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Bill's avatar
Bill H Community Member

Needless Complexity

Infrequent users of Upwork are faced with what the programmers believe is absolute simplicity to post a job. The problem is that few clients are Upwork programmers. Those who have not done freelancing previously are likely to post hourly jobs, regardless of the work. Hourly pays for input, Fixed Price pays for output. A number of entire categories are thus best for Fixed Price, such as Translation and Writing.

 

In almost all cases, Fixed Price contracts transfer risk of cost over-run from the client to the freelancer. Hourly contracts are fine for security guards, receptionists and cocktail servers. Work whose value depends upon intellectual capital would be best off contracted as fixed price. But, new or infrequent clients don't know this. Changing from an hourly job post to a fixed price one should be achievable by clicking on a button. Sadly, it requires deleting the hourly job post and creating a new fixed price job post. It is during this process that UW runs the greatest risk of a client and freelancer going off-platform for billing and payment.

 

This is not the first time this has been brought to UW's attention. Unfortunately, it won't be the last, because it will undoubtedly be prioritized behind thread count selection for doll furniture throw covers.

ACCEPTED SOLUTION
Douglas Michael's avatar
Douglas Michael M Community Member


Valeria K wrote:

Douglas Michael M wrote:

...contract type is available from a pull-down at any point prior to acceptance of a contract.


Hi Michael,

 

This is still very much true. The client can switch the type of the contract from hourly to fixed-price and vice versa when creating an offer and even after it's been sent but BEFORE it's accepted.

There is a video demo for it here


Thanks, Valeria!

View solution in original post

29 REPLIES 29
Preston's avatar
Preston H Community Member

re: "Hourly pays for input, Fixed Price pays for output."

 

Hourly contracts pay for time worked.

Which is a far simpler contract model than fixed-price.

 

Upwork is the current incarnation of a business that was essentially built on the hourly contract. The time-tracker is one of the hallmarks of the business.

 

For most types of work, clients will have a better outcome if they use hourly contracts. If the quality of work is important, then hourly contracts are particularly beneficial because fixed-price contracts entail simply completing a task, and have little incentive for freelancers to do more work to provide additional quality.

 

Not every client wants to do every type of work using hourly contracts. I understand that. But I regard it as a fair, equitable, simple contract model.

Bill's avatar
Bill H Community Member

The freelancer's incentive is milestone completion, which occurs when the client accepts the work, not when the freelancer submits it. Clients are free to refuse to fund escrow; in my case, I never require it of my clients.

 

Why something taking twelve hours to complete is worth more than the same result requiring ten hours is beyond my understanding. Hourly contracts are indeed more advantageous to freelancers, especially those who are slow or lazy. One can achieve far higher margins, though, on fixed price agreements, which is why I prefer them. With a fixed-price contract, risk of cost over-run is transferred to me, along with the benefit of cost savings.

John's avatar
John B Community Member

Preston is a massively successful Upwork consultant. His profile indicates stats that are superlative. His penchant for marketing himself is remarkable.  When he makes recommendations, I believe they are very good to listen to.

James Dean's avatar
James Dean J Community Member

I can't believe anyone would think that there is a "one size fits all" answer for this. Are some hourly employees possibly lazy and slow? I would say Yes. Are some hourly employees working very hard? I would also say Yes.

I also believe that some people that post jobs come very prepared and some post jobs that are one sentence with no details. When jobs have little input, I like hourly contracts. Those types of clients come back with change after change after change (which makes milestones hard to negotiate for a price/time). 
Sometimes when you ask for detail AFTER you've made a proposal they say things like "do your best" or "I trust you", but many times this just means they haven't thought about it...until they see something. 
TLDR. There is a "lazy" mode on both sides and not a particular type of contract is the best for every scenario.
Do I think the interface should be easier for you to switch between one mode and the other type? YES, but don't throw so many stones in your glass house when you are asking for something to improve your laziness.

Jennifer's avatar
Jennifer M Community Member


James Dean J wrote:

I can't believe anyone would think that there is a "one size fits all" answer for this. Are some hourly employees possibly lazy and slow? I would say Yes. Are some hourly employees working very hard? I would also say Yes.

