Deposits, milestones and payment terms: what is normal
How payment is usually structured for web and software work, what protects each side, and the terms that should make you pause.
The short answer
Payment for web and software work normally has three parts: a deposit at signing that commits both sides and covers early work, payments at milestones tied to things you can see and use, and a final payment at launch or acceptance, with a separate monthly fee for maintenance and support afterwards. Good milestones are demonstrable deliveries, an approved prototype, a working stage on a preview, a launched release, never dates or hours. The structure protects both sides: the builder is paid for work done, and you pay for results you have seen. The terms that should make you pause are full payment upfront, milestones defined by time, final payment before hand-over, and ownership that transfers only when the last invoice is settled, which turns a payment dispute into a hostage situation.
What normal looks like
| Element | Usual shape | Purpose |
|---|---|---|
| Deposit | A modest share at signing | Commitment; covers discovery and early work |
| Milestone payments | Several, each tied to a demonstrable delivery | You pay for progress you can see |
| Final payment | At launch or acceptance, with hand-over complete | Closes the project |
| Retention | Sometimes a small share held until a short warranty period ends | Covers defects found after launch |
| Monthly fees | Maintenance, support, hosting in your accounts | Ongoing work, separately |
| Change requests | Priced and approved individually, or drawn from a change budget | Changes visible and agreed |
| Payment period | A standard number of days per invoice | Cash flow for both |
Milestones done well
- Discovery accepted: scope, not-included list, risks, prototype approved by the people who will use it.
- Each build stage accepted: working software on a preview, tested against the stage’s acceptance criteria.
- Launch accepted: live, documented, accounts in your name, hand-over complete.
- Warranty period: defects fixed within it; any retention released at its end.
- Ongoing: monthly invoices for maintenance and support against the agreed scope and report.
Terms that should make you pause
Full payment upfront for anything beyond a small job. Milestones described as dates or hours rather than deliveries. Final payment due before hand-over or documentation. Ownership held until the last invoice clears. Vague acceptance with no criteria or window. Automatic renewal of maintenance with long notice. None is necessarily malicious; each moves risk to you without a corresponding protection, and each is negotiable at signing.
What this means for you
Expect a deposit, milestones tied to demonstrable deliveries with acceptance criteria, a final payment at launch with hand-over complete, and monthly fees separately. Push back on full payment upfront, time-based milestones, payment before hand-over and ownership held hostage to the last invoice. Payment terms are where a project’s fairness is decided before it starts, and they are far easier to fix at signing than at the final invoice.
Frequently asked questions
Is a deposit normal, and how much?
A deposit is normal: it commits both sides and covers the builder's early work. A modest share of the project value at signing, with the rest at milestones, is the usual shape. A very large deposit or full payment upfront moves all the risk to you and removes the builder's incentive to finish; it should be questioned unless the work is very small.
What makes a good milestone?
Something demonstrable that you can accept or reject: the discovery document and prototype approved, a working stage on a preview link, a release live. Milestones defined by dates or hours pay for time passing, not for progress. Tie payment to seeing the thing.
What if we are unhappy at a milestone?
The milestone is the moment to say so, specifically, against the acceptance criteria agreed for it. A good contract defines what acceptance means and gives a short window to raise issues. Paying and complaining later loses the moment; withholding without stating the issue breaks the relationship. Say what is missing, in writing, at the milestone.