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a_lipsey
Community Member

Fixed-Price Contracts - Curious how others in different fields manage milestones

I am hoping to get a conversation going. I know rants about the problems of fixed-price contacts have come up multiple times.

 

I almost exclusively work fixed-price. The nature of my work favors often  only 1 or 2 milestones, and, yes, I basically do unlimited revisions. I know  that's frowned upon  but let me explain why. For me, a client comes in and needs a grant proposal submitted. The grant proposal has a hard external deadline. I may have one milestone prior to the grant deadline that is a draft or fact-finding or outline, and then the final project milestone is due the day that I submit the grant. I send the final submission information and package with the Submit work button, and all is well.  The client and I have been going back and forth pretty much the whole course of the project, so I don't typically deal with a number of revisions because my job is to "take it to the finish line".  And usually the client is relying on my expertise, and their edits/feedback tend to only be  specific factual details about their organization. So for me, and it has worked well to do it this way, I tend to work with only 1-2 milestones, even for a large amount. Now, I vet organizations/clients extensively before accepting them as clients.  So I'm sure that has a lot to do with it. And I have a clear written scope of work that we both agree to before we begin the project. That scope includes deliverables and milestone payments. 

 

I'm curious how others who are successful with fixed-price contracts  structure these contracts.   So if you'd like to contribute your insight into how you structure them, and why you do it that way, perhaps we can build a best practice  thread here. There seem to be many misperceptions about how fixed-price works, and I think it can be a really valuable tool that  allows more creativity and freedom than hourly projects.

 

I'm also curious to see if I can learn from others who like these contracts to improve upon my milestones and scope creation. 

18 REPLIES 18
lysis10
Community Member

I like everything escrowed upfront so if it goes into mediation/arbitration, I can grab the money while still compromising. So like, with the last dispute I had, she escrowed $750 (IIRC) and I settled for $500. If I had done half, I'd have to try to force the full amount out of her. With full escrow, I feel like I can get money for my time while the client thinks they got a discount and "won" in a way.

 

Also, if I have full escrow, I can just do the whole job without waiting on anyone else. 

 

This is probably only possible due to the nature of what I do. I'm sure other industries don't have this luxury.

I have no concept of a "budget for a project."


I only think of "a fixed price for a specific task."

 

So for me, I provide a fixed-price quote for a specific task, and I do that task, and expect to get paid for that task.

 

I couldn't care less if the client decides to continue on with any other tasks after that task. That is up to the client.

 

My fixed-price quotes for individual tasks are not "front-loaded" due to anticipation that a client MIGHT bail on the project. Nor are they "preliminary" based on the assumption that after this first task, there will be others.

 

As for how to structure the wording of contracts to avoid "scope creep":

 

I don't think I put a lot of effort into that. I basically just start with small fixed-price contracts in order to "test" the client to see if she will work with the fixed-price contract model properly.

 

If I agree a small fixed-price contract with the client, and when I submit my work, she pays for the work without asking for extra work, then she essentially has "passed" the test, demonstrating that she uses the contract model properly.

 

If a client asks for extra/out-of-scope work, then she has shown she does not understand fixed-price contracts. So if she wants further work done, she would need to use an hourly contract.


Preston H wrote:

I have no concept of a "budget for a project."


I only think of "a fixed price for a specific task."

 

So for me, I provide a fixed-price quote for a specific task, and I do that task, and expect to get paid for that task.

 

I couldn't care less if the client decides to continue on with any other tasks after that task. That is up to the client.

 

My fixed-price quotes for individual tasks are not "front-loaded" due to anticipation that a client MIGHT bail on the project. Nor are they "preliminary" based on the assumption that after this first task, there will be others.


Preston, so you view each task as the project? That makes sense if you can break it up that way. For me the task is to submit a grant. So one milestone works just fine for me.  

 

Can you give an example of  a "project" that you broke into individual tasks? I know you've said elsewhere you do each task as an individual contract.  

 

Thanks!

re: "Can you give an example of a 'project' that you broke into individual tasks? I know you've said elsewhere you do each task as an individual contract."

 

I USUALLY do that. But not always.

Sometimes I do multi-milestone contracts.

 

But even when I do that, the way I bid on the tasks is the same: One price for one task.

 

Examples:

Most of the fixed-price contract work I do could be considered an example of this approach.


A classic example is a client who had a large, complex Excel spreadsheet file and he wanted a tool that could import all of it into a database.

 

He knew from the start that he wanted it all imported. But each tab (worksheet) within the file was quite complex. So I divided it into separate milestones for each worksheet. Whether that was done as a single contract or a multi-milestone contract, it didn't matter. The cost for each milestone and the description for each was the same.

