How Much Deposit Should A Contractor Ask For?

A deposit is not an advance on your profit. It covers the money that leaves your account before any of the customer's money arrives: materials, delivery, permits, a machine rental, the deposit your own subtrade wants. On a job with real material content, you are the bank until the first payment clears. The deposit is what keeps that stretch short.

It does a second job too. Someone who will not put money down usually will not sign either. A deposit turns a verbal yes into a booked job, which is why you should ask for it at signature rather than the morning you start.

That framing also changes how the conversation goes. "This covers the material order" is a reason, and reasons survive pushback. "That's my standard fifty percent" is a policy, and policies invite negotiation.

Work the number out from the job in front of you, not from habit. Add up everything you have to pay for before you can invoice anything.

That total is your floor. A deposit below it means you are financing the customer's project out of your own working capital, and you will feel it on the third job running at once, not the first.

Now express the floor as a share of the contract, because that is the form the customer will hear it in. On most residential work it lands at a third of the total or less - labour is the bigger half of the price, and labour you have not performed yet costs you nothing. Jobs that are almost entirely labour, like a repaint or drywall repair, justify very little. Jobs built on custom orders - cabinets, windows, engineered stone - can justify considerably more, because that product is paid for, cut to your customer's dimensions, and unsellable to anyone else.

If you would rather not do the arithmetic on the back of the quote, the deposit calculator at /tools/deposit-calculator takes the job total and your material cost and tells you whether the percentage you had in mind actually covers what you are about to buy. It is quicker than the mistake.

A very large deposit reads as cash-flow trouble. The customer is being asked to carry your risk on a job you have not started, and the good ones know it. It is also the single most common thing a homeowner is warned about before hiring a contractor, so an oversized ask puts you in the same sentence as the people who took the money and vanished. You lose those jobs to whoever quoted a number they could explain.

A deposit that is too small, or none at all, means you buy the material and hope. If the customer cancels, changes their mind about the colour, or stops answering the phone, you are holding product you paid for. On a custom order you are holding product nobody else wants.

The defensible position sits between the two and is easy to say out loud: this is what the material costs, this is what I need to order it, the rest follows the work. A number you can justify line by line is a number that survives comparison with the other three quotes on the kitchen table.

Most deposit arguments are really scheduling arguments. The contractor wants to be paid before the risk, the customer wants to pay after the work, and a single large deposit is a blunt way to settle it. A draw schedule settles it better: a modest deposit to cover the material order, then payments tied to visible milestones.

On a two-week renovation that might look like a deposit at signing sized to the material order, a payment when the material lands and work begins, a payment at substantial completion, and a small balance at the final walkthrough. Adjust the shape to your trade - the principle is what matters.

One rule keeps a draw schedule honest: never let the work you have completed run more than one draw ahead of the money you have collected. And keep the final payment small enough that the customer will actually pay it, but large enough that you will come back to finish the deficiency list. Write the schedule into the contract with the milestones named, not just the percentages.

Ask why before you argue. There are two answers and they need opposite responses. Either they have been burned before, or they do not have the money yet.

If it is trust, show your work. Send the supplier quote alongside your quote so the material figure is visibly not invented. Offer to have the supplier invoice them directly, or to have them buy the materials themselves while you price labour only. Some contractors take no deposit and instead invoice for materials the day they are delivered, with photos - that protects the same money and feels completely different to the customer.

If it is cash, that is a different problem and it does not improve once you have started. A customer who cannot fund the material order at the beginning is unlikely to fund the final payment at the end.

If they will not accept any structure that protects your material cost, you have learned something useful for free. Either price the risk into the job or let it go. A job you walk away from costs you an afternoon of quoting. A job that stalls at eighty percent complete with your material in it costs considerably more.