Tie work to payments with milestones

Time sheets are a poor fit for contractor work. They measure input (hours) instead of output (results), create administrative overhead, and make budgets unpredictable. Milestones solve this by tying payments directly to deliverables.

A milestone is simple: define what needs to be delivered, set the amount, establish a due date, and pay when the work is complete and approved. This structure makes projects predictable, reduces disputes, and keeps both parties focused on outcomes.

Designing milestones

Good milestones are specific, measurable, and independently valuable. Bad milestone: "Phase 1 - $5,000." Good milestone: "Homepage design with 3 layout options, mobile responsive, delivered as Figma file - $5,000."

Break projects into logical phases. For a website redesign: Milestone 1 - Design mockups. Milestone 2 - Frontend development. Milestone 3 - Backend integration. Milestone 4 - Testing and launch. Each milestone delivers something you can review and approve.

Size milestones appropriately. Too large (one milestone for the entire project) creates risk—you pay everything upfront or at the end. Too small (dozens of tiny milestones) creates administrative burden. Aim for 3-5 milestones per project, each representing 1-3 weeks of work.

Include acceptance criteria in each milestone. What exactly needs to be delivered? What format? What quality standards? Example: "Mobile app screens for login, dashboard, and settings. Delivered as Figma file with interactive prototype. Must match brand guidelines and pass accessibility review."

Set realistic due dates. Discuss timing with the contractor before finalizing milestones. Account for dependencies—Milestone 2 can't start until Milestone 1 is approved. Build in buffer time for review and revisions.

Review and accept

When a contractor submits a milestone, review it promptly. Delays in review delay the project and frustrate contractors. Aim to review within 2-3 business days. If you need more time, communicate that upfront.

Check deliverables against acceptance criteria. Does the work match what was agreed? Is the quality acceptable? Are all files included? If yes, approve the milestone. If no, provide specific feedback on what needs to be fixed.

Be clear about revisions. Minor fixes (typos, small adjustments) should be included in the milestone. Major changes (scope expansion, new features) should be handled as change orders with additional milestones. Don't let scope creep eat into agreed milestones.

Document approval explicitly. Send a message: "Milestone 2 approved. Payment will be processed within 2 business days." This creates a clear record and sets payment expectations. Contractors appreciate knowing exactly when they'll be paid.

If work is incomplete or doesn't meet standards, don't approve the milestone. Provide detailed feedback: "The homepage design looks good, but the mobile layout needs adjustment. The navigation menu overlaps content on small screens. Please fix and resubmit." Clear feedback helps contractors deliver what you need.

Payout logic

Payment happens after approval, not before. This is the key protection milestones provide. You only pay for completed, approved work. If a contractor disappears mid-project, you haven't paid for work you didn't receive.

Process payments quickly after approval. Contractors rely on timely payment. Aim for 2-3 business days from approval to payment. Faster payment builds trust and makes contractors prioritize your projects.

For large projects, consider a deposit. A 20-30% upfront payment shows commitment and covers initial setup costs. The deposit counts toward the first milestone. Example: $10,000 project with $2,000 deposit. Milestone 1 is $3,000, but you only pay $1,000 more since the deposit already covered $2,000.

Handle partial completion carefully. If a contractor delivers 80% of a milestone, you have options: reject it and request completion, accept it and pay proportionally, or negotiate a reduced payment. Document whatever you decide. Partial payments create confusion—avoid them when possible.

Track milestone status clearly. Pending, In Review, Approved, Paid. Everyone should know where each milestone stands. This transparency prevents "Did you pay me?" questions and keeps projects moving.

Examples by project type

Website redesign ($15,000):

• Milestone 1: Design mockups for all pages ($4,000)
• Milestone 2: Frontend development and responsive layout ($5,000)
• Milestone 3: CMS integration and content migration ($4,000)
• Milestone 4: Testing, bug fixes, and launch ($2,000)

Mobile app development ($30,000):

• Milestone 1: UI/UX design and interactive prototype ($6,000)
• Milestone 2: Core features development (login, dashboard, settings) ($10,000)
• Milestone 3: Additional features and API integration ($8,000)
• Milestone 4: Testing, bug fixes, and app store submission ($6,000)

Content writing ($5,000):

• Milestone 1: 10 blog posts, first drafts ($2,000)
• Milestone 2: Revisions and final versions of first 10 posts ($1,000)
• Milestone 3: 10 more blog posts, first drafts ($2,000)

Marketing campaign ($8,000):

• Milestone 1: Campaign strategy and creative brief ($2,000)
• Milestone 2: Ad creative and landing page copy ($3,000)
• Milestone 3: Campaign setup and first month management ($3,000)

Common mistakes

Vague milestones: "Complete Phase 1" tells the contractor nothing. Be specific about deliverables, format, and acceptance criteria. Specificity prevents disputes.

Too few milestones: One milestone for a 3-month project creates risk. If the contractor disappears or delivers poor work, you've paid everything upfront. Break large projects into smaller milestones.

Slow review: Contractors submit work and wait weeks for feedback. This kills momentum and frustrates good contractors. Review within 2-3 days. If you need more time, communicate that.

Scope creep: Milestones expand to include extra work without adjusting payment. This is unfair to contractors. If scope changes, add new milestones or adjust existing ones. Document all changes.

Paying before approval: Some contractors request payment before submitting work. Don't do this. Milestones protect you by ensuring you only pay for completed, approved work.

The system in practice

Here's the complete workflow: Define milestones with the contractor before starting. Include deliverables, amounts, due dates, and acceptance criteria. Contractor completes Milestone 1 and submits it. You review within 2-3 days. If approved, you process payment within 2-3 days. Contractor starts Milestone 2. Repeat until project completion.

This structure keeps projects on track, budgets predictable, and both parties aligned. Contractors know exactly what to deliver and when they'll be paid. You know exactly what you're getting and only pay for approved work.

Contractor management software makes this easier. Define milestones in the system, contractors submit deliverables, you review and approve, payment is triggered automatically. The system enforces the workflow and creates a complete audit trail.

The bottom line

Milestones are the best way to structure contractor payments. They tie payment to deliverables, make budgets predictable, and protect both parties. Design specific milestones, review promptly, and pay quickly after approval. This simple system makes contractor projects professional and predictable.

The alternative—hourly billing or one lump sum—creates problems. Hourly billing adds administrative overhead and makes budgets unpredictable. Lump sum payments create risk. Milestones are the middle ground that works for most contractor projects.