Why you should avoid Fixed Priced, And use multiple platforms.

[#1]

Ok so, I have finished a project for a client and I have to pay him money!

Yes I get punished for finishing a project, thanks for upwork, fixed prices, milestones and Dispute system.

I accepted the project based on requirements and agreed on the price, my only mistake I did was providing milestone for feature delivery (which I delivered on time), while the client used this to try to take the source code of the finished project, with 50% payment, without approving any of the work, claiming that: 

"No, I dont want this last milestone it was your decision to finish it"

I went to Dispute and AAA with confidence that I have delivered a project on time.

The AAA (so called neutral) does not allow you to submit more than one file (unless you pay more)

does not provide any sensible reason for the Award, for me seemed like the arbitrator does not understand or read the case, he/she just decide to take one side and adopt all his claims (probably based on names?) , I now realized why other people consider it a "lottery process" instead of arbitration.

The arbitrator was very generous with the client so he did not just give him the escrow, he also made a decision that I should pay the client (money back).

Man who are you to decide about my money?

This is totally non sense, and now I dont know if my top-rated upwork profile worth this small amount of money I have to pay, I can take paying money but I do not take this amount of non sense.

My case is clear:

- When I deliver a project  client should either approve  it or request changes not asking for parts of it because this is software and everything is linked together.

- Imagine I did not deliver the whole project the client would say "this is late delivery" and if it was delivered he can say "no I don't want this delivered", this is so good platform for non serious client.

- Upwork agent agreed that a milestone does not change the contract to sub contracts for client to choose which part to take.

I believe, If you have talent you should success anywhere, so my advice is to invest on more than one platform, may be they all like each others in terms of disputing in favor of clients, but having multiple platforms will give you more freedom to switch. When the platform becomes a platform for losing money/time.

[#2]

Mostafa,

Some clients can and do take advantage of Upwork's rules - that is obvious from the many posts we see on this message board.

My advice to reducing your risk of loss on a fixed price project is this:

1) Never start work on a project until all milestones have been agreed with the client and clearly defined within the project page on Upwork.

2) Don't start work on any milestone until it has been fully funded and the client has released payment for all previous milestones. (I would like to see Upwork disallow funding on a milestone if all previous milestones have not been funded and payments on all prior milestones have not been released to the freelancer.)

3) Frontload as much of the cost of a project in the earliest milestones for a project. (Leave a relativvely small amount of the project's total value in the last milestone or two, to show your commitment to completing the project.)

4) Make the last milestone or two include work the client can't do without, so they can't get the bulk of your work in the earliet milestones and then close the project and finish the work themselves without paying you in full.

5) For each milestone, submit your work via the "Submit" button when the work for that milestone is substantially (90%?) finished, making it clear to the client that there are a couple of elements of the miletone you would like feedback on and (s)he can then release payment for the milestone. Never submit substantially finished work to the client via email or other channels.

It is difficult to make hard rules that work perfectly in every situation, so some of what I have listed above might not work for everyone. But it pays to think about how a dishonest client can misuse Upwork's necessary rules and protocols, so you can prevent at least some of their attempts to get your work for free.

Good luck.

[#3]

Mostafa:

I am very sorry that this happened to you.

But I appreciate the fact that you took your time to provide this first-hand account of your experience. This is an excellent example of some of the weaknesses within the Upwork system, particularly as they apply to fixed-price contracts.

[#4]

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This is an excellent example of some of the weaknesses within the Upwork system, particularly as they apply to fixed-price contracts.

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It is an excellent example of being presented with one of three sides... (some of the second side, as well as the client's history) can easily be found.

[#5]

Petra:

I completely agree with you that the original post in this thread is only presenting one side of the story.

For me, the fact these types of misunderstandings and disappointments can arise represents a weakness in the overall system. I'm not saying I have a solution. And I'm definitely not saying that one side or the other in this situation was completely "at fault" or "completely innocent."

The way I look at the current fixed-price contract model within Upwork is that it can be a very effective way to hire, and a very effective way to work as a freelancer. But it requires a degree of professionalism and trust from both sides.

