1. Should puppy deposits be refundable or non-refundable?
Breeders love to use non-refundable deposits because they mean that they don’t need to worry about paying people back if they cancel, so in theory it locks in that they want a puppy. It’s also nice because, in a way, it’s a guarantee you can spend that money.
Conversely, buyers like refundable deposits because, if they don’t get a puppy from you, then they get their money back. This seems like goodwill if something unexpected comes up in their life, like they lose their job or have to move.
What’s the right answer?
Non-refundable deposits can make breeders feel protected, but they often come across as rigid or unapproachable to buyers. I don’t like that. On the other hand, if you have refundable deposits, then they really don’t mean much. People could place a deposit on your dogs and another breeder, and another breeder, and then, when the first puppy they like is born, they’ll just ask for a refund on the other deposits.
When the goal of a deposit is to lock in that puppy, or a puppy from the litter is reserved and has a home, it feels wrong to allow refunds on deposits.
What’s worse, if they paid with a credit card, they can flag it, like an item they purchased but never received, and the credit card company will come after you for an explanation and a refund—and those are extremely hard to fight. Many years ago I had a guy message once about a refund. I didn’t get back to him for a few days—that was my first mistake. I didn’t have a contract—that was my second mistake. And he just called his card company and said he didn’t get the thing, and they pulled that money out of my account in a few days. It’s quite easy, but not everyone knows it.
The solution is to do 50% refundable deposits under contract. This way, there is some skin in the game for them, but some goodwill from you. You put it in your contract that the deposit is 50% refundable—no questions asked. This way you don’t have people trying to come up with a ridiculous story about their life to try and win your heart over, just because they bought a puppy somewhere else. They lost half what they paid, and that’s the arrangement.
I remember the first time I tried it. It was before I had a contract (embarrassing, I know). One guy messaged me, said he changed his mind and didn’t want a dog at this time. I asked if he wanted to wait. He said no, then asked for a refund on his deposit. On a whim I said, “No problem, our deposits are 50% refundable; I’ll send that over right away,” and I did. At the time, my deposits were only $300, but I was still living in my broke state and that savings of $150 was huge for me.
After it was over, I realized how easy it was. The guy felt good, I felt relieved. Neither of us felt taken advantage of, and it was over.
I immediately changed my policy, put that on the website, and, a year later, when I finally had a contract. I put it in there, too.
If you’re worried you aren’t getting enough guaranteed income in the 50%-refundable model, then you should consider doubling your deposit and making it 50% refundable. So, for example, if your deposit is $500 on a $3500 dog, make it $1000, 50% refundable. This way you get the $500 non-refundable piece you like to keep, but you also maintain the good will.
If you want the wording I use in my contract that covers the whole deposit, pricing, and what-if situations, you can buy it here or in the show notes below. Please understand I am not an attorney and therefore this is not legal advice.
2. What if you live in California and now you can’t have non-refundable deposits?
The new law has come out in 2026 in California making it illegal to have non-refundable deposits as a breeder there. I know the goal was to stop the scams of people pretending to sell puppies accepting deposits, but, as often happens, the law won’t do much to stop scams, but it will hurt legitimate breeders trying to run an honest program.
Buyers pay deposits to lock in their pick in the litter and to give the breeder confirmation people want the pups in their litter. It’s a good system. It’s important to have skin in the game. However, this new law changes all this. It is asking breeders to remove this component of their business and sort of figure out a new method.
What do you do?
First off, for any of you wondering, trying to relabel a deposit as a reservation doesn’t change how courts typically view it. I know I’m not an attorney, and this isn’t legal advice, but the law doesn’t leave much wiggle room on that topic. There’s no reason to have your whole contract thrown out in court because of this illegal stipulation.
I’ve thought about this one a lot, and I believe it comes down to three avenues depending on your ideal puppy buyer: 1. You make your refundable deposit higher so it isn’t easy for them to simply place a deposit unless they’re serious; 2. You make the deposit very low so that if you have to refund it, it isn’t all that much; 3. You don’t change your deposit, keeping it the same, just understanding that you’ll be responsible for refunding the whole thing if they ask.
Which is right for you?
You’ll want to increase your deposit rate if your people are a little fickle and are difficult to get to commit. This will force them to commit, and it will be less likely they’ll place deposits with multiple breeders because it will affect their cash flow too much.
For breeders who are nervous about the refunds and anticipate a lot of refunds, then I would drop your deposit lower so those asking for a refund aren’t going to hurt your cashflow.
Lastly, if you rarely get people cancelling spots on your waitlist, looking for a refund, then you don’t need to change anything. What I might do is remove the wording in your contract that discusses the refund. This way it will default to state law and not encourage them to ask for a refund. So what this might look like is a line that says, “The deposit is this and it comes off the total price of the puppy, which is this.” This way you honor the refund, but don’t make it outwardly obvious. This will allow the effect of putting skin in the game to work, but not be in violation of the state law, while not encouraging them to ask for it back if they want to cancel.
