How Much Deposit to Ask For

A deposit covers the money you have to spend before you earn a dollar: materials, permits, a dumpster, holding a slot on your calendar. It is not your profit and it is not a prepayment for labor. Framing it that way makes it much easier to explain.

• Small jobs (under $1,000) — often no deposit at all. Bill on completion and keep it simple.
• Mid-size jobs — 10% to 30%, or enough to cover the material order, whichever is larger.
• Material-heavy jobs — price the deposit off the actual material cost, not a percentage. If cabinets are $9,000, the deposit covers the cabinets.
• Custom or special-order work — collect the full cost of anything that can't be returned or resold.

Several states cap what a residential contractor can collect up front — some as low as 10% or a fixed dollar amount. Check your state's contractor licensing board before you set a standard number.

Don't apologize for it and don't bury it. Say what the money buys, and tie it to a date on the calendar. Customers rarely argue with a deposit that has a clear purpose.

Thanks again for going with us on the kitchen. To lock in the start date and get the cabinet order placed, we collect a $2,400 deposit — that covers the materials up front. Once it's in, I'll put you on the schedule for the 14th and send the confirmation.

• Put the deposit amount and what it covers in writing.
• Never start work before the deposit clears.
• Give a receipt every single time.
• Say plainly whether the deposit is refundable, and by when.
• Keep deposit money for that job's materials — don't use it to finish the last job.

Some will push back. Offer a smaller deposit tied strictly to the material invoice, or offer to have the supplier bill them directly. If they refuse any up-front money on a material-heavy job, that isn't a negotiation — it's a warning sign.