Understanding protected milestone payments
Milestone-based payments split a project into phases so homeowners pay as work progresses. Here is how they will work on BidTorch.
Why large upfront deposits are risky
Traditional contracting often starts with a deposit: 30%, 50%, sometimes more. If the contractor disappears or the work stalls, recovering that money is difficult and expensive.
Protected milestone payments change the dynamic. Instead of one large payment up front, the project is broken into phases. Each phase has a defined scope and a payment amount. The homeowner releases payment only after confirming that the work for that phase is complete.
How milestones will work on BidTorch
When protected payments launch on BidTorch, the process will work like this:
1. Scope and milestones are set at bid acceptance
The contractor's bid will include a breakdown of work phases. For a kitchen remodel, that might look like:
- Phase 1: Demo and rough plumbing/electrical (20%)
- Phase 2: Cabinets and countertops installed (35%)
- Phase 3: Finish work, fixtures, final inspection (35%)
- Phase 4: Punch list and final sign-off (10%)
2. The homeowner funds each milestone before work begins
Before each phase starts, the homeowner will fund that milestone. The funds will be held as a protected payment until the work is confirmed.
3. Work is confirmed before payment is released
After the contractor completes a phase, the homeowner will review the work and confirm it meets the agreed scope. Only then will payment be released.
4. Disputes have a resolution path
If there is a disagreement about whether work meets the scope, the platform will provide a documented record of the agreed scope, photos, and communications to help resolve it.
What this means for pricing
A small protected-payment fee will be applied when milestones are funded. The contractor will receive 100% of their bid amount. The homeowner will pay the bid price plus the platform fee.
When will this launch?
Protected milestone payments are coming soon. The current version of BidTorch supports project posting, sealed bidding, and bid comparison. Payments will be added before the marketplace goes live for transactions.
In the meantime, homeowners can post projects, receive sealed bids, and choose a contractor based on price and credentials. Payment terms are arranged directly between homeowner and contractor.