I also believe that some people that post jobs come very prepared and some post jobs that are one sentence with no details. When jobs have little input, I like hourly contracts. Those types of clients come back with change after change after change (which makes milestones hard to negotiate for a price/time). 
Sometimes when you ask for detail AFTER you've made a proposal they say things like "do your best" or "I trust you", but many times this just means they haven't thought about it...until they see something. 
TLDR. There is a "lazy" mode on both sides and not a particular type of contract is the best for every scenario.
Do I think the interface should be easier for you to switch between one mode and the other type? YES, but don't throw so many stones in your glass house when you are asking for something to improve your laziness.


Thank you. I guess I just need to stick to reddit to describe what I'm thinking about the OP. 🤬🤬🤬🤬

Amanda's avatar
Amanda L Community Member


Jennifer M wrote:

James Dean J wrote:

I can't believe anyone would think that there is a "one size fits all" answer for this. Are some hourly employees possibly lazy and slow? I would say Yes. Are some hourly employees working very hard? I would also say Yes.

I also believe that some people that post jobs come very prepared and some post jobs that are one sentence with no details. When jobs have little input, I like hourly contracts. Those types of clients come back with change after change after change (which makes milestones hard to negotiate for a price/time). 
Sometimes when you ask for detail AFTER you've made a proposal they say things like "do your best" or "I trust you", but many times this just means they haven't thought about it...until they see something. 
TLDR. There is a "lazy" mode on both sides and not a particular type of contract is the best for every scenario.
Do I think the interface should be easier for you to switch between one mode and the other type? YES, but don't throw so many stones in your glass house when you are asking for something to improve your laziness.


Thank you. I guess I just need to stick to reddit to describe what I'm thinking about the OP. 🤬🤬🤬🤬


Part of me wants to annoint you my savior for introducing me to reddit, and part of me wants to crucify you. 

Jennifer's avatar
Jennifer M Community Member


Amanda L wrote:


Part of me wants to annoint you my savior for introducing me to reddit, and part of me wants to crucify you. 


lol it's such a time sink. OT: Tracker is the one thing that keeps me off of it while I work.

John's avatar
John B Community Member

Interesting note.  I agree with you mostly.  I love your biting writing style.  You have played in the big games outside, where people are not so very sensitive.

 

"Fixed price contracts transfer risk of cost-overrun...."  Many out here trend toward fixed fee contractors, which amazes me, but that is another topic. 

Ex-Booz.  I am a former partner in a 600-personal consultancy we built from 18.  I loved your note. It glowed with Big Three mindset.

It would perhaps be interesting to get to know one another.  I clearly would view you as my Snr. It would be an honor to get to know you. Perhaps you will send me a private email to establish a dialog. Also, sometimes I get consulting engagements that are a bit strong for my skills.  A relationship would allow me to bring you in as business strategy expert and I have no problem bringing in the massive 16" cannons when I know I have a rifle in comparison.

That related.   You understand Upwork is as enterprise-class SaaS/Big Data system as they come.  I hail from enterprise IT -- my thumb-in-the-wind estimate is that it would cost $250,000 or more to implement your suggestion.  That's just IT cost.  Retraining of all support agents, changes in help documentation -- even small tweaks have ripple effects in EIT that can be massive.

This is a fine forum for bringing attention to problems.  If this is truly a beehive you want to kick: write up a 1-pager.  Booz-class, and mention in the intro you are such  Get on a chat line with contractor support.  Ask the chat agent to receive your information sheet and forward it to the head of Upwork IT.  You can probably find his name in Google somewhere.  Just remember.  You are suggesting to that EVP he spend $250,000 and really upset the customer support director.

That was fun. I loved reading your note. I am your Jr. in professional consulting.  Seven years on Upwork, 72 projects, more than 2500 hours billed, 100% JSS, thirty four major deliverables in my portfolio. You would be my Jr. in terms of Upwork delivery.

I know a potential mentor and ally when I see one. I have skills to share in return.

