Guide
How to collect a deposit as a contractor
Collecting a deposit before every job is the single most important financial habit in contracting. Here's how to do it without the awkward conversation.
Why deposits matter — and why most contractors undercharge them
A deposit does three things: it covers your material costs before the job starts, it weeds out non-serious customers, and it creates commitment. Once someone has paid a deposit, they're 10x less likely to cancel or ghost you. Most contractors who don't collect deposits say they're afraid to ask. The contractors who've been in business 20 years collect deposits on every job without apology.
How much to charge as a deposit
The right deposit amount depends on your cost structure. Rule of thumb: your deposit should cover at least your material costs plus the first day of labor. For HVAC and roofing, 30–50% is standard because materials are expensive and ordered before the job starts. For painting and handyman work, 20–30% is typical. For small jobs under $500, some contractors charge 50–100% upfront — the customer expects it.
How to ask for a deposit without it feeling awkward
The trick is to present it as part of your standard process, not as a personal financial request. 'We require a 30% deposit to secure your spot on our schedule and order materials' is a policy statement, not a negotiation. Put it in your estimate as a line item — not in a cover email, not in a separate conversation. When it's written in the document they're already approving, it feels like standard business procedure. Because it is.
The fastest way to collect a deposit: a payment link in the estimate
The traditional way — waiting for a check, chasing a bank transfer — adds days to every job. The modern way is to embed a payment link directly in the customer's estimate approval page. When they click Approve, the deposit checkout is the next step. Card, Apple Pay, Google Pay — collected in seconds. By the time you pull out of the driveway, you may already have the deposit.
What if a customer refuses to pay a deposit?
This is a red flag, not a negotiation. Customers who refuse reasonable deposits often have cash flow problems, are comparison shopping with no intention of hiring you, or are planning to dispute the final invoice. You don't have to fire every customer who pushes back — but you should have a firm minimum. 'We can reduce it to 20%, but I need something to hold your spot and order materials.' If they refuse that, move on.
What to do when a job gets cancelled after a deposit
Your terms should spell out your cancellation policy before the deposit changes hands. Common policies: deposit is fully refundable if cancelled 7+ days before start date; 50% refundable within 3 days; non-refundable after materials are ordered. Whatever your policy is — write it in the estimate. A signed estimate with a clear cancellation policy is your protection.
Deposit vs. retainer vs. progress payment
A deposit secures the job and covers materials. A retainer is an ongoing arrangement (common in commercial work). A progress payment is a scheduled payment mid-job, typically tied to a milestone like rough-in or substantial completion. For large jobs ($20K+), consider a structure like: 40% deposit, 40% at midpoint, 20% on completion. This keeps your cash flow healthy throughout the project.
Deposit quick reference by trade
Collect deposits automatically — right in the approval flow.
Customers approve, sign, and pay the deposit in one step. No chasing checks.