Speaking as someone who has been doing this for 35+ years.....

In my current state, I consider myself semi-retired as a Knifemaker.  I am no longer taking orders, but did so for many years... Upon retirement from the Air Force, I had 4 years of backlogged orders, and just hated it!  EVERY time I walked into the Knife Shop, I knew EXACTLY what I had to do, and Bladesmithing became "not fun" anymore.  I cleaned those orders up as quickly as I could (did it in just less than 3 years).   

Each maker's situation is unique; therefore, what drives the type and style of orders is typically what type of knives the specific maker has come to be known for.   

  Often, customers will seek out newer makers whom they like/have noticed, and ask them to make whatever style knife is the current "fad," hoping to get a bargain. (because they know that same knife will usually be more expensive from a well know Maker.)

Deposits:  FLAT OUT NO!  All too often, when a Maker takes a deposit, it puts you under the client's thumb. What does that mean?  It means that all too often, when a deposit is required, the client thinks they own a part of you.  They will call every day and want to talk for hours.  They will want to change this or that about their order, and when you tell them that you need to go, so you can work on orders and get to theirs sooner, they get angry and say something along the lines of... "I gave you a XX% deposit on my order, you should be willing to talk to me whenever I want!"  There's also the chance that you take a deposit, and something happens... that prevents you from completing that order WHEN YOU SAID it would be ready.... You become "the bad guy."  The ONLY time I ask for a deposit is when exotic materials are part of the order(s)... OR if the order is a design that might be difficult to sell, should the client back out.

Finding the time to work on "your own stuff"... is nearly impossible IF you are taking deposits/setting specific delivery dates on those orders.  Taking those deposits means you have "painted yourself into a corner." 

  Not saying you should or shouldn't do this, but I'll quote Star Trek.... Kirk: "Mr Scott! Have you always multiplied your repair estimates by a factor of four?"  Scotty: "Certainly, Sir! How else can I keep my reputation as a miracle worker!?"  (Hint, Hint... think about it... if you state a specific delivery date and don't meet it, then YOU ARE the Bad Guy.  However, if you state a specific delivery date, and finish the order/notify the client BEFORE that delivery date.... YOU are the hero.  Get what I mean?) 😉 

   I have changed how I do things since being diagnosed with Lupus, Lung disease, and kidney disease..... When I have "shop time".... I make what I want to make, only accepting orders from clients who have purchased multiple times in the past, and even then no deposits are accepted, and no specific delivery dates are given.  Then, when I complete a knife/knives, I will send out pics to those on the "waiting list".... and if none of those want the piece, it then makes it's way onto my website. 

Stick with Bladesmithing long enough, and you will see it's like a wheel...EVERYTHING comes back around.  That being said, every Bladesmith operates under their own unique set of circumstances, and must decide what's right for them, and for their business/reputation.     

I think there are many variables in this equation, so it is difficult to pin down a path that works for everyone.

For me, limiting my commissions has been the modus operandi for my entire career when I was a parttime maker. This has never been my primary source of income and if I can help it, never will be. I generally make what I want to make and if it sells, great, if not, it gets gifted out to family or friends. Some pieces are too "good" to give away and I hold them until someone buys them.

If knife making is going to be how you earn a living, you are probably going to take whatever commissions you can get out of necessity, until you get to a point where people just want one of your knives and don't really care what type of knife it is.

Most of the makers I know who are fulltime and rely on this for a living either specialize in something or have been making for so long and gained enough notoriety that they can make whatever they want, and it will sell.

To answer your specific questions, I have four orders right now. Two of them are from people who already own knives I made, (they both want kitchen knives) one saw my FB post of that sub-hilt knife and wants one with different handle wood, the other one is a person who saw my website and wants a knife but isn't sure what style yet. He just wants one of my knives and nothing in my current stock tickles his fancy. Orders come from different sources, and you need to have different ways of getting your work out there as you build a reputation.

I do not take a deposit. If I have to tell them it will be a few months before I can get to them, I let them know up front and reach out when I am ready to start their order to confirm they are still committed. If they bail out, it's no problem. I just start working on whatever is next, whether that's another commission or my own projects. If they bail out when I am halfway or all the way through the build, that's no problem either. It just goes into current inventory and usually sells.

I recently retired from the rat race. When I was working fulltime, my weekends were the only real time I had to work extended time on knifemaking, whether that was a personal project or a commission. Often enough, weekends also had other priorities, so that wasn't working so well. I developed a method of finding time to go out to the shop and do something, even if it was just for a half-hour. I would also schedule a specific day or half-day to work on knives in any given month. This became extremely important when I wanted to pass my JS. I had to schedule time to work on my presentation set and my performance blade. I worked on my JS set for two years including design time. That also includes the knives I made that did not go into the presentation set, but they started out with the intention of being in that set. They just didn't make the cut in my opinion and were sidelined.

I rarely work on only one knife at a time. When I forge blades, there are always at least two, at most four in the fire that day. I then set up for grinding and prepping for HT. I work on 2-4 knives at a time, keeping them all at roughly the same stage of development. I have a fairly small shop, and it takes some setup time to get things ready for some processes. So, I like to have multiple pieces ready for a specific process to limit setup and put back equipment time.