Switching from hourly to fixed price roles

[shibajyoti]

Dear Community.

I hope your staying safe.

I am facing this situation right now,  and I need expert suggestions.

As I am transitioning from hourly pay to fixed price contracts, how do I decide my price if the client ask for a monthly budget.

I found it intensely hard to compare with other professional in the same domain, as the rates fluctuate substantially based on factors such as qualification, expertise and background.

[abu_ansarul-mush]

I need suggestions also 

[prestonhunter]

re: "As I am transitioning from hourly pay to fixed price contracts, how do I decide my price if the client ask for a monthly budget. I found it intensely hard to compare with other professional in the same domain, as the rates fluctuate substantially based on factors such as qualification, expertise and background."

I can assure you that Upwork is not going to provide that information.

And I doubt you will find much support from experiened Upwork freelancers.

Nobody I know who is a successful freelancer here uses a monthly fixed-price budget.

It sounds like an extraordinarily bad idea.

[kbadeau]

If your workload is consistent each month you can make it work out just like hourly, or sometimes better. I certainly prefer hourly, but I'm not afraid of fixed rate with clients I know and trust.

I usually try telling them they're free to limit the amount of hours I'm approved to work weekly, since that can work in their favor, if I don't always bill all the allowable hours.

[prestonhunter]

To clarify:
I agree that fixed-price can work well for freelancers who know how to use it effectively.

My description of the original poster's plan as a bad idea wasn't because he wanted to use fixed-price, but because he wanted to use MONTHLY fixed-price.

If a freelancer chooses to use fixed-price, they should structure their contracts and milestones so that they can get paid EVERY DAY.

Working for an entirely month and then getting paid is a bad idea.

Compare these two scenarios:

"Francine" worked for a whole month for a montly fixed-price contract. Then the client decided not to pay Francine. Francine was very sad, because she worked for a whole month and didn't get paid.

"Juanita" worked for a few hours for a fixed-price milestone. Then the client decided not to pay Juanita. Juanita was annoyed, but she had only spent a few hours of time before realizing that this client can not be trusted.

Who would you rather be? Francine or Juanita?

If a freelancer UNDERSTANDS how to use fixed-price, and has really studied it and thought about it, then go for it. But not for a month-long milestone!

[shibajyoti]

What is the case is outside a freelancing platform, and somebody is seeking a full time role ? How would I manage that situation when hiring managers ask for Last and Expected CTC ?

[f53cd21c]

Outside a freelancing environment is an ordinary full time job of which the nature is that you work X amount of hours for X amount of remuneration.  It's not comparing apples and apples so its difficult to link the two, The very nature of freelancing, in my opinion, is to allow a conversation/agreement to take place where I am providing a service or skill at a rate that I (as the freelancer) feel is fair and within a timeframe that is fair too. If hiring managers are asking for last and expected  CTC of freelancers then it's always going to be difficult to answer. Please do share the outcome or feedback on this and wishing you only success!

[shibajyoti]

Thank for the support Justin. Thats what my exact query is !

[f53cd21c]

Thanks for replying honestly. I am new to Upwork as well and navigating pricing does seem to be a hot topic. Fixed pricing does seem limiting and communicating with clients sets an expectation that they will only pay the agreed fixed rate - is there perhaps a way to add a caveat for fixed price models that allows for large amounts of additional work to be billed for where applicable/from time to time? 

[273c0bdc]

I am starting my third business now after selling my two previous companies. They were both low seven-figure companies in the tech and consulting space. Our revenue models were fixed monthly amounts. 

I have never been a fan of hourly work, but I will try it now to figure out my processes with this new company.

My tips are to productize your services as much as possible.

Build out your packages as detailed as possible and explain everything you are going to do for them each month.

Focus on the benefits and the promises you will deliver for them - they know what they'll spend each month and what they will get in return - certainty and clear expectations is loved by business owners!

You can also offer different package offerings to fit different budgets.

This is the best way to build our your business because productizing your services allows you to create rinse and repeat systems for customers! Good luck!

[8467c28e]

Hi Shibajyoti,

Transitioning from hourly pay to fixed price contracts can indeed be challenging, especially when determining your rates. Here are some suggestions on how to decide your monthly budget in the context of fixed price contracts:

Calculate your hourly rate: First, calculate your desired hourly rate based on your qualifications, expertise, and background. You can also factor in your current hourly rate and the rates of other professionals in your domain.

Estimate the time required: Determine how many hours per month you expect to work on a typical project. This may require analyzing your past projects or discussing with your peers in the industry.

Calculate your monthly budget: Multiply your desired hourly rate by the estimated number of hours per month. This will give you a rough idea of your monthly budget.

Factor in project complexity: If the project is more complex or requires additional resources, you may need to adjust your budget accordingly. Be sure to communicate this clearly to your clients and explain the reasons behind any adjustments.

Conduct market research: Analyze the rates of other professionals in your domain and consider factors such as their qualifications, expertise, and background. This will help you better understand the market and ensure your rates are competitive.

Communicate with the client: It's crucial to maintain open communication with your clients. Be transparent about your pricing structure and be willing to negotiate if necessary. Make sure you and your client are on the same page before moving forward with the project.

Adjust as needed: As you gain more experience with fixed price contracts, you may need to adjust your rates based on feedback from clients, changes in the market, or your evolving skillset. Regularly review your pricing strategy to ensure it remains competitive and accurately reflects your value.

I hope these suggestions help you determine your monthly budget for fixed price contracts. Remember, the key is to be transparent with your clients and continuously reassess your pricing strategy as you gain more experience in your domain.

[shibajyoti]

Thank you so much for your reply.

What if the case is outside a freelancing platform, and somebody is seeking a full time job ? How to answer the hiring managers asking  for Last CTC ? Hourly rates cannot be converted to monthly scale everytime as the amount becomes massive compared to the median pay scale for some countries.

[prestonhunter]

Okay...but that's not an Upwork question at all. Why are you asking about that here?

[shibajyoti]

I am trying to present an example here. There's no guarantee Upwork wiill be my only source of income.

[8467c28e]

Shibajyoti,

When seeking a full-time job outside of a freelancing platform, the process of determining your salary expectations will differ slightly. Here are some tips to help you navigate the conversation with hiring managers, especially when discussing your last CTC (Cost to Company):

Research industry standards: Start by researching the typical salary range for the role you're applying for in your country or region. Websites such as Glassdoor, Payscale, or local job boards can provide valuable insights into the average pay for similar positions.

Evaluate your experience and qualifications: Consider your experience level, qualifications, and skillset in comparison to the average professional in your industry. This will help you determine where you should fall within the salary range.

Calculate a monthly salary expectation: If you have an hourly rate in mind, you can still use this as a starting point. Multiply your hourly rate by the typical number of working hours in a full-time position (usually around 160 hours per month). However, as you mentioned, you might need to adjust this figure to ensure it aligns with industry standards and regional pay scales.

Consider additional benefits and perks: When discussing CTC with hiring managers, take into account the entire compensation package, including benefits such as health insurance, retirement plans, and paid time off. These benefits can significantly impact your overall CTC, so it's essential to factor them into your expectations.

Be prepared to negotiate: When discussing your last CTC or salary expectations, be prepared to negotiate with the hiring manager. Highlight your skills, experiences, and accomplishments that make you a valuable candidate. Remember that it's okay to ask for a fair compensation package that reflects your worth.

Maintain transparency: Be honest about your previous CTC or current salary expectations when discussing with hiring managers. If you don't feel comfortable sharing the exact numbers, provide a range based on your research and qualifications. This will give you room to negotiate while maintaining transparency.