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Milestone Amounts - Paying Less Than Funded

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Active Member
Mark R Member Since: Apr 7, 2016
1 of 5

During interviews, the freelancer I eventually hired discussed a time estimate that we both agreed upon. 

 

Before I hired him, we agreed that he would send a written revised time estimate that reflected the the number of hours we had agreed on.

After I hired him, the revised time estimate document he sent included more hours than we had agreed upon. HIs explanation was that the additional hours were included as a contingency for unforseen pages/features/etc. development we had not previously discussed. Realistically, I agree that these kinds of unforseen additions are likely.

 

Here's my question:

If I fund a milestone for $800 for x hours and the milestone is documented by the freelancer to have taken (x-5) hours, can I:

  • release only the funds in escrow equal to the (x-5) hours and not the full amount in escrow?
  • mark the milestone as complete so the project can progress on to the next milestone?
  • get a refund of what's left of the $800 from that milestone (for the 5 hours that were not billed) that were not released from escrow?

    If I cannot handle payment as described above, is it better to set milestones for lower estimated amounts and them if they take longer than estimated, increase the payment by either modifuing the amount or adding a "bonus"?

tl;dr - Can the amounts of milestone payments be lowered after they have been funded but before the amounts are released?

Thank you,

Community Guru
Preston H Member Since: Nov 24, 2014
2 of 5

Mark, you seem like a well-meaning person. I believe you are over-thinking this.

 

It is not appropriate for you to think about hours with regards to a fixed-price contract.

 

I went to a bakery. I ordered a special cake. Later I picked up the cake and paid for it. How many hours did it take the baker to bake the cake?

 

I don't know. Who cares? It is irrelevant.

 

Respectfully, you need to use the fixed-price contract model or pay a contractor hourly. Not do both.

Active Member
Mark R Member Since: Apr 7, 2016
3 of 5

Preston,

Thank you for recognizing my good intentions, but your response misses my point entirely. Perhaps that was my fault in referring to "hours" and "time" in my initial question. So please allow me to reframe it using your bakery analogy...

I phoned up the baker and described the cake I wanted. I told him that:

  • I needed the cake to feed 30 people
  • it should consist of three layers (chocolate, vanilla, and strawberry)
  • it should have whipped cream frosting between the lawyers
  • it should have white icing on the top
  • it should have six roses for decoration
  • it should have the message "Congratulations Joe" written on the top (in blue)

    The baker said he understood what I wanted and said he would charge me $x for the cake. I agreed that was a fair price and that I would come down to his bakery to formally place my order.

    When I went to the bakery, the baker presented me an order form for the cake...and the price was $(x+y).

    The baker said that the increase in price was in the event that:
  • I wanted to increase the cake to feed 40 people
  • I wanted to change one layer to hazelnut flavor (that's a more expensive flavor)
  • I wanted butter cream frosting between the layers
  • I wanted to have blue icing on top of the cake (blue's a more expensive color than white)
  • I wanted eight roses on the top of the cake
  • I wanted the message written on top of the cake to read "Congratulations Joe and Bill"

    He said that these changes would increase the price of the cake to $(x+y).

    I agreed that any of those changes would increase the amount of work necesarry to create the cake. But, I had not requested any of those changes or increases. The cake he described in the baker's final estimate was not the cake we discussed on the phone. 

    Is it possible that I might phone him back in three days and say, "We've had more people rsvp to the party than expected, so I will need the cake to feed 40"? Yes, it is possible...and if I do, I will pay him for the additional features/ingredients/labor/effort. But I do not want to commit, in advance, to paying him for features/ingredients/labor/effort I have not requested, with the promise that he will refund me if no changes are made (or issue me a partial refund if I make some of these changes and not others).

To your point: "Respectfully, you need to use the fixed-price contract model or pay a contractor hourly. Not do both." I thought I was using a fixed price model, until this freelancer's proposal came back with a different fixed price than the one we had agreed on during interview/negotiations. Once again, perhaps the confusion there was caused by referring to "hours" and "time" in my initial question.

 

TL:dr: You are correct that how long it takes a freelancer to create the product on a fixed price contract doesn't matter, as long as it meets the project requirements. My real concern here is not wanting to pay for features/ingredients/labor/effort that I have not asked for.

Moderator
Vladimir G Moderator Member Since: Oct 31, 2014
BEST ANSWER
4 of 5

Hi Mark,

 

Yes, you can choose to release either the full amount or a portion of Escrowed funds for a Milestone. The remaining amount will be kept in Escrow and held over for the next Milestone. By completing one Milestone, you can progress to the next one.

 

You can find more details about Upwork's Fixed-Price Protection program in this video and these Help articles: here and here.

Active Member
Mark R Member Since: Apr 7, 2016
5 of 5

Vladimir,

Thank you for those links.

 

That clears up my question about whether: 

  • I can release less than the full escrow amount of a milestone
  • and that any left over milestone escrow amounts are rolled over to teh next milestone.

 

Thank you

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