Polls: Should you extend credit to clients?

From About.com:

The question isn't as simple as it sounds. There is no web designer/services programmer who has not been burnt by a client. Sometimes it seems like the clients we are most willing to do more for are the ones most likely not to pay. That's some sort of psychological twist built into the creative-technical syndrome (-Did I just invent a new topic for the DSM VI?).

But getting a contract from clients who are woefully unaware of the goals of their own site can be impossible.
In Australia, the level of client awareness is woefully behind the rest of the free world for many reasons. Australians have only had broadband access for a couple of years for anyone outside the central business districts (CBD). Even the best of promised access speeds coming in the next few years are only barely considered 'broadband' by the rest of the world.
Through no fault of their own, the vast majority of Australian businesses have no concept of the power of the Internet.

94.6% of registered businesses in Australia are small businesses. Following the ancient maxim/rule of internet marketing, 70% (or more in a developing market) of sales from a website will be within 20 miles of the physical address of the business. That's approximately 35 kilometers.
The rule applies to about 85-90% of the 3.8 million Australian business owners.
In plain English, these folks just don't see the reason for a website.
At best, the business owner sees that their clients expect some sort of website. Their vision for the website is more along the lines of a business card or brochure. Monetizing the site, or even making it SERP-friendly, is far beyond the mindset.

Extending credit to such clients is risky - with or without a contract.
The poll on About.com is not a good representative sample because of the small number of respondents; and possibly the make up of the respondents, but the message comes through loud and clear: Credit is very risky.

A useful compromise to put everyone's mind at ease is a staged payment system.
Once the goals of the site are outlined and sketched out as webpages, a baseline cost can be determined. This price has to leave some room for a little scope creep, but not too much.
Suggested features should be fixed price alternatives - defined as clearly as possible - and not more than 3-5 listed.
A base rate of some sort has to be agreed upon, either as per-hour, per-page, or some combination.

When the price is agreed upon, at 1/3 to 1/2 is paid up front. An alpha point is determined by the satisfaction of the contracted goals of the site. If there are a large number of pages/features in the site, another payment point should be based on the estimated number of days to complete pages or features.
Like most of us, web designers/programmers like to see pay packets fortnightly or monthly. That's a good rule of thumb for how to break up payment schedules.

Finally, the last payment should be substantial - 1/4 to 1/3 of the completion.

If a client can't agree to partial payments as the goals of the site are satisfied, it's time to find another client. The web designer has already put in hours of research and consultation at this point that s/he will never be paid for; and the 'client' has gained from the free education.

It's nearly impossible to get full payment up front from a contracted project, but we can all hope for somedays..

SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey. Sphere: Related Content