Milestone payments
Payments tied to completing defined stages of a project, rather than paying everything up front or at the end.
What it means
A milestone structure breaks a project into stages and ties each payment to a stage being finished. A website project might be paid 30 percent on signing, 30 percent on design approval, 30 percent on launch, and 10 percent after a short fix period. It spreads risk: the client does not pay for work not yet done, and the provider does not wait until the end to be paid.
The weak spot is usually acceptance. If a milestone is paid only when the client “approves” the work, and approval is at the client’s discretion, payment can be held up indefinitely. Good milestone clauses define each deliverable objectively, give the client a set number of days to accept or reject with reasons, and treat silence as acceptance.
Milestones suit fixed-price projects, but they need a plan for delays and scope changes. If the client causes delays, such as late content or feedback, the provider may want the right to invoice after a set period anyway. And if the project is cancelled midway, the contract should say how the provider is paid for work done toward the current milestone.
What to watch for
- Check that each milestone and deliverable is described clearly enough that completion is not a matter of opinion.
- See whether there is an acceptance deadline and whether silence counts as acceptance.
- Look at what happens if the client causes delays or requests changes that affect the milestones.
- Confirm how work in progress is paid for if the contract ends between milestones.
Example clause
Client will pay the Fees in the installments listed in Exhibit B, each due on acceptance of the related Milestone. Client will accept or reject each Milestone deliverable in writing within 10 business days after delivery, stating its reasons for any rejection, and a deliverable not rejected within that period is deemed accepted.
Each payment follows approval of a stage, and the client cannot stall approval by staying silent.