Bill's avatar
Bill H Community Member

About ten years ago I knew my time was getting short. I offered to share with then-Elance my insight into a highly-lucrative freelancing market, large client spend-directing. This differs from strategic sourcing in that it focuses mostly on very expensive services. The market in the U.S. alone is more than $50B per year. I found everything from airline pilots and prison designers to attorneys and business executives, typically engaging a firm (e.g., Architectural & Engineering) to undertake a series of projects. As it often involves selecting a firm, it isn't quite head hunting.

 

I was told that they knew what they were doing, and it was easy for an outsider to come up with off-the-wall random ideas, but they were the experts, so my input was not welcome. I left that industry about a year later because it is a young person's game, and 40 hours a week on airplanes wasn't appealing. So, I see no point in putting together a memo. After all, any input from me would be just a random off-the-wall idea.

 

Sending you a PM.

John's avatar
John B Community Member

Understood.  I will not recommend a course of action to you again until it is requested.  I understand how to work with Snrs.

My only executive contact with this firm was writing for **edited for Community Guidelines**, the founder and then-CEO.  I had to promise to never, ever, ever list that on my profile as it would be both bad taste and a competitive advantage that is potentially overwhelming.

Over in the Coffee Break section, you will see some "tips of the week" I have written. I try to do one a week and I have three done so far.

One of them was recently reposted so you can find it close to the top of the threads. Or at least not on page 24, and I appreciate this reposting kindness from the moderators very much. (Thank you Valeria.)

I would love to discuss the postings with you and have you grade them.  Fortunately, you have the common sense not to tear into consultancy-class thought capital with katty remarks about an effort honestly made.  And perhaps you will join me in tip-of-the-week and let the EVP of IT (lol...) alone.  The firm is getting crushed in stock price (a penny a share recently) -- and you understand what that means in terms of spending money on IT.

I send my apologies for that pedantic suggestion. On the other hand, when the JSS first came out, I wrote a short paper on why it was goofing up. Offered to have a call with **edited for Community Guidelines**, their new VP of Trust and Safety.  He had his top systems-build director set up a conference call with me so they could gain some field opinions of what was not working.  Didn't cost anything, worked out great and when people from Booz or ex-CEOs speak, it is easy to figure out the smart people

They will be the one's listening. 

John's avatar
John B Community Member

As a note to the young consultants, and, for that matter, the old bears out here.  For those spending time on the platform making suggestions.  You now have another tactic.  Write up the suggestion, contact the contractor support group, provide it to them, ask them to forward it to IT.

And yes.  Not bragging - simply facts when facts are due.  When the JSS came out, something was obviously wrong with the math.  I came in at a ridiculous 67% JSS, with a string of 5-0s in tow.  Then just to make sure, I contacted each of my past 10 clients, and asked professionally if they would share the information on the private feedback they provided.  Which each consented to.

Something in the JSS math was not calculating correctly -- or it darn sure did not look like it.  So I contacted contractor support, offered this write up as a "case study" and did it without throwing a fit I was sitting there at 67% with a string of 5-0s and 10 perfect backend ratings.

I ended up having a conference call with the group lead of the JSS Big Math group, to cover the profile, the data I had collected, and a polite suggestion someone investigate it.  Not "for me" and not because this was about me.  Because this corporate EIT system perhaps had a bug and bugs that involve public ratings are... bad.

Two recalcs later, my JSS was above 90%. 

This is an example of how, when we think there is a problem, we research it, get ourselves positioned not to complain, but to try to add value to the organization, and detach emotions from the process.  Newcomers, you have massively experienced consultants hanging out on this board.  Add the project revenue of three of our top posters and myself - you are looking at more than $1million billed lifetime.

It is good to ask questions and listen very, very closely to the older bears who respond kindly, yet with clarity and force.  Their time is worth money and remember the rule.  One day, pass it on.

Will's avatar
Will L Community Member

Everybody sees Upwork through the lense of their own experience. Upwork’s designers and programmers can’t take all of those experiences into account, though they could no doubt do a better job of it.

 

All of what I do is “intellectual,” but I am neither a security guard, receptionist nor cocktail server. There is no way I would consider using fixed price arrangements for a significant number of my new clients, who often initially know little about what they want me to do for them or exactly what the final product of my work should be.