That makes it a "more complicated" contract model than the hourly contract model.

[#6]

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Preston H wrote:

Petra:

For me, the fact these types of misunderstandings and disappointments can arise represents a weakness in the overall system. I'm not saying I have a solution.

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Frankly, sometimes I wonder if it wasn't all much easier back in "the good old days" where there was no Escrow and no funding and no arbitration and people just used common sense and communication and basic conflict resolution skills.

[#7]

Mostafa:

I don't doubt that you were frustrated by what happened.

Without referring to your case specifically, below is how I view fixed-price contracts on Upwork. This is how I approach and use Upwork fixed-price contracts, based on my understanding about how the system actually works. This is NOT how I think things "should work," and this is NOT how I think things are described in documentation or any legalese anywhere. This is how I think things actually are handled:

- A freelancer and client agree to a milestone.

- The milestone is funded in escrow.

- The freelancer does the task.

- The client releases payment for that task.

I regard the "budget" is irrelevent. I regard an initial description of the project as a whole as something that is informative, but not binding. I regard unfunded milestones as potentially interesting, but not binding.

If there are 10 milestones planned, and client wants to fund only one of them, then that is completely allowable. The freelancer should only work on funded milestones.

If there are 10 milestones planned, and the freelancer only wants to do one of them, then that is completely allowable. The client will only pay for the milestone tasks that the freelancer actually finishes, and may hire other people to work on the other milestones.

If I am reading things correctly, the freelancer in this situation considered the "original plan", with a whole set of milestones and payments, as something that constituted a "contract." His disappointment stems from not being paid the full amount that was discussed originally, because the client wanted to end things part-way through the process. Upwork ended up agreeing with the client.

(If my understanding of this is incorrect, then please feel free to correct me.)

So it appears that the original poster (the freelancer) had an expectation about how fixed-price contracts work that was different from how the client and Upwork itself view things.

[#8]

This doesn't make any sense because it destroys the Upwork contract itself , a Fixed price is not an estimation, It is a fixed value because based on it, the freelancer decide if the amount of work is worth it or not.

Attached is what the Upwork Contract says, it is self-explanatory.

I am not going to another dispute I just leave this here for real freelancers to learn from my experience if you guys don't mind.

Thanks

**Edited for Community Guidelines**

[#9]

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Mostafa A wrote:

Ok here is the story from all sides, the complete dispute message

Please read it and give your unbiased opinion,

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Having read through all of it I am not at all surprised with the outcome.

[#10]

Well, I actually quite see the client's side of this. The source code should be delivered and reviewed and then payment released.   It didn't seem like he had issues releasing the amount s in escrow previously so it doesn't seem to me like he was trying to scam you. 

Maybe the lesson here is to stipulate in the scope of work precisely when you release source code for each milestone and how much they get of the source code and when.  If you agree on that prior to accepting the contract, then there should not be any issue of this nature. 

[#11]

That was an interesting read and the stereotypical coder holding source code hostage.

OP post the arbitration conversation too!

[#12]

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Jennifer M wrote:

That was an interesting read and the stereotypical coder holding source code hostage.

OP post the arbitration conversation too!

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I also think from that conversation that the OP does not understand how a fixed price contract works. And I agree with his title: if you don't understand exactly all the ins and outs of a fixed price contract, do not set one up.  It will certainly bite you in the ass. 

[#13]

Well I can only understand it as a "contract" as upwork says:

"You accepted XXXXXXX's offer for a $xxxxxxx fixed-price project."

This  means I should deliver this requirements for this price, if it has any other meaning then this is just ambigiouty in the Fixed Price system.

[#14]

A fixed price project has a set total price and defined deliverables. On Upwork the client and freelancer agree on periodic milestones that allow the client to see that progress is being made and the freelancer to be paid as the project progresses, as measured by completion of all of the agreed milestones.. 

If either the client has no intention of paying for the entire project or the freelancer has no intention of completing all of the work required for the project, that is dishonest. Not a crime, not a violation of Upwork protocols, but nevertheless dishonest.

There can, of course, be legitimate reasons for either freelancer or client to cut a project short, but planning to do so from the beginning of the project is dishonest.

