"50% upfront, 50% on delivery" is the most common phrase in Nigerian agency proposals, and for good reason. A deposit funds the work, filters out clients who aren't committed, and protects you if the project stalls. Here's how to structure it properly.
What is a mobilisation fee?
A mobilisation fee (or deposit) is a payment made before work starts. It covers early costs (staff time, software, production, travel) and commits the client. The term is common in construction and government contracts, and many agencies, consultancies and IT firms use it too.
How much deposit should I charge?
| Project type | Common structure |
|---|---|
| Short creative project (under 1 month) | 50% upfront, 50% on delivery |
| Website or app build (2–4 months) | 40–50% upfront, milestones for the rest (design sign-off, build, launch) |
| Campaign with third-party costs (media, production) | Media and production costs 100% upfront, fees 50/50 |
| New client, or public sector | Higher deposit (60–70%), or a short paid discovery phase first |
| Retainer | Billed monthly in advance, not in arrears |
The right percentage depends on your cash exposure. If you pay freelancers or suppliers before the client pays you, your deposit should cover at least those costs.
How should milestone payments work?
Tie each payment to a deliverable the client signs off, not a date:
- Deposit (40%): on signing, before kickoff.
- Design approval (30%): when the client approves designs in writing.
- Launch (30%): on go-live or final handover.
Write in the contract that approval is deemed given after a set number of days without feedback. That stops projects stalling at 90% done.
How does VAT work on deposits?
VAT is generally due when you issue the invoice or receive payment, whichever comes first. So:
- Invoice the deposit with VAT at 7.5%.
- On the final invoice, list the full project value and deduct the deposit already invoiced, so VAT is charged only on the balance.
Example: a ₦2,800,000 project with a 50% deposit
| Net | VAT | Total | |
|---|---|---|---|
| Deposit invoice (50%) | ₦1,400,000 | ₦105,000 | ₦1,505,000 |
| Final invoice: project ₦2,800,000 less deposit ₦1,400,000 | ₦1,400,000 | ₦105,000 | ₦1,505,000 |
| Total over both invoices | ₦2,800,000 | ₦210,000 | ₦3,010,000 |
The client pays VAT once on the full project value, never twice.
How do I ask for a deposit without losing the client?
- Put it in the proposal, not in a follow-up. Clients accept terms they see before they say yes.
- Explain what it pays for: "The deposit secures your slot and covers production costs."
- Make paying instant. A quote the client can accept online and pay the deposit on the spot converts better than "we'll send an invoice."
- Don't start without it. Starting "while the payment processes" teaches clients that deposits are optional.
How BizBooks handles quotes and deposits
Send a quote, choose a 30%, 50% or 70% deposit, and your client accepts online and pays the deposit immediately through your own Paystack or Flutterwave. When you turn the quote into the final invoice, the deposit is deducted automatically, and VAT is charged only on the balance. See quotes and deposits.
Frequently asked questions
What percentage is a mobilisation fee in Nigeria?
It varies by industry and contract. Agencies and service firms commonly charge 30–70% before starting, with 50% the most common.
Do I charge VAT on a deposit?
Yes. VAT is generally due when you invoice or receive the deposit. Deduct the deposit on the final invoice so VAT isn't charged twice.
What if the client cancels after paying the deposit?
Your contract should say whether the deposit is refundable and what happens to work completed. Many agencies make deposits non-refundable once work has started.
Should retainers be paid in advance?
Yes. Most agencies bill retainers monthly in advance, so you aren't funding a month of work for the client.
Sources
- Based on common Nigerian agency contracting practice. VAT timing: Avalara, Nigerian VAT returns. Have your contracts reviewed by a lawyer.