 

Hourly projects are most appropriate in any situation where scope creep is likely. An experienced translator can likely see an English language document and know how much work is required to translate it to Swahili, so a fixed price works (for reasonable clients). But a product designer who gets incomplete or changing specifications for her work would likely be better served with an hourly arrangement (which also might limit the ever-changing demands of that certain type of client who has problems making final decisions).

 

The third option is to charge a client such a high fixed price that the cost of potential scope creep is built in, but I’d guess that in the highly-competitive, cost-conscious world of Upwork not many freelancers have the luxury of taking this approach.

Wendy's avatar
Wendy C Community Member

Caveat: As a writer I can only speak for that category ... and not all sub-cats within it.

 

I work with both fixed and hourly contracts for a few reasons:

1. Client preference

2. Scope of work > includes research needed, brainstorming, marketing and branding segues, etc., etc.

3. Relationship / comfort zone between us.  Example:  I have a long-term client who can't stand the process of setting up new contracts on a regular basis; at their request (polite demand) we converted to hourly and everyone's happy.  

 

No, hourly won't work for everything and everyone all the time.  Neither will fixed.  It all depends on the job and the players,

Kim's avatar
Kim F Community Member


Will L wrote:

... Hourly projects are most appropriate in any situation where scope creep is likely ... The third option is to charge a client such a high fixed price that the cost of potential scope creep is built in


The simplest way of dealing with scope creep is to say "no".  The more profitable way is to say, "OK, that will cost you an additional $XXX." Despite rumours to the contrary, people tend to say things like "fine" and "thanks".

 

One reason I prefer fixed-price projects is that it's clear when they're going to come to an end, enabling me to schedule time in advance.  The scope creep thing isn't just about money. It's also about how you arrange your time and how you choose what you want to work on. 

Will's avatar
Will L Community Member

Kim,

 

If I expect scope creep in my projects, which I do for all but a few, I see no advantage in having to negotiate a new milestone with each instance of a client's increase in work required when an hourly arrangement takes care of the increase in my payment for services automatically.

 

And I don't want to say "no" to clients when they add new requirements to their projects. I'm here to provide services to clients who have certain goals. I'd guess that just saying "no" is not a brand-building or profit-maximizing approach for most freelancers on Upwork, but I'm certain it is not for me.

 

For me, additional time and effort spent in negotiations with a client for new milestones is a waste and unnecessary. I like to keep things simple and myself well-paid for the amount of my time each client actually requires for their project.

Kim's avatar
Kim F Community Member

The term "scope creep" is generally used pejoratively here, describing work additional to what you agreed but don't especially want to do.  But in any event, "no" is always a valid (and I still believe, the simplest) response. That obviously doesn't mean it has to be your response.

 

Saying "no" can indeed be a brand-building response if it means other commitments don't have to suffer because of an endlessly growing project. 

Will's avatar
Will L Community Member

I don't think "scope creep" is a negative term and don't use it pejoratively unless the creep in the originally-described scope of a project is not matched with a similar creep in a client's payments to me.

Christine's avatar
Christine A Community Member

Like Bill, I really wish that the project type didn't default to "hourly" - I would prefer it if clients needed to actively choose one or the other. I feel like I'm at a disadvantage when I bid on hourly projects, because my hourly rate is quite high relative to other freelancers in my category. But I think that I'm much better value than most, because there's no messing around - I'm very quick and efficient and my projects don't require multiple rounds of revisions. Sometimes I try to put an explanation to this effect in my proposals, but I worry that I come off sounding arrogant. It's much easier to apply to fixed price projects because then my price is probably more in line with the other bidders. 

 

And of course, the other major disadvantage of preferring fixed price projects is that the "Hours worked" number in your portfolio looks unimpressive, and you may be overlooked by clients who set "minimum hours" filters. My profile no doubt looks weird to some clients - 339 jobs worked, 388 hours worked - doesn't that make it look like I've spent only about an hour on each job? (And that I've been charging $258 an hour?)

 

Mary's avatar
Mary W Community Member

I recently received a fixed-price invitation.  I got the client to convert it to hourly and it came out way below his fixed price offer.  Worked well for me as he has more work for me.  And I already crossed the $500 barrier.  I'm pleased, he's pleased, it's all good.  (And I learned a new-to-me legal software program).