I wish Upwork would provide us with more information about clients who regularly pull the plug on projects before the agreed milestones have been paid in full. I'd be happy for clients to know how often I bail on clients, which is never.

[#15]

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Amanda L wrote:

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Jennifer M wrote:

That was an interesting read and the stereotypical coder holding source code hostage.

OP post the arbitration conversation too!

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I also think from that conversation that the OP does not understand how a fixed price contract works. And I agree with his title: if you don't understand exactly all the ins and outs of a fixed price contract, do not set one up.  It will certainly bite you in the ass. 

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Escrow projects really do require you to know the system inside and out to protect yourself while still staying within ToS. Also, knowing how to fight a dispute is important I think, and you have to set up escrow projects in a way that you can protect yourself. So yeah, I agree. They can be a pain and it's why I try my best to stick with hourly. But hourly I think is also for people with bigger budgets.

He was refusing to release source code though after the milestone was prematurely released by the client, so like the arbiter said the client acted in good faith and the freelancer shot himself in the foot. It seems the freelancer was arguing that he did more work than he should have for the milestone, but that's why you really should only get full escrow unless you can without any questions do a defined scope at a smaller amount.

[#16]

I think moderators deleted the link, well I dont see any wrong to share this conversation for other freelancers to learn weather I am wrong or right this is not a big deal.

[#17]

This job must have been a disaster if you have to give the client money back. Ouch.

[#18]

It is not about who has good faith, contracts are defined by terms not by good faith,

you want the source code of the finished project because you think releasing 50% of the value proved your good faith?.

like I said I will leave the link for real freelancers and since upwork doesn't like it on the community I will spread it by my way.

May be Upwork will listen to fix their Fixed Price system and force the everyone to respect the initial contract instead of making it ambigious and loose and allow a party to use milestones when he wants and use initial contract when necessary.

[#19]

I think this is a very valuable discussion, and I think the original poster's perspectives are worth thinking about.

He is certainly correct when he points out that there is ambiguity in the system.

By definition, there is ambiguity about how things work, because he thought that it worked one way, and others thought it worked another way.

Clearly there is ambiguity about what is meant by a "contract." Perhaps Upwork is using the word "project" in a place that a freelancer thinks a "contract" is being referred to. Perhaps Upwork is using the term "contract" loosely in some places, or applying a non-traditional meaning to the word.

Personally, when I set up a fixed-price contract, I create a central server where I do all of my work. I provide full root credentials to that server to the client, from the very beginning. I do all of my work there. There is never a time that the client does not have full access to all source code and files.

This way of working on fixed-price contracts may not appeal to all freelancers. But it is a viable way to work. If clients have concern about being able to access the source code and files that they have hired freelancers to produce, they should consider ONLY working with freelancers who will provide this type of access.

[#20]

It doesn't matter that the TOTAL value of a contract is $2500. The fact is, the contract was set up in 3 payables with 3 deliverables.  Contracts can be ended at any time, which is why setting them up with milestones  or the payables/deliverables, in this case 3, protects both the freelancer and the client. If the client decides to stop after 1 milestone/payable/deliverable, he is perfectly in his right to do so.   It doesn't mean that three milestones are 3 subcontracts. If the OP can't wrap his head around how milestones work and that  client can fund one milestone at a time and end the project after the first milestone, then he just shouldn't work fixed price. I really don't find there to be ambiguity. What I see is a freelancer WANTING fixed price to work in a way that it clearly does not. No matter how much we might want it to work a different way, it does not work that way. 

And yes, in business, good faith is a thing. But if you want to focus on terms: the terms were you deliver work and you get paid. You didn't want to do that. That was explained to you multiple times in the conversation you posted. I'm sorry you learned a hard lesson. Like I said, if negotiating a fixed price contract is too difficult then don't do them. You can find success with hourly just as well. I, myself, turned down a fixed price contract recently for the same reason - too much ambiguity in the milestones and deliverables. 

