Quote Deposits and Validity: How Much and How Long

How much deposit should you ask for on a quote?

Ask for enough to cover what you would lose if the client cancelled the day after accepting: materials you cannot return, work done before the first payment, and time you turned other jobs away for. Keep the quote valid only as long as your costs are predictable, often 14 to 30 days where material prices move.

There is no single correct percentage. A labour-only repair may need no deposit at all, while a job built around made-to-measure materials can justify a large one. The sections below work both numbers out from your own costs, show where the law caps or limits them, and follow one deposit from the quote to the receipt to the final invoice.

What a deposit is actually for

A deposit is not a reward for being trusted, and it is not a way to improve cash flow at the client’s expense. It exists to cover the gap between the moment you start spending money or turning work away and the moment the client’s next payment is due. If that gap is zero, the deposit can be zero.

Three kinds of loss make up that gap. List them for the job in front of you before you pick a number.

• Committed costs you cannot get back. Materials cut, printed or ordered to measure, non-returnable special orders, restocking fees on returnable stock, permits, hire bookings with cancellation fees, and subcontractor bookings you must pay for anyway.
• Work done before the first payment point. Surveys, design drawings, samples, project set-up. If the client walks away after seeing your design, you have delivered something of value and been paid nothing.
• Capacity you reserved. A fixed date (an event, a wedding, a slot in a fitting schedule) means you said no to other enquiries. What that costs depends on how likely you are to refill the slot, which falls as the date gets closer.

Working from costs gives you a figure you can explain. “The worktops are cut to your measurements and cannot be returned, so the deposit covers them” lands better with a client than “we always take 50%”, and it is much easier to defend if a cancellation ever turns into an argument.

Working out the deposit from your own numbers

Here are four hypothetical jobs, each priced by a small business that is not VAT or sales-tax registered, so every figure is the whole price. The point is not the percentages themselves but how different they come out when you start from the costs.

A kitchen fit, £9,600

Say a kitchen fitter quotes £9,600. Inside that price are worktops at £2,150, cut to measure by the supplier and not returnable, and cabinets at £3,400 that can be returned but carry a 20% restocking fee. If the client cancels after the order is placed, the fitter loses £2,150 plus £680 of restocking fee, a total of £2,830. That is 29.48% of the price, so a 30% deposit of £2,880 covers it with a little room.

A custom sign, $6,400

A sign maker quotes $6,400 for an illuminated shop sign. On day one it spends six hours on design and approval drawings, worth $540 at its rate, and orders $1,900 of acrylic and aluminium cut to the design. Before the client pays anything more, $2,440 is at risk, or 38.125% of the price. A 40% deposit of $2,560 covers it.

A wedding photography package, $3,200

A photographer books a date eight months out. Very little cash is spent at booking. The risk is the date: once it is taken, other couples are turned away. If the couple cancelled too late for the date to be rebooked, the photographer would lose the fee minus the costs it no longer has to pay (a second shooter at $400, travel at $150, an album at $350), which is $2,300. Early on, the chance of rebooking is high, so a 25% booking deposit of $800 is proportionate. The risk grows as the date approaches, so the schedule asks for more later rather than all of it now.

A same-week repair, £480

A plumber quotes £480 to replace a valve and some pipework using stock from the van. Nothing is ordered, no date is held weeks ahead, and the work is paid on completion. The deposit floor is close to zero, and asking for one would slow the sale for no real protection.

Your prices already contain these costs, so the numbers are sitting in your pricing sheet. If you build prices by adding a markup to materials and labour, the markup, overhead and sales tax quote guide shows how, and the markup calculator does the arithmetic. The committed-cost lines are the ones to pull out for the deposit.

When the floor is too big to ask for at once

Sometimes the honest floor is more than a client will pay before seeing anything. The answer is usually a staged schedule rather than a smaller deposit that leaves you exposed. Take a booking deposit that covers the first commitment, then invoice again at the point where the next large cost is committed, such as when materials are ordered or a design is approved. How to set out stage payments on invoices is covered in invoice payment terms explained, and milestone billing for freelancers in how to invoice as a freelancer.

