How should payment to a ghostwriter work?

Most writers request an initial deposit before starting on your work, and then may ask for installments along the way, or may just get paid the rest when the book is complete. This varies between writers, but deposits and installments are very standard. This ensures that the writer gets paid for work done, but also keeps a client from handing over huge wads of cash without having some sort of product in hand.

Although it is possible to find, almost no professional writer (that means someone feeding him/herself and family on writing income) will write a book with the simple hope of making money from the profits. Unless the book is nearly guaranteed to be published (in the writer’s mind … not in the client’s mind), writing for free would be a very good way to lose a home. A near-guarantee often involves a celebrity.

The way I explain this when someone enquires about having me write "on spec" (this means "on speculation") is that no one else in the world is asked to work without getting paid for months on end in the hopes that a company becomes profitable enough to end up paying him. So why should writers do exactly that? Besides, most of us have plenty of ideas for our own books. We really have no incentive to be under someone else's guidance about a book, only to end up splitting any profits that are made.

In the case of non-fiction books, many publishers will agree to look over a book proposal along with 2-3 sample chapters, and in this case you may be able to invest less to produce these samples, then see whether the market is interested. (It’s possible a publisher would even offer an advance at that time.) This would be another case where a writer might see the potential and might consider 3 chapters a small enough investment that he or she would consider doing this work at no cost up front. Again, this all depends on the writer’s own sense of return on his or her time.