[#21]

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Mostafa A wrote:

It is not about who has good faith, contracts are defined by terms not by good faith,

you want the source code of the finished project because you think releasing 50% of the value proved your good faith?.

like I said I will leave the link for real freelancers and since upwork doesn't like it on the community I will spread it by my way.

May be Upwork will listen to fix their Fixed Price system and force the everyone to respect the initial contract instead of making it ambigious and loose and allow a party to use milestones when he wants and use initial contract when necessary.

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Good faith is the term the arbiter used. It's a term lawyers use too. In this case, the client released the milestone in good faith that you would also do what you agreed to do, which is give him the code and fix bugs. You did not, so that's why you lost.

[#22]

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Jennifer M wrote:Good faith is the term the arbiter used. It's a term lawyers use too. In this case, the client released the milestone in good faith that you would also do what you agreed to do, which is give him the code and fix bugs. You did not, so that's why you lost.

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Thank you for repeating the arbiter words, for me releasing 50% of the project value is not a proof of good or bad faith, especially when the project is 100% complete.

If we have to talk about faith then, I have never seen a client who is freaked out by having the work finished and says no I did not want it to finish

like I said the dispute is over it is not important who won or who lost, more important is to learn from it especially from freelancers who do software it is more relevant to them.

[#23]

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Mostafa A wrote:

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Thank you for repeating the arbiter words, for me releasing 50% of the project value is not a proof of good or bad faith, especially when the project is 100% complete.

If we have to talk about faith then, I have never seen a client who is freaked out by having the work finished and says no I did not want it to finish

like I said the dispute is over it is not important who won or who lost, more important is to learn from it especially from freelancers who do software it is more relevant to them.

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That's not what happened though. He released the milestone thinking you would give him the code and fix bugs. That's what you agreed to. You refused and he gave up trying and just cancelled. That's exactly why you lost. The person who needs to learn the lesson is you. You can't do that.

[#24]

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Jennifer M wrote:

That's not what happened though. He released the milestone thinking you would give him the code and fix bugs. That's what you agreed to. You refused and he gave up trying and just cancelled. That's exactly why you lost. The person who needs to learn the lesson is you. You can't do that.

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Thanks, it is amazing how you know what happened more than me, 

I will make it simple for you,

- The project has initial requirements broken down by me to 4 milestones.

- The 4 milestones were finished

- The client released 2 milestones + 1 milestone in escrow + 1 milestone not funded yet (debugging).

- The client wants the source code of the finished 4 milestones. Claiming he did not want the last 2 milestones

Thats what happened .. the following is how the Fixed Price system ambigiouty helps one side against another:

- I believe the client should approve or request changes for his project instead of asking for source code before approval.

- The client believe he can only take part of the project (2 milestones) and cancel the other two.

- The dispute think the client should take the milestone in escrow and I take the 2 milestones paid.

- The AAA thinks the client should take the amount in escrow, additionally I pay the last milestone to client.

Hope it is more clear

[#25]

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Mostafa A wrote:

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Jennifer M wrote:

That's not what happened though. He released the milestone thinking you would give him the code and fix bugs. That's what you agreed to. You refused and he gave up trying and just cancelled. That's exactly why you lost. The person who needs to learn the lesson is you. You can't do that.

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Thanks, it is amazing how you know what happened more than me, 

I will make it simple for you,

- The project has initial requirements broken down by me to 4 milestones.

- The 4 milestones were finished

- The client released 2 milestones + 1 milestone in escrow + 1 milestone not funded yet (debugging).

- The client wants the source code of the finished 4 milestones. Claiming he did not want the last 2 milestones

Thats what happened .. the following is how the Fixed Price system ambigiouty helps one side against another:

- I believe the client should approve or request changes for his project instead of asking for source code before approval.

- The client believe he can only take part of the project (2 milestones) and cancel the other two.

- The dispute think the client should take the milestone in escrow and I take the 2 milestones paid.

- The AAA thinks the client should take the amount in escrow, additionally I pay the last milestone to client.

Hope it is more clear

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lol this is hilarious considering this is not what the client said at all. The client clearly states that you won't hand over code for milestone two. The mediator even tells you that what you are doing is not ok.