The purpose of the deposit is to prove the customer actually will buy the product. This binds both parties to the transaction, whereas just agreeing to "if you

The purpose of the deposit is to prove the customer actually will buy the product. This binds both parties to the transaction, whereas just agreeing to "if you build it we will buy" has no binding. The refund policy is mostly for "show", but it takes away the risk from the customer. 1. If you are a startup and want to survive, you will get the product delivered, so you can close on the contract. All you have so far is a deposit. 2. The purpose of receiving the deposit is not to pay for the development of the product, but to prove the customer actually wants the product. If you are taking a deposit to pay for the development of a product, that's more of an investment. If you renege on that promise, and don't have the money, you need to get a loan to pay it back, or shut the business down, as you are proving untrustworthy.