Pros and Cons of Different Animation Project Payment Terms

Payment terms determine how and when you, as a freelance animator, will get paid by your animation clients. They contain everything related to payment, including deposits, who pays for what expense, payment methods, payment deadlines, and late payment penalties.

According to Twine, freelance animators are usually the ones who set the payment terms. It’s rare for animation clients to dictate payment terms. This means that you need to have a clear idea of your terms prepared when approaching a new client. 

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Ran Segal, a full-stack designer, says that a critical concept in running your own business is that you need to get paid as fast as possible. You need to pay your expenses as quickly as possible to have the money to grow and maintain your animation business.

If you’re doing an animation project for a month or more, that means you’re now working for many weeks while paying for your bills, hardware, software, and food using your savings. Your income will be negative for that one month. This is called cash flow negative.

You need to work for a cash flow-positive business, which means you need to have money before working to not go into debt. This is called a downpayment.

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Before you start any project, make sure you get a deposit. Brad Hussey, a freelance web designer, developer, and digital entrepreneur says you can ask for 25%, 50%, or a flat fee depending on the animation project’s size. This is the first step toward making sure you will get paid.

Clients who won’t pay you a deposit will surely be a pain in the neck sooner or later. If your clients disagree with your payment methods and payment terms, then you can simply refuse to work for them. Remember, you set the terms; therefore, you have the power in this situation.

This is why it’s essential to set a payment structure and schedule so that you won’t have to run around and chase animation clients for their payments. Remember that your animation clients don’t want to release money right away because they also want to keep money in the bank for the project’s duration.

It can be a tough balance to strike, but finding the best payment terms for both you and your client is possible! In this blog post, we list down the pros and cons of different animation project payment terms so you can get it right every time. 

Upfront Payment

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Upfront payment is one of the easiest ways to establish trust between you and your client, says Freelancer Map. It gives you some income while you work on the project and guarantee that you will be paid once the project is completed.

It also assures you that the client is serious about the project and intends to be with you as you finish it. On the other hand, for your client, it might seem sketchy for them to pay you right away even if you haven’t done anything.

On the other hand, though, upfront payment can assure them that you will begin working and do your best to receive the remaining amount of your payment.

Pay Per Project

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The first kind of payment term is the pay-per-project method. This includes the total amount you will be paid for your job. You can charge whatever you will need to be paid for the entire project, which will depend on your normal rate and the breadth of the project. 

You can decide on how much you will be paid according to the tasks’ difficulty and how long it will take to finish, but you need to deliver the result at that price. Whether you spend several days or several weeks, it’s up to you. You get to decide how often you want to work.

However, Stanislav Fedorov, a contract engineer for Contracts and Procurement, warns that you need to set up milestones and get approvals from your animation client. You also need to agree on how many revisions you will do, or else this will cost you too much time and energy without getting paid.

Milestones or Progress Payments

Second, this is where you agree with your client on paying you at a fixed price within a specific time frame.

Checking in with your client at your milestones is important because it keeps you and your client on track with the project. You will be paid based on your progress while your client delivers feedback on your progress.

According to Freelancers Union, milestones payment will ensure that you get paid even if the project gets dropped by your client. They also help make your cash flow steady to help you budget more easily and not get into debt. 

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A disadvantage of milestone payments is that the client might not be that invested earlier in the project. They might not give feedback early or not pay attention to your needs as you work on the project.

There will be times that you’ll continue to work and hope that your client will pay you for every milestone you reach. Take note to stop working on projects if your clients become unresponsive and consistently is not paying you on time or at all.. Never send a complete project unless you have been fully paid.

As an example, Ran Segal says that he asked for 50% upfront as a deposit for most of his contracts before starting on any project. Then he gets another 25% for presenting a design and when it is approved. And another 25% when the project is finished.

This means that the intellectual property is still yours. The project’s intellectual property will only go to the client if the client has given you your last payment. You can sue the client if he/she uses your animation project without giving your final payment since the intellectual property is still yours.

On the other hand, if a client has already paid you, that means they will be invested in making sure the project you are working on will succeed.

Hourly Pay

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The third payment term is hourly pay which is the most straightforward way to charge your clients. To arrive at an hourly rate, you find out the cost of running your business and add on top of that how much you’d like to earn.

According to Envatotuts+, a pro of having an hourly rate can look more appealing to clients than a daily or monthly rate. Also, it can provide you with flexibility for some projects. You can charge your client not based on how much you work but on how long you want to work.

Another advantage is that hourly rates give your client an estimate of how much they will pay you if they request a revision or additional work.

If ever the client asks for a project revision of 3-5 hours worth of work, you won’t end up underpaid because your client will be able to pay you at a decent rate for the additional work you did.

A con of hourly rates is that your rate may appear high compared to what regular employees get per hour. This is because you have to get your rate based on your business fees and accept that you can’t work 8 hours a day. Your fee should also include your time spent on admin tasks, meetings, etc.

Another disadvantage of hourly pay is that your animation client might not have boundaries and end up seeing you as an average employee.

The client might give you heavy workloads and expect you to send him his requests in an urgent manner. In the end, this will cost you a lot of energy, time, and even lost opportunities to work for other clients.

Wrapping It Up

There are many payment terms you could use for your animation project. It’s up to you to decide which you think will work best for you, the workload you can handle, and your budget. However, you also need to take into consideration what payment term your client will like.

If you are looking for ways to gain animation clients and learn how to manage a freelance animation business, don’t forget to sign up for our free masterclass and get a copy of our free marketing handbook.

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