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Fixed Project vs Hourly Contract

Community Guru
Petra R Member Since: Aug 3, 2011
11 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$?


Nope,

You are as safe as you make yourself, by being super professional, doing great work, not overestimating your abilities, underpromising and overdelivering, and choosing your clients carefully.

 

Clients can dispute any amount, and if non-binding mediation is not successful, either you pay the $ 291 for arbitration, or there is no chance of getting the money. If you don't, the clients gets their money back.

 

That said, it took me 8 years to stumble into my very first dispute just recently, and in all those years and 250 contracts, I have never once not been paid in full (including that first and only dispute).

 

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

If the work has been proven to Upwork that it's the requested and done 100% as it was requested, I still need to pay that 291$ to look into the situation? What a fair system Smiley Very Happy


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

Noureldin Y wrote:

If the work has been proven to Upwork that it's the requested and done 100% as it was requested, I still need to pay that 291$ to look into the situation? What a fair system Smiley Very Happy


The only circumstance in which "proving to Upwork" anything at all is in the case of hourly work logged with the desktop tracker. In which case, there is no "proving" anyway, it's done in the system and can't be undone. In all other situations, UW is merely the escrow agent and facilitates communication, it makes no binding determinations.

 

Do yourself a huge favor: eliminate the notion of "fair" from your calculations. "Fairness" doesn't enter into it. The platform is what it is. Learn how it works, and then figure out how to make it work for your business.

Active Member
Maurice M Member Since: Sep 7, 2017
14 of 16

Some more guff on the subject.

 

Following a realisation that I was totally exposed some months ago, I opened up a discussion with an Upwork advisor. As follows...

 

How Upwork pays Fixed Price contracts
This from an Upwork advisor: “It shows that it is under Fixed Price contract. When this type of contract is being offered to freelancers please check first the amount that the client funded in escrow instead of the budget. The client may have stated $100 on the budget but just funded $15 on the escrow.

 

I replied... “So are you saying that the budget price is largely irrelevant? Is it the case that only the escrow amount can be relied on? If the client refused to pay more than the $40 in this particular contract would he be in the right or the wrong?”

 

Advisor: "Please understand that the budget will be for the entire project but the payment of your work is based on the satisfaction of your client. On your case it shows that you are on your second milestone. Payment was released to you for $40 on the first milestone and now the second milestone is funded for $20. If in case your client is not satisfied with your work he may only release $10 for the second milestone. There is also an option if he is satisfied to continue on the third milestone and fund additional payment for it."

 

Hmmm… so I think that means I am the mercy of the client, as much as the client is at my mercy.

 

Best regards,

Maurice

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

Maurice M wrote:

Some more guff on the subject.

 

Following a realisation that I was totally exposed some months ago, I opened up a discussion with an Upwork advisor. As follows...

 

How Upwork pays Fixed Price contracts
This from an Upwork advisor: “It shows that it is under Fixed Price contract. When this type of contract is being offered to freelancers please check first the amount that the client funded in escrow instead of the budget. The client may have stated $100 on the budget but just funded $15 on the escrow.

 

I replied... “So are you saying that the budget price is largely irrelevant? Is it the case that only the escrow amount can be relied on? If the client refused to pay more than the $40 in this particular contract would he be in the right or the wrong?”

 

Advisor: "Please understand that the budget will be for the entire project but the payment of your work is based on the satisfaction of your client. On your case it shows that you are on your second milestone. Payment was released to you for $40 on the first milestone and now the second milestone is funded for $20. If in case your client is not satisfied with your work he may only release $10 for the second milestone. There is also an option if he is satisfied to continue on the third milestone and fund additional payment for it."

 

Hmmm… so I think that means I am the mercy of the client, as much as the client is at my mercy.

 

Best regards,

Maurice


IMO it would be better all round if UW didn't extol its "payment protection" features because too many FLs and client take it at face value. In fact, the only situation in which payment protection is bullet-proof is hourly work logged via the tracker incorporating meaningful activity memos. (Which is not feasible for all kinds of work.) The client may manage not to pay UW but UW will pay the FL. With manual hourly projects, the risk is all on the FL. With fixed-price projects, there are numerous ways either party can get skinned.

 

All of this means that everybody's best protection is exactly the same as on any other platform and in the brick-and-mortar world: do a good job of vetting each other, understand your own role and execute it well, communicate effectively (in both directions), and operate from a place of honesty, integrity, and a genuine desire to find a win-win solution to every challenge.

 

UW facilitates introductions and processes payments. Beyond that, except for those working via the tracker and using it absolutely correctly, there are no guarantees. Which is fine, as long as everybody understands that.

Community Guru
Preston H Member Since: Nov 24, 2014
16 of 16

The description of Upwork's utility and limitations from Phyllis is excellent.

 

Misunderstanding these concepts causes problems for both freelancers and clients.

 

I feel bad when clients have a bad experience and learn that they can't just click a magic "refund" button and get all their money back if they didn't get precisely the wonderful app that they imagined and paid some money for. (for example)

 

And I feel bad or the freelancers who expect the presence of escrow funding to protect them... and then it really doesn't. There are a lot of ways that freelancers can get jammed up if a client wants to give them grief... whether they are using fixed-price OR hourly contracts.

 

I don't doubt that Upwork provides information about how their system works... But many freelancers and clients imagine something different in their minds.

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