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Fixed Project vs Hourly Contract

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Community Leader
Noureldin Y Member Since: Sep 7, 2019
1 of 16

I thought that working by fixed project is more secure than using the hourly system, until I saw this in freelancer profile :

 

"NOTE TO CLIENTS: I DO NOT DO FIXED-PRICE CONTRACTS USING UPWORK'S FIXED-PRICE SYSTEM. Upwork removed most protections for contractors with its new fixed price system so this is non-negotiable. HOWEVER, WE CAN AGREE TO A FIXED PRICE USING THE HOURLY SYSTEM TO BILL in that you can set an hourly cap on your end that will not allow the price to go past a certain point without your permission and action on your end and the system will not let me bill past this limit. In this situation, depending on our arrangement I can work until the job is done regardless of how many more hours past the cap it takes."

 

Can anyone explain the main differences in a direct way?


Marvelous.
Community Guru
Mark F Member Since: Jul 10, 2018
BEST ANSWER
2 of 16

Noureldin Y wrote:

I thought that working by fixed project is more secure than using the hourly system, until I saw this in freelancer profile :

 

"NOTE TO CLIENTS: I DO NOT DO FIXED-PRICE CONTRACTS USING UPWORK'S FIXED-PRICE SYSTEM. Upwork removed most protections for contractors with its new fixed price system so this is non-negotiable. HOWEVER, WE CAN AGREE TO A FIXED PRICE USING THE HOURLY SYSTEM TO BILL in that you can set an hourly cap on your end that will not allow the price to go past a certain point without your permission and action on your end and the system will not let me bill past this limit. In this situation, depending on our arrangement I can work until the job is done regardless of how many more hours past the cap it takes."

 

Can anyone explain the main differences in a direct way?


I think someone else can speak better to the insecurity of fixed price than I can.  My guess is that it has to do with the client's ability to enter into arbitration and if the job is worth less than $291.00 or really somewhat close to that then you end up with nothing or close to it even if you win.

 

But to speak to your second point I often give estimates for hourly work and even though the word is estimate nobody seems to know what that means and most clients think of this as actuals.  In the case of a client with a hard budget it essentially becomes a fixed priced project that is run hourly.  I don't think systematically they can prevent me from billing more hours than what is agreed on but if I do so I am just asking for trouble.

 

Again this goes to what a client expects and how you meet those expectations.

Community Guru
Mark F Member Since: Jul 10, 2018
3 of 16

Dude, I don't think I gave you a complete answer so you shouldn't have marked it as a solution.  You are a little quick on the trigger with that.  The problem is some people use that as an indicator if they should even bother looking further at this so you should definitely wait to assign that.

Community Guru
Phyllis G Member Since: Sep 8, 2016
4 of 16

Not sure what that person is on about.

 

The only situation in which payment protection is absolute is on an hourly contract with all hours logged through the desktop tracker and the FL enters meaningful activity memos as recommended. In that scenario, even if the client challenges or disputes the payment, UW will cover the gap and the FL will be paid.

 

On an hourly contract with manual hours, the client can dispute and will likely succeed. Therefore, if/when using manual hours it is critically important for the FL to be comfortable taking that risk, relying on their own skill and experience to determine that the client is trustworthy and professional.

 

Fixed-price contracts feel safer to a lot of people but the fact is, a client has up to 30 days after the final milestone is paid, to dispute the entire contract. If client and FL cannot agree, it goes to Mediation and an UW rep encourages them to find a compromise. If that fails, then either party can request Arbitration and pay a non-refundable $291 fee toward the cost of the outside arbitrator whose judgment will be binding. In that case, UW also pays $291 and the other party pays $291. Whoever wins arbitration gets the amount of money determined by the arbitrator. Nobody gets their $291 back. If one party requests arbitration and the other one does not agree to put up the fee, then the one that requested it gets their $291 back AND wins the dispute automatically. Obviously, arbitration is only worthwhile if there's more than $300 on the table. At no time does UW take any deciding role in settling a dispute. As the escrow agent, it would be illegal to do so. UW can only facilitate communication and encourage the parties to find a mutually acceptable solution.

 

Community Leader
Noureldin Y Member Since: Sep 7, 2019
5 of 16

That means I'm very safe with any fixed project less than 291$ because the client won't try to refund it to not pay that 291$? But if the task will cost more than that its recommended to move to hourly project?


Marvelous.
Community Guru
Phyllis G Member Since: Sep 8, 2016
6 of 16

Noureldin Y wrote:

That means I'm very safe with any fixed project less than 291$ because the client won't try to refund it to not pay that 291$? But if the task will cost more than that its recommended to move to hourly project?


No, that is not the case at all.

 

Anybody else want to give this a whirl?

Community Guru
Antun M Member Since: Jan 27, 2018
7 of 16

Phyllis G wrote:

Noureldin Y wrote:

That means I'm very safe with any fixed project less than 291$ because the client won't try to refund it to not pay that 291$? But if the task will cost more than that its recommended to move to hourly project?


No, that is not the case at all.

 

Anybody else want to give this a whirl?


I wanna jump in with this:

Client can get any amount back (fixed type project). 'Reversed by the client's bank' glitch in the system.

It's unlikely to happen.

Sure this is not what you had in mind; yet fun to complicate it a bit.

Community Leader
Noureldin Y Member Since: Sep 7, 2019
8 of 16

Now I got it, a refund through the bank that issued his Card, so how's that cannot be done if he paid the hourly project by the card also ?


Marvelous.
Community Leader
Noureldin Y Member Since: Sep 7, 2019
9 of 16

Can we say that that a new client may do that, but a client with a good history won't? Or nowadays nothing can be trusted?


Marvelous.
Community Guru
Kat C Member Since: Jul 11, 2016
10 of 16

Noureldin Y wrote:

That means I'm very safe with any fixed project less than 291$ because the client won't try to refund it to not pay that 291$? But if the task will cost more than that its recommended to move to hourly project?


That's not an assumption I'd recommend to any UW Freelancer. Could that factor make it less likely, hypothetically, it could. But, hypotheticals are just that...lol. Your client contract types depend on many factors based on both you and the client. I understand the aim of attaining some if-then rules for your client contracts. I only take on hourly contracts (for many reasons and I don't have time to share them here; suffice to state they are based on years of freelancing "practicum" and are relevant to how I do business -- but may not hold true for other freelancer niches or even other Flers in the same niche). 

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