March 26, 2018

What if an existing client refuses to pay 100% up-front?

There’s a good thread going in my group coaching Slack room related to my recommended practice of asking for 100% payment up-front for value priced software projects.

One of my students (let’s call him Bob) is getting push back from one of his existing clients about Bob’s new 100% up-front payment terms. Bob asked the room what he could do to overcome his client’s objection.

For the record, I generally ask for 100% up-front to give myself something to concede in a negotiation. If a client pushes back, that’s fine because the whole point of the exercise is to focus any negotiations on something other than my prices.

In Bob’s particular situation, he has an existing relationship with the client so they’re naturally going to have some expectations about payment terms for future engagements. If it were me, and I wanted to continue the relationship with the client, I’d be pretty gentle about changing the terms of engagement.

It’s worth pointing out that I don’t have stringent global policies for my business. Part of the benefit of being a soloist is that I can make exceptions whenever I like.

What this looks like in practice is that I play hardball with new prospects but once someone becomes a client (and assuming I like them) I am happy to present personalized future engagements.

Of course, I have certain inviolable standards even with long term clients (e.g., I won’t agree to trading time for money, I never negotiate price, etc) but I am as flexible as possible with folks who I have a mutually trusting business relationship with.