Thank you, Preston. That makes a lot of sense. Within those tasks, for each tab/page in the worksheet, do you deliver any progress reports or drafts? Or simply deliver upon completion and get paid for the task/milestone?

re: "Within those tasks, for each tab/page in the worksheet, do you deliver any progress reports or drafts? Or simply deliver upon completion and get paid for the task/milestone?"


I might send notes with updates... But that is informal.

 

I don't send "drafts" in the sense that you are thinking of. That would not really apply to the work that I do, because I do all of my work on a shared server that the client has full access credentials for.

 

So all of the work that I do is continuously available to the client, from the beginning of the project.

These are fascinating details. There is a lot to unpack here
a_lipsey
Community Member


Jennifer M wrote:

I like everything escrowed upfront so if it goes into mediation/arbitration, I can grab the money while still compromising. So like, with the last dispute I had, she escrowed $750 (IIRC) and I settled for $500. If I had done half, I'd have to try to force the full amount out of her. With full escrow, I feel like I can get money for my time while the client thinks they got a discount and "won" in a way.

 

Also, if I have full escrow, I can just do the whole job without waiting on anyone else. 

 

This is probably only possible due to the nature of what I do. I'm sure other industries don't have this luxury.


I tend to do one milestone myself as well, for the same reason as I can't wait for everything to be escrowed. But I never thought of it in the way of protection as well. That's an interesting practice. 

a_lipsey
Community Member


Jennifer M wrote:

I like everything escrowed upfront so if it goes into mediation/arbitration, I can grab the money while still compromising. So like, with the last dispute I had, she escrowed $750 (IIRC) and I settled for $500. If I had done half, I'd have to try to force the full amount out of her. With full escrow, I feel like I can get money for my time while the client thinks they got a discount and "won" in a way.

 

Also, if I have full escrow, I can just do the whole job without waiting on anyone else. 

 

This is probably only possible due to the nature of what I do. I'm sure other industries don't have this luxury.


Jen, meant to ask, how do you handle revisions? Do you stipulate a certain number? Does it even come up for you?

 

It never comes up for me because I am basically revising until it goes into the online grants portal. So there's not a question that if something is wrong, I'll revise it. 

lysis10
Community Member


Amanda L wrote:


Jen, meant to ask, how do you handle revisions? Do you stipulate a certain number? Does it even come up for you?

 

It never comes up for me because I am basically revising until it goes into the online grants portal. So there's not a question that if something is wrong, I'll revise it. 


Sometimes I forget to specify number of revisions, but when I do I tell them 1 round. Even though I say 1, I'd do more if someone asked. I only do it to avoid unlimited revisions. I think your stuff is way more complex than mine. There really isn't a need for more than 1 round on something like 1000 word piece that talks about something. I very rarely have revisions, but I've had a few people push limits. I've had to say "ok, buddy, no more revisions" on three contracts that I can think of off the top of my head. 2 just kept asking anyway (lol), another went into dispute.

a_lipsey
Community Member


Jennifer M wrote:

Amanda L wrote:


Jen, meant to ask, how do you handle revisions? Do you stipulate a certain number? Does it even come up for you?

 

It never comes up for me because I am basically revising until it goes into the online grants portal. So there's not a question that if something is wrong, I'll revise it. 


Sometimes I forget to specify number of revisions, but when I do I tell them 1 round. Even though I say 1, I'd do more if someone asked. I only do it to avoid unlimited revisions. I think your stuff is way more complex than mine. There really isn't a need for more than 1 round on something like 1000 word piece that talks about something. I very rarely have revisions, but I've had a few people push limits. I've had to say "ok, buddy, no more revisions" on three contracts that I can think of off the top of my head. 2 just kept asking anyway (lol), another went into dispute.


I honestly don't even think of it as revisions. I mean, I suppose it is technically, but my first draft is never like, "I think this is done, tell me what you hate." For me it's "here's all the information we've figured out, here are the gaps, here are my ideas for filling those gaps, what do you think?" 

tlsanders
Community Member

The nature of my work is a bit different. I have three different scenarios:

 

-Ongoing, such as four blog posts per month, indefinitely: For these, I one milestone per month, regardless of how many posts are included, unless the client prefers otherwise. I had one ongoing client for a couple of years who wanted to open a new contract for every post.

 

-One off with multiple pieces (such as writing a whole new website from scratch): For these, I work in increasingly-large increments. For instance, if I were hired by a new client to write a 20-page website, I would do one milestone that was 2 pages. These would be priced higher than the other pages and come with unlimited revisions, since any back and forth on them would inform the rest of the project. Next, I'd do a milestone of 5ish pages with the standard single round of revisions and get any feedback on those. Assuming all was well at that point, all remaining pages would go into a single milestone. (I do not encourage clients to escrow for the full project or to set up all milestones at the beginning)

 

- One piece one-off, like a white paper: Depends on the length/depth/amount of research. Marketing white papers that might be 1500-2000 words and $500-700 I typically do as one milestone, with one round of revisions built in. A longer piece that requires significant research and has a price tag of $2,000+, I will usually break up.

