Negotiation & Deals

Deposits

A deposit does three jobs at once: it finances the work, de-risks the deal, and reveals who's serious. Every dimension of it (size, refundability, coverage) is negotiable.

  • Beginner
  • 7 min total
  • 11 chapters

What decision this helps you make: The deposit that fits the deal: sized to the sunk cost and risk it protects, with refundability tied to who controls non-completion, and only paid to a party you could recover it from.

What this topic is

A deposit is an upfront payment that finances the provider's pre-revenue work, de-risks the deal by giving the buyer skin in the game, and signals commitment, with size, refundability, and coverage all negotiable.

Why it matters

Deposits filter serious buyers, fund custom work, and shift risk. But a deposit to an unverified provider is unsecured credit flowing the wrong way, which is why size, refundability, and pairing with escrow or milestones all matter.

Who should learn it

Anyone who takes or pays deposits: providers protecting against non-completion, and buyers avoiding unrecoverable upfront payments.

What you will understand

  • The three jobs: financing the work, de-risking, signaling commitment
  • The dimensions: size, refundability, and what the deposit protects against
  • The reverse risk: a deposit to an unverified provider is credit flowing the wrong way
  • Pairing deposits with escrow, milestones, and staged release

Prerequisites

Common misconception

"A deposit is just a partial payment upfront." A deposit does three distinct jobs: it finances the provider's pre-revenue costs, it de-risks the deal by making buyer walk-away costly, and it signals which buyers are serious (the one who won't deposit often isn't). Every dimension is negotiable: size, refundability, and what it actually protects. Treating it as a simple prepayment misses that it's a risk-and-commitment instrument, and that paying one to the wrong party sends your money into unsecured credit you may never recover.