancel or reuse on another project.
Add the three, compare the total with the fee, and only then convert it to a percentage. The table applies the method to four projects, each with its own fee, rate and payment schedule.
| Project | Work before next payment | Unfilled time and outside costs | Deposit |
| --- | --- | --- | --- |
| Sales page copy, $1,500 at $75 an hour | 20 hours: $1,500 | None | $1,500 |
| Brand identity, $6,000 at $100 an hour | 18 hours: $1,800 | 10 hours: $1,000, plus $200 of licences | $3,000 |
| Web build, $24,000 at $120 an hour | 50 hours: $6,000 | 10 hours: $1,200, plus $600 of licences | $7,800 |
| Video production, $18,000 at $100 an hour | 22 hours: $2,200 | 16 hours: $1,600, plus $9,000 of crew, location and equipment | $12,800 |
The copywriter delivers the whole job in a week, so there is no later payment for the deposit to bridge: all 20 hours are worked before any second invoice could exist. The brand designer is paid again when the first concepts are approved, 18 hours in. The web developer invoices the first stage at the end of week two, after 50 hours. The video producer spends 22 hours on pre-production and holds two shoot days, 16 hours, that cannot be rebooked a few days ahead, but the line that decides everything is the $9,000 owed to other people.
## What percentage of the fee does that come to?
On the four worked examples the deposit comes to 100%, about 71%, 50% and 32.5% of the fee: the percentage falls as the project gets longer and is paid in more stages, and rises with the share of the fee owed to outside parties. No single percentage fits all four, which is the reason to compute it instead of quoting a habit.
Deposit as a share of the project feeFour illustrative projects, deposit sized on work before the next payment, unfillable time and outside costs
Illustrative figures. Each bar is the deposit from the table above divided by that project's fee.
Three patterns come out of the chart.
Small jobs are paid in full. When the whole job is delivered before a second invoice would be due, the deposit calculation returns the fee itself. Full payment up front on a $1,500 job is what the arithmetic says, and it spares both sides a second invoice.
Stages shrink the deposit. The web build has the largest fee and the smallest percentage, because the developer is never more than two weeks of work away from the next payment. Every stage payment you add lowers the deposit you need.
Pass-through costs raise it. Half of the video fee is not the producer's income at all. A 50% deposit on that project would leave the producer personally owing a crew before a single hour of their own was covered.
## Are 25%, 30% and 50% deposits a rule?
Deposits of 25%, 30% and 50% are trade conventions, not rules and not statistics: no law sets a freelance deposit at any of those figures, and no reliable survey establishes one of them as the norm across professions. They persist because round shares are easy to quote, easy to invoice and familiar enough that few clients push back.
Half up front, half on delivery suits a short project with two natural moments: the start and the handover. It splits the risk evenly, since each side is exposed for half the fee at some point. It fits the brand identity example exactly.
A quarter to a third up front belongs with staged projects. It assumes more payments are coming soon, so the deposit only has to bridge the first stretch. It fits the web build.
Full payment up front is the convention for small fixed-price jobs, productised services and anything sold at a listed price.
A convention is a reasonable shortcut when your calculation lands near it. It stops being one when the project does not have the shape it assumes. A three-month engagement on a 50% deposit asks the client to prepay six weeks of work. A production with heavy outside costs on a 30% deposit asks the freelancer to lend the client the difference.
## Can a deposit be non-refundable?
A deposit can be described as non-refundable in a contract between two businesses, but the wording does not make any amount enforceable: in most legal systems the sum kept has to bear a reasonable relation to the loss or the legitimate interest it protects. With a consumer, the limit is tighter, and a clause that keeps a large prepayment regardless of the loss actually suffered is the kind of term consumer law is written to catch. The rules vary by country and, in the United States, by state; what follows is general information, not legal advice.
The United Kingdom gives a clear, well-documented example of the consumer side. The Consumer Rights Act 2015 lists, among the terms that may be regarded as unfair, a term that lets a trader keep sums paid by a consumer who decides not to go ahead, and a term that makes a consumer who cancels pay a disproportionately high sum in compensation. The Competition and Markets Authority's guidance on cancelling goods or services draws the practical consequences: a business may keep an amount sufficient to cover its actual losses resulting directly from the cancellation, a cancellation charge must be a genuine estimate of the business's direct loss, the business must take reasonable steps to reduce its losses, and non-refundable deposits should only be a small percentage of the total price. A cancellation charge, the guidance adds, is not fair just because it is in the contract the consumer signed.
