We stopped billing against milestones
It sounds like the safer arrangement for a buyer. In practice it pays for declarations of completion and delays every piece of bad news.
On continuous work we bill monthly against demonstrated progress rather than against milestones, because milestone billing turns every honest report of a delay into a commercial dispute. Milestones remain right where the scope is genuinely fixed.
What we used to do, and what it rewarded
Payments attached to named milestones: design approved, phase one complete, launch. It reads as protection for the buyer, and it is, against one specific failure and no other.
What it rewards is declaring a milestone complete. When money is attached to a word, the argument moves onto the word, and both sides spend the week debating whether approved means approved instead of looking at the work.
The worse effect: news arrives late
If telling a client that a milestone will slip means delaying an invoice, the message gets softened and delayed. That is not a character failure, it is arithmetic acting on a person with a payroll to meet.
The cost lands on the client, because a problem reported in week two can change the plan and the same problem reported in week six can only change the deadline.
What we do instead
A monthly fee for an agreed team, a demonstration of working software at the end of each month, and thirty days notice on either side. If a month produced nothing worth demonstrating, that is visible immediately and you can stop.
The protection is not in the payment schedule, it is in the frequency of the checkpoint and in how easy it is to leave. A monthly cycle gives you twelve decisions a year instead of three.
- A demonstration, not a status report, at the end of each month
- A monthly ceiling agreed in advance
- Thirty days notice, without cause, on both sides
- Everything built stays in your accounts as it is built, not at the end
Where milestones are still correct
Fixed-scope work with a clear finish line: a defined migration, a defined integration, a set of pages. When the deliverable can be described unambiguously, tying money to it is fair to both sides and removes ambiguity rather than creating it.
They also fit where your own approval process needs discrete stages. That is a legitimate reason and it is worth naming as the reason, rather than adopting milestones by default and discovering the side effects later.
If you keep milestones, do these two things
Define completion as something observable rather than as an approval. Working in a staging environment and passing an agreed check is observable. Signed off by the client is a diary problem, and it will hold an invoice hostage to a holiday.
Keep a retention of ten percent or so until the system has run for a month in production. It is the part of milestone billing that genuinely protects a buyer, and it is the part most often left out.
What to take from this
- 01Milestone billing pays for the declaration of completion, not for progress
- 02Money attached to a milestone delays the news that it will slip
- 03Monthly billing with a demonstration and short notice gives twelve exit points a year
- 04Where milestones fit, define completion observably and keep a retention
Ask the question directly
- Does monthly billing mean an open-ended budget?
- Only if you leave the ceiling out. A monthly cap plus a total cap for the engagement gives the same budget certainty and keeps the ability to stop.
- What if a month produces nothing visible?
- Then the demonstration is uncomfortable, which is the point. Some months are genuinely infrastructure with little to show, and a supplier should say that in advance rather than at the demonstration.
- Is a deposit reasonable?
- Yes. A first month in advance is normal and reasonable. A large upfront payment against future work is a different arrangement and should be recognised as one.
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