I work with both hourly and fixed price contracts and all are costed out based on my estimated hours X my current hourly rate.  I explain this right up front so there is never any question as to why I'm over a client's preferred budget.

 

I brand and write a number of websites and my process is very similar toTiffany's.  "If hired by a new client to write a 20-page website, I would do one milestone that was 2 pages. These would be priced higher than the other pages and come with unlimited revisions, since any back and forth on them would inform the rest of the project. Next, I'd do a milestone of 5ish pages with the standard single round of revisions and get any feedback on those. Assuming all was well at that point, all remaining pages would go into a single milestone." I don't encourage clients to escrow the full project; however, they are appraised of all milestones at the beginning)

 

 

Let's try this again... I got halfway through this post and accidentally closed the tab.

 

I price primarily by the word, so most of my contracts are fixed-price. I do hourly contracts, but, with a couple of exceptions, I offer not-to-exceed prices, which essentially turns them into fixed-price contracts.

 

For true fixed-price contracts, I generally do one milestone per contract, unless there are related documents that I don't have at the start. For example, I have an ongoing contract where we've agreed on a price per word, and he opens a new milestone every time he has a new document. In another case I just finished, there were three related documents that were coming one at a time, so I just did new milestone proposals each time he sent one. For cases where there are more than one step, like a copyedit followed by a proofread of the final doc, I'll often still just do it as one combined milestone, especially for established clients, just to save on the paperwork. Jennifer's point of escrow protection is a good one, but it's never been a problem for me (knock on wood).

 

I do hourly contracts with not-to-exceed prices in some cases: First, if it's fairly large, I'll do an hourly contract with a cap around my fixed-price estimate. The main reason is it helps with cash flow on large projects. There's also the payment protection, but I'm fairly careful with choosing clients so that's not really a concern of mine. I also set things up this way where there's ongoing ad hoc work. In those cases, I'll cap the cost of each document at an agreed price per word. I use a little spreadsheet to tell me when to stop the clock. The main reason for handling these as hourly is to avoid the paperwork of doing milestones or contracts for each document.

 

In terms of revisions, I usually don't specify a limit, and I'm accommodating if the client wants me to have another look at something. I've only regretted that once.

Tiffany S wrote:
 
- One piece one-off, like a white paper: Depends on the length/depth/amount of research. Marketing white papers that might be 1500-2000 words and $500-700 I typically do as one milestone, with one round of revisions built in. A longer piece that requires significant research and has a price tag of $2,000+, I will usually break up.

This is most like my market, and most how I'm likely to structure fixed-cost contracts.
 
Almost all of my work lately has been hourly, but that's because I follow clients' preferences. Editorial tasks are stratified by complexity, and both $/hour and and time/page are quantified, so when I plug those figures into a spreadsheet along with my personal pace at the various levels, I can pull out hourly rates, per/page and per/word rates, whole-project estimates, and post-delivery cost reviews. In short, I spare both me and the client from fretting over rates and costs.

With an accurate whole-project estimate, which is reasonably attainable in my field, I can offer a price list for typical projects and be agnostic about the form of the contract.

I'm curious how translators use fixed-price? So far I don't think we've had one weigh in? 


Amanda L wrote:

I'm curious how translators use fixed-price? So far I don't think we've had one weigh in? 


Most often it is by charging per word.

 

 

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"Where darkness shines like dazzling light"   —William Ashbless
gilbert-phyllis
Community Member

I do both hourly and fixed-price. On full survey projects (design, questionnaire creation, build/test/administer/monitor, data cleaning & tabulation, analysis, reporting), most of the hours are in the back half but I need to front-load the fees in order to block time on the calendar (and forfeit other opportunities during that time). I also need for the client to feel sufficiently invested and engaged at the front end, because the outcome is only as good as the articulation of objectives and priorities at the beginning. (Clients with little or no experience using primary research often don't understand that, they think I can just wave my magic research wand and conjure the findings they need.) Off UW, I typically bill 30% up front, 40% when the survey comes out of the field, and 30% when I submit final deliverables. On UW, I try to structure milestones similarly. I'm sure I've lost jobs because of front-loaded milestones, but that's preferable to blocking out 2-3 weeks for analysis/report and having the client pull the plug early. (It's never happened but there's a first time for everything.) An advantage of working that way is that clients willing to engage me on those terms are typically ready to listen to my professional counsel and genuinely collaborate. By the time we get to the end, they're not likely to abuse me on revisions, and apt to listen if I determine final requests are out of scope.

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