Between businesses in the United Kingdom, the Consumer Rights Act does not apply and the parties have more freedom, but not unlimited freedom. In its 2015 judgment in Cavendish Square Holding v Makdessi, the UK Supreme Court restated the rule against penalties: a sum payable on breach is unenforceable if it is out of all proportion to any legitimate interest of the innocent party in the performance of the contract. A deposit forfeited on cancellation can be examined on that basis.
The practical reading for a freelancer anywhere is the same, whichever law applies. A deposit sized on real exposure is easy to defend, because the calculation that produced it is the justification a court or a regulator would ask for. A deposit sized on a round number has no such file behind it. Most freelance clients are businesses, so the consumer rules bite mainly on freelancers who work for individuals: wedding and portrait photographers, tutors, private web and design commissions.
## How much of the deposit do you keep if the client cancels?
If a client cancels, the defensible amount to keep is the loss actually suffered at the moment of cancellation, which is small when the cancellation comes early and the slot is refilled, and equal to the whole deposit only when the cancellation comes at the worst moment. Writing that sliding scale into the contract is fairer to the client and stronger for the freelancer than a flat "non-refundable" label.
Take the $6,000 brand identity with its $3,000 deposit, at $100 an hour. The loss depends entirely on when the client cancels and on what happens to the reserved time.
| When the client cancels | Loss at that moment | Kept | Returned |
| --- | --- | --- | --- |
| Three weeks before the start, slot refilled | 2 hours of onboarding: $200 | $200 | $2,800 |
| Two days before the start, slot not refilled | 2 hours: $200, plus 10 unfilled hours: $1,000 | $1,200 | $1,800 |
| After the first concepts are presented | 18 hours: $1,800, plus 10 unfilled hours: $1,000, plus $200 of licences | $3,000 | $0 |
The third row is the scenario the deposit was sized for, and there the whole deposit is consumed. In the first row the freelancer lost two hours and nothing else, because another client took the slot; keeping $3,000 for a $200 loss is the outcome that consumer guidance calls unfair and that a business client would simply resent.
Contract wording that follows this logic usually has three parts, each in plain language:
- a statement that the deposit is credited against the fee and is not an extra charge;
- a scale of what is retained on cancellation, by notice period or by stage, with the reasoning stated ("work carried out to date, costs already committed, and reserved time that cannot be rebooked");
- a commitment to refund the remainder within a stated number of days.
A scale by notice period is the simplest form: the full deposit is retained on cancellation after work has started, a stated part on cancellation within a short notice period before the start, and only the cost of work done on earlier cancellation. A lawyer in your jurisdiction should check the wording before it becomes your standard contract. A late cancellation after substantial work is a separate matter, usually handled by a kill fee clause covering the work beyond the deposit.
## Is a deposit the same as a first milestone or a retainer?
A deposit, a first milestone payment and a retainer are three different payments: a deposit is security credited against the fee, a first milestone is the price of a defined piece of work, and a retainer is a recurring fee for reserved capacity. The difference matters most on cancellation, because it decides whether anything goes back to the client.
| | What the client pays for | Sized on | On cancellation |
| --- | --- | --- | --- |
| Deposit | Security against the client walking, credited to the fee | The freelancer's exposure before the next payment | The part not consumed by actual loss is returned, unless the contract validly says otherwise |
| First milestone | A named deliverable or phase, paid in advance or on completion | The value of that phase | Earned once the phase is delivered; nothing to return |
| Retainer | Availability or a block of hours each period | The capacity reserved per period | The current period is normally earned; later periods are simply not billed |
| Booking fee | Holding a date or a slot | The cost of an unsold date | Kept if the date cannot be resold, within the limits of the applicable law |
The first milestone is the most useful alternative to a deposit. Selling the opening phase as a product in its own right, a paid discovery, a strategy document, a technical specification, turns "security I might keep" into "work you have received". The client owns something for the money, and the freelancer has no refund question to manage. The limit is that a milestone covers work only: it does not pay for unfilled calendar or for outside costs, so a project with either still needs a deposit or a booking fee on top.
A retainer answers a different need. It suits ongoing work with no defined end, where the client buys a number of hours or a level of availability each month, usually billed at the start of the period. Billing in advance already does the job a deposit would do, because the freelancer is never working on credit.
A payment called a "non-refundable retainer" on a one-off project is, in substance, a deposit, and it will be read as one if it is ever contested.
## How does the payment schedule change the deposit you need?
The more often a project is paid, the smaller the deposit it needs, because the deposit only has to cover the stretch between the start and the next payment. Comparing schedules on the same project shows the deposit and the stage payments as two parts of one decision, and shows what each schedule leaves unpaid at its worst moment.