Are there legal limits on how much deposit you can take?

For business-to-business work, deposits are mostly a matter of what you agree. For work done for consumers, and especially work on people’s homes, several places set rules. These are examples, not a complete list; rules differ between countries and between US states, so check the rules where you and your client are.

California home improvement contracts

California’s Business and Professions Code section 7159.5 applies to home improvement contracts between an owner or tenant and a licensed (or licensable) contractor. It requires the contract to be in writing with the agreed amount in dollars and cents, and says a down payment “shall not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever amount is less.” Apart from the down payment, the contractor may not request or accept payment that exceeds the value of the work performed or material delivered (https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=7159.5).

So a Californian contractor cannot use the cost-based floor for a $48,000 remodel if that floor is $9,000 of cabinets; the down payment tops out at $1,000, and further payments must follow work done or materials delivered, set out in a payment schedule. The section exempts contractors who furnish certain bonds or registrar-approved joint control, and some breaches are misdemeanours, so a contractor in that position should read the section in full.

US door-to-door and in-home sales

The US Federal Trade Commission’s Cooling-Off Rule covers sales made at the buyer’s home, workplace or dormitory, or at a seller’s temporary location, for $25 or more at a home and $130 or more at temporary locations. The buyer can cancel until midnight of the third business day after the sale, and the seller must refund the money within 10 days of cancellation (https://consumer.ftc.gov/articles/buyers-remorse-ftcs-cooling-rule-may-help). A deposit taken on a quote accepted at the kitchen table is refundable during that window.

UK consumers: cancellation rights and unfair terms

Under the Consumer Contracts Regulations 2013, a consumer can cancel a distance or off-premises contract (one agreed online, by phone, or at their home, for example) within the cancellation period without giving a reason (regulation 29). For services, that period ends 14 days after the day the contract is entered into (regulation 30), and the trader must refund payments no later than 14 days after being told of the cancellation (regulation 34). If the consumer expressly asks you to start within those 14 days and then cancels, they pay a proportionate amount for what was supplied (regulation 36), provided you gave them the required cancellation information.

Separately, the Consumer Rights Act 2015 lists terms that may be unfair, including one that lets a trader keep sums paid when the consumer decides not to go ahead, without the consumer getting equivalent compensation when the trader cancels (Schedule 2, paragraph 4), and one requiring a consumer to pay “a disproportionately high sum in compensation or for services which have not been supplied” (paragraph 5). An unfair term is not binding on the consumer (section 62). That is the legal reason the next section ties retained deposits to real losses.

Can a deposit be non-refundable?

Writing “non-refundable” on a quote does not settle the matter, especially with consumers. Whether you can keep a deposit depends on what you agreed, where you are, and whether the amount you keep is proportionate to what the cancellation actually cost you. The safer habit is to say what the deposit pays for and how much of it is kept at each stage, instead of a blanket label.

A cancellation schedule does that. Using the photographer’s numbers, where a late cancellation that cannot be rebooked costs $2,300, the amount kept rises as the chance of rebooking falls, and never goes above that $2,300.

The payment schedule behind this table is $800 at booking, another $800 three months before the date, and the $1,600 balance 14 days before. Whether any particular figure would be upheld is a question for a court, not for a blog post, but a schedule with a visible reason for each number is far easier to defend than a single word in capitals. It also works in reverse: if you cancel, the client should get everything back.

Deposit vs advance payment vs retainer vs security deposit

These words are used loosely, and the loose use causes arguments. On your quote, pick the one that matches what the money does, and say it in plain words.

The difference matters most for tax. In the UK, a deposit that is part payment for the job is treated very differently for VAT from a security deposit that is returned when hired goods come back (see the VAT section below). It matters for your books too: a deposit or advance payment is money for work you have not yet done, so it should be matched to the final invoice for that job, while a security deposit is money you expect to give back. Retainers are covered in more depth in how to invoice as a freelancer.

How long should a quote be valid?

