• When milestone invoicing fits
  • How to define a billable milestone

Milestone invoicing means billing an agreed amount each time a defined part of a project is complete, instead of billing by the hour or all at the end. You and your client agree on the milestones, what counts as done for each one, and how much each is worth before the work starts. Each completed milestone then triggers its own invoice.

Billed publishes this page. It gives general information, not legal advice. The US federal contracting rules quoted below are from the Federal Acquisition Regulation, opened on October 29, 2026. For the terms of your own contract, ask a lawyer.

When milestone invoicing fits

  • Projects with clear stages, such as discovery, design, build and launch.
  • Fixed-price work, where the client wants to pay as results arrive rather than for hours.
  • Longer projects, where waiting until the end to bill would leave you unpaid for months.

How to define a billable milestone

For each milestone, write down and agree on with your client:

  • The deliverable: what you'll hand over, in terms both sides can check.
  • What counts as complete: the acceptance step, such as a sign-off or a review period.
  • The amount: a fixed figure or a percentage of the total fee.
  • When the invoice is sent and due: for example, on acceptance, due in 30 days.
  • What happens if the client asks for changes: whether rework is part of the milestone or billed separately.

Put these in your contract or statement of work. See freelance contract essentials.

Performance-based payments in US federal contracts

US federal contracts have a related idea. The Federal Acquisition Regulation (FAR) says "Performance-based payments may be made on any of the following bases", which include "Accomplishment of defined events" (FAR 32.1002). It also says "Performance-based payments are contract financing payments that are not payment for accepted items" (FAR 32.1001). These rules apply to US federal contracts, not to private projects; your own contract sets your terms.

What each milestone invoice should show

  • the milestone's name and its reference in the contract;
  • the date it was completed or accepted;
  • the amount for this milestone, and its share of the total fee;
  • the total invoiced so far and the amount left on the project;
  • the due date and how to pay.

Worked example (sample figures)

A sample web designer, invented for this example, agrees on a $12,000.00 fixed fee with three milestones.

  • Milestone 1, approved design: 30% × $12,000.00 = $3,600.00
  • Milestone 2, working site on a test server: 40% × $12,000.00 = $4,800.00
  • Milestone 3, launch: 30% × $12,000.00 = $3,600.00
  • Check: $3,600.00 + $4,800.00 + $3,600.00 = $12,000.00

When milestone 2 is accepted, its invoice shows $4,800.00 due, $8,400.00 invoiced so far ($3,600.00 + $4,800.00), and $3,600.00 left on the project.

Milestone or progress invoicing?

Milestone invoicing bills fixed amounts when defined events happen. Progress invoicing bills for the share of the work completed in each period, whatever stage it falls in. See the guide to progress invoicing.

Where Billed fits

Billed's invoice software page says: "Set a due date on each invoice so your client knows when to pay."

When this guide isn't for you

If your contract has formal acceptance procedures, government funding rules or disputed milestones, ask a lawyer. For construction pay applications and retainage, see the guide to progress invoicing.

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Frequently Asked Questions

What is milestone invoicing?

Billing an agreed amount each time a defined part of a project is complete. You and your client agree on the milestones, what counts as complete and the amount for each before work starts.

How do I split a project fee into milestones?

Assign each milestone a fixed amount or a percentage of the total, and check that the parts add up to the full fee. In this page's sample, a $12,000.00 fee split 30%, 40% and 30% gives $3,600.00, $4,800.00 and $3,600.00.

What should a milestone invoice show?

The milestone and its reference in the contract, the date it was completed or accepted, the amount and its share of the total fee, the total invoiced so far, the amount left, and the due date.

What if the client asks for changes before accepting a milestone?

That depends on what your contract says about rework. If changes go beyond the agreed scope, agree on them in writing, and bill them separately if your contract allows.

How is milestone invoicing different from progress invoicing?

Milestone invoicing bills fixed amounts when defined events happen. Progress invoicing bills for the share of work completed in each period.

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