Douglas Michael's avatar
Douglas Michael M Community Member

Perhaps I'm missing something. Perhaps a mod can weigh in to clarify.

As I recall, after long and loud clamor from the community (including me), Upwork modified the offer form so that contract type is available from a pull-down at any point prior to acceptance of a contract. I virtually always accept a prospect's chosen and published contract type, assuming they know the norms of their business. (Upwork does not provide one of the basic norms of my business, so I have a spreadsheet to handle conversion calculations from either contract type.) On the rare occasion when contract type merits discussion, that discussion takes place before acceptance of the offer—after which there is indeed no recourse but to cancel the contract and make a new one.

Valeria's avatar
Valeria K Community Member


Douglas Michael M wrote:

...contract type is available from a pull-down at any point prior to acceptance of a contract.


Hi Michael,

 

This is still very much true. The client can switch the type of the contract from hourly to fixed-price and vice versa when creating an offer and even after it's been sent but BEFORE it's accepted.

There is a video demo for it here

~ Valeria
Upwork
Douglas Michael's avatar
Douglas Michael M Community Member


Valeria K wrote:

Douglas Michael M wrote:

...contract type is available from a pull-down at any point prior to acceptance of a contract.


Hi Michael,

 

This is still very much true. The client can switch the type of the contract from hourly to fixed-price and vice versa when creating an offer and even after it's been sent but BEFORE it's accepted.

There is a video demo for it here


Thanks, Valeria!

Preston's avatar
Preston H Community Member

I'm totally fine with the idea that for different types of work, different contract models may be preferable.

 

It might be useful to strip away all generic and philosophical considerations and talk about specifics. For development projects, I recommend project owners use hourly contracts if they want to achieve higher-quality results.

 

Simple example:

Client hires a freelance developer to add a dropdown menu so that users can select what type of pet they prefer: cats, dogs or birds.

 

The developer does that, and the contract is closed.

 

Later the client decides she wants to add "snakes" and "gerbils" as additional options.

So she goes into the back-end database to add these options to the pets table.

What the heck? There is no PETS table?!

 

Upon further investigation, she finds out that the pets dropdown menu was HARD CODED in the source code.

 

This is nuts, right? She thought there would be a pets table, but there's not. It turns out the freelancer thought it would take less time to hardcode the dropdown menu options into the source code.

 

So now the client needs to hire somebody to completely revise the system so that it isn't hard coded, and so that she can add or edit new pet options using an admin tool. This is causing all kinds of delays.

 

But the original freelancer did not do anything wrong. He completed the task he was hired to do.

 

With an hourly contract, he may well have asked the client if she wanted a pets table, and of course she would have said yes. He may have asked about other things, such as adding an admin tool to edit the pets list. And adding graphics illustrating each pet type, etc.

 

The freelancer also would have had an incentive to add helpful comments, use really clean, modular code, and whenever he turned in his work to the project manager, he would have seen that this was all high-quality source code which fit well into the overall project. Versus a fixed-price contract in which the developer MIGHT have done all these things. Or MIGHT have only fulfilled the exact specifications in the contract agreement.

 

An hourly contract does NOT GUARANTEE a high-quality result. An hourly contract can be abused by dishonest or incompetent freelancers. But if properly managed, hourly contracts allow for time to produce higher-quality work.

 

That IS NOT ALWAYS what the client wants.

Sometimes a client ONLY wants a quick, fast result and a known payment. There's nothing inherently wrong with that.


So I would never say that an hourly contract is the "only" way to work with freelance developers. I am simply pointing out one of the possible advantages.

Bill's avatar
Bill H Community Member

Preston just addressed a case where hourly is better for both sides, and actually uncovered the way to determine every part of a freelance job, not just whether it is hourly or fixed-price.

 

In Preston's example, he is asking questions. Lots of questions. In his example, the fictional freelancer asks the fictional client if she wants a pets table. I already know that Preston is too good to ask the question that way; he would ask "Do you want to be able to add more kinds of pets?" The functional question yields an answer to the hardcode or not issue.