A quote’s validity period is the length of time you are prepared to stand behind the price. The right length is the time over which your costs and your availability stay predictable, and no longer. Three things set it.

• Cost volatility. The bigger the share of the price that is bought-in materials, and the faster supplier prices move, the shorter the period should be. A quote that is almost all your own labour can stay valid longer.
• Capacity. A quote often assumes a start date. If your diary fills while the client thinks about it, the price may still stand but the date will not. Say so.
• The client’s decision cycle. A homeowner may decide in a week; a company may need a budget sign-off that takes a month. A period shorter than their process just produces a string of re-quotes.

Putting a number on cost volatility

Your exposure runs from the day you price the job to the day you actually buy the materials, which is the validity period plus the lead time before ordering. Use the kitchen fitter again. The £9,600 quote contains £5,550 of materials, £2,560 of labour (eight days at £320) and £390 of waste disposal and sundries, which leaves £1,100 of profit. Suppose, purely for illustration, that its suppliers’ prices have been rising by about 1.5% a month, and materials are ordered about 21 days after acceptance.

Going from 30 to 90 days costs this fitter an extra £172.05 of profit in the worst case, on a job that only makes £1,100. With stable prices the same fitter could offer 60 or 90 days happily. The table does not tell you the answer; it tells you what the answer costs. If you want to test your own margin, the profit margin calculator shows how a cost increase moves it.

Whatever you pick, print an actual date (“Valid until 21 October 2026”) rather than “valid for 30 days”, which leaves the client guessing the start. The estimate generator turns its 7, 14, 30, 60 and 90-day presets into a printed date, and its history marks quotes past that date as expired, so you can see which ones need a follow-up or a re-quote.

What happens when a quote expires

The expiry date is the point after which you have said the price no longer stands. Say on the quote what happens next, so an acceptance that arrives late is not a surprise to either side. You have three sensible options.

• Honour it. If costs have not moved and you have room in your diary, confirm in writing that you will hold the original price, and give a new acceptance date.
• Re-quote. Issue a new quote with a new number and date, so the paper trail shows which price was accepted. Refer to the old one (“replaces EST-0042”).
• Extend with changes. Keep the labour price and update only the lines that moved, showing the old and new figures.

Say the kitchen client comes back 75 days after a 30-day quote. The worktop supplier’s price has gone from £2,150 to £2,260 and the cabinets from £3,400 to £3,470. A re-quote at £9,780.00, showing that £180.00 of the increase is materials at cost, is a straightforward conversation. Quietly charging £9,780.00 against an expired £9,600.00 quote without a new document is not.

Price-change, expiry and acceptance wording you can adapt

A price clause should say exactly which part of the price can change, what triggers it, how the new figure is worked out and what the client can do about it. Vague clauses (“prices subject to change”) protect you least and are the most likely to be challenged. In UK consumer contracts, the Consumer Rights Act lists as potentially unfair a term letting the trader decide the price after the consumer is bound, and one letting the trader raise the price without giving the consumer a right to cancel if the final price is too high (Schedule 2, paragraphs 14 and 15). Part 2 of that Schedule excludes price-indexation clauses from those two paragraphs where the method by which prices vary is explicitly described.

• Validity: “This quote is valid until 21 October 2026. If you accept after that date, we will confirm the price or send a revised quote before any work is booked.”
• Start date: “The start date shown is our earliest availability today. We will confirm the date when we receive your acceptance and deposit.”
• Materials: “Materials are priced at our supplier’s list price on 21 September 2026. If the supplier’s invoiced price for any listed item rises by more than 3% before we place the order, we will pass on the difference at cost and show you the supplier’s invoice. You may cancel and receive your full deposit back if you do not accept the increase.”
• Scope: “The price covers only the work listed. Changes you request will be quoted in writing and agreed before the work is done.”
• Deposit: “A deposit of £2,880.00 (30%) is due on acceptance and will be deducted from the final invoice. Materials are ordered when the deposit is received.”

