play to your strengths

sometimes, writing penalties into a contract can be a good motivational tool. if there is a chance that you won't get paid, you may be motivated to do a better job and ship on time.

however, if your track record is such that your company has

a) never shipped on time, and
b) never shipped a good release

it is generally a good idea not to sign a contract that says you're going to start knocking money off the bill for each day you are late and for each bug that is found.

also, be sure to stop at $0. you don't want to have to tell your employees, 'there is a possibility that we'll be sending a check with the release.'