Despite having 50% refund on my breeding program, I do have a handful of people who have placed a deposit, passed on getting a dog, and haven’t asked for a refund. I treat them as though they are in limbo land, with a credit at the ranch when they’re ready—if they ever are.
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3. Should you have a separate deposit contract?
I don’t recommend a separate deposit contract, nor a reservation fee, as many attorneys have put it out. I find that, in small claims court, you’re generally not with an attorney. You often have an arbitrator, which is an official who is really hoping to handle this thing quickly in an hour, given the evidence presented, and he’s not going to see that a reservation fee is not a deposit on the dog. Sounds good on paper, but doesn’t often hold up in court, from what I’ve seen.
What I recommend is incorporating your deposit amount and agreements in your main contract, and having the buyer review and sign the contract before they give you a deposit. The beauty of this is that the contract will dictate the deposit, it will give the buyer full transparency on what to expect working with you, and it’s clean.
I also lock in their price with this contract for 12 months. I used to do 24 months, but the economy is in so much flux, my price has gone up a lot in the past few years.
4. How much should your deposit be?
I recommend 25-33% of your total price for your deposit. This is adequate skin in the game to get the buyer to commit without it feeling greedy.
What part of the range should you be on? Well that depends on your breeding program, price, and your cashflow needs. If your dogs are $2000, an easy 25% is $500. On the high end of 33%, you’re a little over $650. When my dogs were $1800, I had my deposit at $600, 50% refundable, and I rarely had any issues. I preferred the $600 upfront because it helped my cashflow. It allowed me to get 2-3 $600 deposits in a month when I didn’t have puppies ready to go home. This covered all my overhead for my breeding business, keeping my personal finances out of it. When the litters went home, I would take that large amount of money and do something with it, such as buy more property, improve the kennels, or work towards my other financial goals. The income from the deposits essentially covers all of my breeding expenses.
Many of you sell dogs for $3500+ and still only collect $500 deposits, yet struggle with cashflow. Increase your deposits and make your cashflow much easier.
I’ve since moved my dogs up to $2500, and now the deposit is $800, with $1700 due at pick up. These are easy numbers and on the higher side of the recommended percentage. For me, deposits are the key to my cash flow, so this is what works for me. In my perfect world, if you took the average number of puppies you sold a year, divided that by the 12 months, and aimed to collect that many deposits per month, that cashflow from deposits should cover your entire breeding program overhead. That would allow you to take the litter money when the pups go home as profit, or as a chunk of money to invest in facilities or the breeding program in general.
For example, if you sell 50 pups per year, then that’s about 4 pups per month, your goal would be to collect 4 deposits per month. If your deposits were $500, then those four deposits would produce $2000 per month for you. My goal would be for you to keep your breeding overhead, things like dog food and other monthly costs, under $2000 per month.
If you are feeling like there isn’t enough money in the months between litters going home, consider raising your deposit to a higher percentage. This allows you to smooth out your income flow.
If you always have litters and puppies going home, then having a smaller deposit, around 25%, might make it easier to get more deposits, lock people in, and get them to commit. The cash flow is less important to you because you have litters going home all the time.
If you’re insecure about taking people’s money (which is common in the beginning of breeding), then go to the 25% until you feel comfortable asking for more.
5. When should you take deposits?
A lot of breeders want to wait to take deposits until dogs are bred or puppies are on the ground. Instead, take deposits whenever someone has decided to get a dog from your breeding program. This means you’ll be collecting deposits all year around, but, potentially more importantly, you’re getting the buyer to commit when they’ve contacted you and are excited about the dog.
Remember, the deposit does a very important thing: it gets the buyer to transition from looking for a puppy to preparing for a puppy. Before a deposit, they can still look around, but if they’ve placed a deposit, now they are committed. They are excited, and will want to get ready for the dog. You allow them to do this when they place a deposit, and it’s a gift you’re giving to many buyers.
Just the same, if they are worried about colors or timing, don’t pressure them to take a deposit. Share the probability of what you’ll produce as best as you can, and then let them decide. If I think they’re more worried about getting a certain pattern on their GSP than they are with getting a dog from my breeding program, then they aren’t my ideal puppy buyer, and I’m okay if they move on to another breeder.
This is what I always tell people: “I recommend placing a deposit when you know you want a Bear Paw GSP—that way you’ll get the best pick we have available.” And don’t forget to send the contract covering the deposit at that time as well.
There you go! The details on puppy deposits and what to do. I promise getting this right makes running your breeding program so much easier!
Thank you for listening to another episode of the Honest Dog Breeder Podcast, with me, your host, Julie Swan. I appreciate you taking me along on your breeding adventures and I can’t wait to see you in the next episode!