Here is how the materials clause plays out. If the cabinets rise 5%, from £3,400 to £3,570, the fitter passes on £170.00 with the supplier invoice attached. If they rise 2%, to £3,468, the fitter absorbs the £68.00, because it is under the 3% threshold. The threshold stops a string of tiny adjustments, and the evidence and right to cancel make the clause something a client can check rather than a blank cheque.

Getting acceptance in writing

An acceptance should leave no doubt about what was accepted. That means it names the quote number and date (and the version, if you revised it), the total, the deposit, and the scope or the document that sets it out. Some rules require writing outright: California’s section 7159.5, for example, requires home improvement contracts to be in writing with the agreed amount in dollars and cents.

• A signed copy of the quote. The estimate generator’s optional sign-to-accept block prints a statement naming the deposit, with lines for signature, name and date. The client signs the PDF, on paper or in their own software, and sends it back; the tool itself does not collect signatures.
• An email that quotes the reference: “We accept quote EST-0042 dated 21 September 2026 for £9,600.00 and will pay the £2,880.00 deposit today.”
• A purchase order from a business client that refers to your quote number and total. Check that it does not carry its own terms that contradict yours.

What to include on the quote itself, from scope to exclusions, is the subject of how to write an estimate. If you are unsure whether you are issuing a quote or an estimate, invoice vs receipt vs quote explains the difference.

Following one deposit from quote to receipt to final invoice

Here is the kitchen fit followed through every document, with a hypothetical fitter who is not VAT registered, so no VAT appears on any of them. The same thread of reference numbers runs from start to finish, which is what lets you, the client and anyone checking your records match each payment to the job.

Step 1: the quote

On 21 September 2026 the fitter issues EST-0042 for £9,600.00, valid until 21 October 2026, with “Deposit to accept: 30%” shown as £2,880.00 under the total, and the materials and deposit clauses above in the terms. The client signs the acceptance block on 25 September and pays the deposit by bank transfer the same day.

Step 2: a receipt for the deposit

The fitter issues receipt RCT-0017 in the receipt maker: the quote’s lines, “Part payment” with £2,880.00 received, payment method bank transfer with the bank reference, and EST-0042 in the “Invoice or reference number” field. The receipt shows £9,600.00, amount received £2,880.00 and balance remaining £6,720.00. The client now has proof of what they paid and against what. What else belongs on a receipt is in how to write a receipt.

Why a receipt and not an invoice? The fitter is not VAT registered, and nothing is owed beyond what was just paid, so a receipt records the event exactly. Some businesses issue an invoice for the deposit instead and mark it paid; that is the usual route when the client needs an invoice for their own accounts, or when a VAT invoice is needed (see the next section).

Step 3: a change during the job

Halfway through, the client asks for plinth lighting. The fitter quotes it in writing at £340.00 and the client agrees by email. It does not change the deposit, which was worked out on the original job; it simply adds a line to the final invoice.

Step 4: the final invoice

In the estimate generator, “Convert to invoice” opens the invoice generator with the quote’s lines, the next invoice number and the quote number kept as a custom field. Add the plinth lighting line, enter £2,880.00 in “Amount already paid”, and the PDF shows the total, the deposit and the £7,060.00 balance due. How long the client has to pay that balance is a payment-terms decision; invoice payment terms explained covers the options.

Step 5: the final receipt

When the £7,060.00 arrives, the fitter can mark INV-0093 as Paid, which stamps it and shows a zero balance, or issue receipt RCT-0021 with one line, “Balance on invoice INV-0093”, for £7,060.00, paid in full. Either way, the job is closed: £2,880.00 plus £7,060.00 equals the £9,940.00 final price. If the balance is late instead, overdue invoice follow-up and late fees sets out what to do.

VAT on deposits: the UK tax point

If you are VAT registered in the UK, a deposit usually brings VAT forward. HMRC’s VAT Notice 700 says that if you issue a VAT invoice or receive a payment before the basic tax point (for services, normally when the work is completed), the tax point for the amount received is the date you receive it or issue the invoice, whichever happens first (paragraph 14.2.2). On deposits specifically, it says: “Most deposits serve primarily as advance payments and will create tax points under paragraph 14.2.2(a) when you receive them” (paragraph 14.2.3).

