The last time I took a deposit on a knife was like Karl spoke about...very specific configuration and very expensive materials.
I generally operate under the premise of no deposits. The following experience really soured me though.
I asked for a deposit, (just enough to cover the ivory and gold for the knife) and within two days the client started calling....at first it was just chatting for short periods, then the conversations got longer and longer, to changing things on the knife, then it got to "when is my knife going to be done?" Now I don't mind talking with folks, in fact I encourage it, but this individual called EVERY DAY, and wanted to talk for hours on end, and it was keeping me from getting my work done.
At first I tried to hint by saying "I really need to get going and get some work done." But he didn't get the hint.
After about 3 weeks of getting calls EVERY DAY, including the weekends, I told him that I couldn't talk right now. The response shocked me...."You have my money, so you should be willing to talk with me as often and as long as I want!" I was as polite as possible, but very blunt too. I told him that I was returning his deposit, and that I was canceling his order, which I did.
I really don't know if the guy was a few sandwiches short of a picnic or what, but in essence, that situation made me feel like an indentured servant. Since then, I simply will not take a deposit unless it's 100% necessary for the project, and with a clear understanding of delivery dates and expectations.
My thought pattern is that as soon as you accept somebody's money, and they don't have a product in their hand, you've immediately made yourself beholden to that individual. If your someone who can operate well under those circumstances, then I guess it's OK to take deposits, but I can't, and therefore don't do deposits.