Most Web designers work using some combination of hourly billing and project cost payments. A typical arrangement calls for a retainer or initial "deposit" -- you pay a designer a set amount (typically anywhere from 10% to half of the total project cost) and he or she applies work to the balance until it runs out. This payment is almost always non-refundable, even if you terminate the agreement when there is still a balance -- and the contract will usually say so. Some designers break project costs into phases -- you'll make one payment for the project outline, another for initial site architecture, another for content creation, etc. Whichever billing structure your designer uses, it should be clear in the contract.
Once the site is finished, you need to specify whether it will need to be maintained by the designer, or if you'll be able to usa a CMS (content management system) to make content changes yourself?
Is the designer providing Web hosting services? Make sure the contract addresses any issues that might crop up after the design process is completed and the site is launched, such as scalability, creating additional pages or templates, or necessary revisions to existing work.
A big issue here is ownership -- some designers maintain the rights to the finished product, so you have to start almost from scratch if you want to move your site or switch to a different design firm later on. If you're not comfortable with this arrangement, make sure you maintain ownership rights to the site itself and any custom graphics, logos, or other identifying marks.
Web designers get access to a lot of important information when they design your site -- the meta tags you use to identify pages, the keywords you're using to drive SEO efforts, which software you use to process transactions, customer databases, and other information could be very valuable to competitors. And some of those competitors could be clients of your Web designer. Your Web design contract should make it clear that all information obtained by the designer with respect to your business and your site is not to be disclosed for any purpose.
The best contracts protect both parties in the event that they decide to stop working together. If you call off the project mid-scope, what happens? Ideally, you want to be able to take whatever work has been completed and have it available for another designer to pick up where the first one left off.
Some contracts assign ownership only after the job is completed as "final art," making this impossible, while others require a "termination fee" in the event that a project is halted midstream. While these provisions may seem fair to the designer, they can be inconvenient for you as the client. Eliminating them altogether might not be possible, but you can craft a termination clause that is fair to both parties -- for example, by maintaining ownership rights to certain design elements (logos, etc.) even if the project is called off.
Remember, a contract is a cooperative document, the best ones are those that satisfy both parties.
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