In practice, the VAT in a deposit goes on the VAT return for the period in which the deposit arrives, not the period in which the job finishes. The exception HMRC gives is a true security deposit, such as one taken to secure the safe return of hired goods and refunded or forfeited to cover loss or damage, which creates no tax point. Notice 700 also notes that “a tax point cannot be created simply by preparing an invoice”; the invoice has to be issued to the customer.

The £576.00 of VAT is one-sixth of the £3,456.00 gross deposit, which is how you extract 20% VAT from a VAT-inclusive figure; the VAT calculator does the same sum. The VAT across both documents, £576.00 plus £1,412.00, is exactly 20% of the £9,940.00 net price. That only works if the final invoice deducts the deposit net of VAT. The line-by-line method, with a pro forma and a paid VAT invoice for the deposit, is set out in the worked example in invoice vs receipt vs quote.

Two more points from HMRC. You must use VAT invoices if you and your customer are both VAT registered, and a VAT invoice should normally be issued within 30 days of the date of supply (Notice 700/21). And if a customer cancels and you keep a deposit that was a part payment, VAT is still due on it: Notice 700 says that if you retain a full or part payment for goods or services the customer fails to take up, “VAT is due on the amount paid”, and if you refund it you can reclaim the VAT you accounted for in your next return (paragraph 8.13.1).

Other countries treat advance payments in their own ways, and US sales tax rules on deposits vary by state. Check with your own tax authority before relying on the UK treatment elsewhere.

Sources

• HMRC VAT Notice 700, basic and actual tax points (14.2.1, 14.2.2), deposits (14.2.3), cancellation charges and forfeited deposits (8.13.1): https://www.gov.uk/guidance/vat-guide-notice-700
• HMRC VAT Notice 700/21, VAT invoice normally within 30 days of the supply: https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021
• GOV.UK, VAT invoices required when you and your customer are VAT registered: https://www.gov.uk/invoicing-and-taking-payment-from-customers/invoices-what-they-must-include
• California Business and Professions Code section 7159.5, home improvement contract down payment limit and written contract: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=7159.5
• US Federal Trade Commission, the Cooling-Off Rule for in-home and temporary-location sales: https://consumer.ftc.gov/articles/buyers-remorse-ftcs-cooling-rule-may-help
• Consumer Contracts Regulations 2013, regulation 29, right to cancel: https://www.legislation.gov.uk/uksi/2013/3134/regulation/29
• Consumer Contracts Regulations 2013, regulation 30, 14-day period for service contracts: https://www.legislation.gov.uk/uksi/2013/3134/regulation/30
• Consumer Contracts Regulations 2013, regulation 34, refunds within 14 days: https://www.legislation.gov.uk/uksi/2013/3134/regulation/34
• Consumer Contracts Regulations 2013, regulation 36, services started during the cancellation period: https://www.legislation.gov.uk/uksi/2013/3134/regulation/36
• Consumer Rights Act 2015, Schedule 2, terms that may be unfair (paragraphs 4, 5, 14, 15) and price-indexation exclusion: https://www.legislation.gov.uk/ukpga/2015/15/schedule/2
• Consumer Rights Act 2015, section 62, unfair terms not binding on the consumer: https://www.legislation.gov.uk/ukpga/2015/15/section/62

This is general information, not legal or tax advice. Rules differ between countries and US states and change over time, so check the current rules with your local authority or an adviser before relying on a limit or a time period.

Where to go next

If the quote itself needs work, how to write an estimate goes through scope, pricing lines, exclusions and presenting options. For the documents that follow acceptance, how to write a receipt covers deposit and part-payment receipts, and how to write an invoice covers the final bill.

For stage payments and how long clients have to pay each one, read invoice payment terms explained. Freelancers weighing deposits against milestones and retainers will find worked billing examples in how to invoice as a freelancer.

Common questions