Take the $24,000 web build again: eight weeks at 25 hours a week and $120 an hour, so $3,000 of work is delivered every week. Three schedules are compared on the largest amount of delivered work that is unpaid at any point.
| Schedule | Paid at the start | Peak unpaid work | When the peak occurs |
| --- | --- | --- | --- |
| Sized deposit, then $6,000 after week 2, $6,000 after week 5, $4,200 at launch | $7,800 | $4,200 | End of week 8, before the final payment |
| Half up front, half at launch | $12,000 | $12,000 | End of week 8, before the final payment |
| Everything on completion | $0 | $24,000 | End of week 8 |
Under the sized schedule, the client is ahead by $1,800 at the end of week two: $7,800 paid against $6,000 of work delivered. That $1,800 is exactly the unfilled time and the licences, $1,200 and $600, which is the deposit doing its job. By the end of week five the freelancer is $1,200 behind, and at the end the final $4,200 is outstanding.
The half-and-half schedule takes a deposit more than 50% larger, $12,000 against $7,800, and still leaves the freelancer almost three times as exposed at the end, $12,000 against $4,200. A bigger deposit did not buy more safety; more payment points did. This is the strongest argument to put to a client who dislikes large deposits: a lower deposit is available in exchange for stage payments.
The same table shows the client's side. A deposit is the client's exposure to the freelancer: money paid for work not yet received. Under the sized schedule the client's prepayment is fully worked off during week three. Under half-and-half it takes until the end of week four. A schedule that keeps both exposures small, in both directions, is the one that is easiest to agree.
## What if part of the deposit belongs to other people?
When a large share of the fee is owed to subcontractors or suppliers, the deposit has to cover those commitments in full, and it helps to show the client that part separately. In the video example, $9,000 of the $12,800 deposit is not the producer's money: it is crew, location and equipment, booked in the producer's name.
Presenting the deposit in two lines, third-party costs and the producer's own exposure, changes how a client reads a 71% figure. The producer's own share of the deposit is $3,800 against $9,000 of own fees, about 42%, which is an ordinary deposit. The remainder is production budget that has to be spent before the shoot whatever happens next.
Where several parties are to be paid out of one client payment, a payment router is one way to do it. Shaka is one such router: each party's share is set as a percentage of the deal and can be signed by each recipient before the client pays, the client pays once, and every party is paid their share at the same moment, in one transaction. It routes the payment and never holds the funds, and the payment is final, so it suits a prepayment that is meant to be spent, such as committed production costs, and does not suit a sum that has to stay available to be returned. A deal has at most 20 recipients.
## What can you do when a client refuses to pay a deposit?
When a client refuses a deposit, the options are to shrink the exposure the deposit was meant to cover, to have the money held by a neutral third party, to price the risk, or to decline the project. A refusal is first of all information: find out whether the objection is to prepaying at all, to the amount, or to a procurement rule that nobody in the room can change.
Four responses, from the gentlest to the firmest.
- Shorten the gap between payments. On the web build, weekly invoices of $3,000 payable within seven days leave at most two weeks of work unpaid, $6,000, or $6,600 with the licences. That is more than the deposit schedule left, and about a quarter of the $24,000 at risk under payment on completion.
- Sell the first phase on its own. A paid discovery or specification, invoiced on delivery, lets both sides test the relationship on a small amount. For an organisation that cannot prepay, it is an ordinary invoice for delivered work.
- Use a neutral holder. An escrow service or a platform that holds the client's payment and releases it on agreed conditions answers the client's fear of paying in advance and the freelancer's fear of not being paid. It has a cost and adds a step, and it is designed for two parties who do not yet know each other.
- Keep third-party costs off your books. If the client will not prepay, ask the client to book and pay the suppliers directly. A producer who cannot obtain a deposit should not owe $9,000 to a crew on the client's behalf.
If none of these is accepted, the remaining exposure is a cost, and it can be priced like one. Some freelancers quote a higher fee for payment on completion than for payment with a deposit, in the same way suppliers quote differently for different payment terms. The alternative is to decline. A client who will not prepay anything, will not pay in stages, will not use a neutral holder and will not carry the outside costs is asking the freelancer to finance the whole project, and the calculation at the top of this article says how much that financing is: on the web build, up to $24,000 of work delivered before the first dollar arrives.
The deposit conversation goes better when the figure arrives with its reasoning. "The deposit is $7,800: it covers the first two weeks of work, the licences I buy on day one, and the time I am holding for you" is a sentence a client can check and accept. "I take a third up front" invites the reply that someone else takes a quarter.