Deposits: how much, when, and how to ask

In this article

Deposits are the most confidently discussed and least examined subject in the trades. Everyone knows what they take. Very few can say what it is for, and a fair number are over their state’s limit without knowing there is one.

Three things wearing one word

What it really is	What it is for	What justifies the amount
A slot deposit	Holding a date. You are turning other work away to keep it free.	Small, and it should be. It is compensation for the risk of an empty day, not a payment for work.
A materials deposit	You are about to spend real money on their behalf, often on something you cannot resell.	The actual outlay, if the law lets you. This is the only one with a hard number behind it.
A part-payment	Nothing, really. It is the first slice of the price, taken early.	The hardest to defend and the one customers push back on, because there is nothing to point at.

Say which one you are asking for and the conversation changes completely. “I need $600 before I order the tiles, because they are cut to size and I cannot return them” is a fact. “I take 30% up front” is a policy, and policies get negotiated.

It also tells you when you need one at all. On a $300 repair with no materials you are fronting nothing and holding no slot — asking for a deposit there costs you jobs and gains you nothing.

There is no standard, because the law is not the same twice

The commonly quoted figures are 10–33% up front. Both ends of that are illegal somewhere.

• Maryland allows up to one third of the contract price on home improvement work, and no payment at all before the contract is signed.
• California caps a home improvement down payment at 10% or $1,000, whichever is less — and calling it a materials deposit or a mobilisation fee changes nothing.
• Many states have no cap at all, and leave it to the contract.
• The consequence of being over is not a refund. Depending on where you are it can be licence board discipline or a criminal matter, and it is the kind of thing a disgruntled customer reports long after the job.

So the useful advice is not a percentage. It is: look up your own state once, write the number down, and price around it. Ten minutes, once, for the life of the business.

If your state does cap you tightly, that is not a disaster — it just means the deposit is the wrong tool and the payment schedule is the right one. Charging for design, and taking a deposit works that through end to end for a materials‑heavy trade, including how to structure stage payments so your outlay is covered without a large deposit.

When to take it

One small correction to the usual advice, and it matters: take the deposit before you order the materials, not before the job starts. Those are often weeks apart, and the gap is where the money is at risk.

• Put the deposit terms in the quote, not in a message afterwards. Agreed at quote is agreed. Raised later is a renegotiation.
• Say what it covers and what happens if they cancel. A refundable slot deposit and a non‑refundable materials deposit are different promises; write down which one this is.
• Invoice it properly. A deposit taken with no paperwork is the beginning of an argument about whether it was a deposit.
• Never start work before it clears if the whole point was to avoid funding the job yourself.

How to ask

Deposits feel awkward to ask for because operators phrase them as a demand for trust. Phrase it as a step in the process instead and almost nobody objects.

Three things make that work. It is procedural, not personal. It names what the money does. And it ends with what they get — a date — rather than with a request. You are describing how the job proceeds, not asking for a favour.

If they refuse

Take it seriously, both as information and as a decision.

• Ask what the concern is. Usually it is a bad past experience, and it is answered by references, a licence number or insurance details rather than by dropping the deposit.
• Offer the alternatives that solve it properly. Payment on delivery of materials. A stage payment when the first phase is complete. You supplying nothing and them buying the materials directly — which removes your exposure entirely, at the cost of your markup.
• Use supplier terms instead where you can. Thirty days from a merchant is the cheapest working capital in the trades and it removes the need for a materials deposit at all.
• On a materials‑heavy job, a flat refusal is a real risk signal. Somebody unwilling to fund materials they will own is telling you something about the final invoice.
• On a small labour‑only job, let it go. The deposit was never doing much.

What to stop doing

• Quoting a percentage because it is what everyone does. There is no standard, and both ends of the usual range are illegal somewhere.
• Assuming a materials deposit is exempt from a cap. In the states with caps, what you call it is irrelevant.
• Taking a deposit and starting weeks later. Take it when you spend, and spend soon after you take it.
• Taking one on small labour‑only jobs. It costs you work and protects nothing.
• Agreeing it verbally. If it is not on the quote it is not agreed — see what to do when you have underquoted.
• Spending a deposit on something other than that job. That is how a business ends up needing the next deposit to finish the last job.

Sources

Checked in August 2026. Deposit limits are state law and vary more than almost anything else in this catalogue. The two below are cited as the two ends of the range, not as advice for your state — look yours up.

• Maryland Home Improvement Commission, contract requirements — the one‑third limit, and the rule that no payment may be taken before the contract is signed.
• California Business and Professions Code § 7159.5 — the 10%‑or‑$1,000 cap, and the rule that progress payments may not exceed the value of work performed.
• Charging for design, and taking a deposit — the worked version for a materials‑heavy trade: stage payments tied to milestones, supplier terms, and the lien rights that exist precisely because you cannot take a large deposit.
• The three‑way split of what a deposit is for, and the scripts, are ours. The 10–33% range circulating in this market is descriptive of what contractors charge, not of what any particular state permits — which is the whole point of this page.