The agency signed an agreement for a $136,000 project. It consists of 5 stages:
- Visual design
- QA and launch
Payments do not bind to the stages and are split into stages, such as 30% prepayment, 30% after the alpha version is done (closer to the end of development stage), and 30% after project is launched. How will the agency recognize revenue after the visual design stage is finished and accepted by the customer?
The agency decided to record revenue as follows:
- After the discovery stage is done, the agency recorded 10% of the total project cost
- Prototype delivery is another 10% of the project
- Visual design is worth 20% of the project
- Development is 40% by itself
- QA and launching compose the last 20% of the project
After the visual design stage is done, the agency will record 40% of the total project revenue, which is $54,400, while the actual cash received is $40,800 (30% from $136,000).