How much of a deposit should a contractor ask for?
A deposit protects your calendar and your materials budget. The trick is asking for the right amount, at the right time, in writing.
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Key takeaways
- Ask for a deposit when you’re buying materials, holding a date, or starting a multi-day project.
- Size it to your real risk: enough to cover special-order materials and the cost of a cancellation.
- Some states limit deposits on home improvement work, so check your state’s rules before you set a policy.
- Put the amount, what it’s applied to, and your cancellation terms on the quote the customer approves.
A deposit does two things. It covers the money you spend before the job starts, and it tells you the customer is serious enough to hold a spot on your calendar. Without one, you can end up with a garage full of special-order materials and an empty week when a customer changes their mind.
There’s no single right percentage. The right deposit depends on the job, your costs, and your state’s rules. Here’s how to decide.
When a deposit makes sense
- Special-order materials. Anything you can’t return or reuse on another job.
- Multi-day projects. Painting, installs, remodels, and anything that ties up a crew for days.
- Booking far ahead. A date six weeks out is a date you’re turning other work away for.
- New customers on large jobs. Before there’s a track record between you.
- Custom work. Designs, colors, or fabrication made for this customer only.
Deposits usually don’t make sense for small service calls and recurring maintenance billed after each visit. Asking a weekly mowing customer for a deposit adds friction without protecting you much.
Common approaches by job type
| Job type | Common approach |
|---|---|
| Service calls and small repairs | No deposit, or a trip or diagnostic fee collected on the day |
| Recurring service | No deposit. Bill per visit, or monthly in advance |
| Projects with special-order materials | A deposit that covers the materials, or a percentage of the total |
| Large multi-week projects | A deposit, then progress payments as the work moves |
Check your state’s rules first
Some states limit how much a contractor can collect up front on home improvement work. California is a well-known example: for most home improvement contracts, the down payment can’t exceed 10% of the contract price or $1,000, whichever is less, with some exceptions. Other states have their own rules, and licensing boards often publish guidance.
Size the deposit to your risk
Where the rules allow, think about what you actually stand to lose if the customer cancels after booking. For most project work, that’s the materials you’ve bought plus the cost of an empty spot on the calendar.
Example: a $4,800 exterior repaint
- Paint and supplies
- $1,100
- Deposit at 30% of the total
- $1,440
- Deposit covers materials, with a cushion for the booked dates
- $1,440
For larger jobs, a deposit alone isn’t enough protection. Pair it with progress billing so you’re never far ahead of the customer financially.
Put it on the quote
The deposit should be part of what the customer approves, not a surprise request after they say yes. Spell out the amount, when it’s due, what it’s applied to, and what happens if plans change.
Deposit wording for a quote
A deposit of [30%] ([$1,440]) is due to confirm your start date. It covers materials ordered for your project and is applied to your final invoice. If you cancel more than [7] days before the start date, we’ll refund the deposit minus the cost of any materials already purchased.
Refunds and cancellations
Decide your cancellation policy before you need it, write it on the quote, and apply it consistently. Keep in mind that some customers have a legal right to cancel certain contracts. For example, the FTC’s Cooling-Off Rule gives buyers three days to cancel many sales made at their home, and some states add their own rules for home improvement contracts.
Make paying the deposit easy
Send the deposit as its own invoice the moment the customer approves, with a link to pay by card or bank transfer. The faster the deposit comes in, the sooner you can order materials and lock in the date.
Common questions
Is a deposit refundable?
It depends on your written policy and your state’s laws. Many businesses refund the deposit minus any materials already purchased if the customer cancels with enough notice. Whatever you decide, put it on the quote.
What’s the difference between a deposit and a retainer?
A deposit is usually applied to the final bill for a specific job. A retainer is more often used for ongoing services, reserving availability over a period of time. Many trade businesses only need deposits.
Should I start work before the deposit arrives?
For jobs that require a deposit, generally no. The deposit confirms the booking and funds materials. Starting without it defeats the purpose.
Can I require a deposit for recurring service?
You can, but it’s unusual and adds friction. For recurring customers, billing in advance each month or taking payment automatically is usually a better way to protect yourself.