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Re: How do I get paid for project parts costs

Active Member
Charlie P Member Since: May 10, 2018
11 of 19

Thank you for your advice.  I am very new to Upwork and I appreciate that you said it's a grat platform for doing business.  I will follow your advice and do my best not to get scammed.  If you have any links to information about scams and avoiding them, I would appreciate it.

So, please tell me if this sounds right:

Hypothetically: The labor for the project is $500 and the parts will cost $75.

1. They put 583.34 (500 + 75x1.112) into escrow
2. They set the first milestone as $83.34 for start of project (to order parts)
3. They set a second milestone as $250 for confirmation via pictures/video that the device works

4. They set a third milestone as $250 upon receipt of the finished device

5. They indicate that the 1st milestone has been met
6. After $75 is transferred to my account, I order the parts
7. After I have finished the device, I send them pictures/video

8. After they confirm the device works they agree the 2nd milestone has been met

9. I mail them the device

10. They agree that the third milestone has been met

11. If they need more changes, they add aditional milestones


Does this sound like the way we should do it?  Any modifications to this?  Thanks.



Active Member
Charlie P Member Since: May 10, 2018
12 of 19

What about the shipping charges?  I won't know the shipping to send them their equipent until the end of the job.  That means I cannot include them up front.


Community Guru
Nina K Member Since: Nov 29, 2017
13 of 19


Yes, the client is able to fund milestones and release them as the work is delivered. Also, note that the client can edit the amount they release and either release a smaller amount and keep the remainder in Escrow or release a larger amount. This may come useful if any additional expenses or changes occur. We'd suggest discussing these details directly with the client.

You can also check out this thread for tips on avoiding suspicious jobs and to learn how to stay safe on Upwork. I hope that helps!

Community Guru
Petra R Member Since: Aug 3, 2011
14 of 19

@Charlie P wrote:

Hypothetically: The labor for the project is $500 and the parts will cost $75.

1. They put 583.34 (500 + 75x1.112) into escrow

 No, the fee on the first $ 500 from any one client is 20% - not 10%. It drops to 10% after $ 500 has been earned from that particular client.


Active Member
Charlie P Member Since: May 10, 2018
15 of 19

Okay, I think I understand:

Because they are paying for parts before the labor (rather than after), the percentge will be 20%.  If I only charged them 10% I would not receive enough to buy the parts before assembly began.


Community Guru
Nina K Member Since: Nov 29, 2017
16 of 19

Hi Charlie,

In general, a Fixed-Price contract is best suited for the type of job where there is a defined deliverable that the client receives at the completion of the project. If you are building something for the client which they will receive at the end of the job, it may be a good idea to suggest setting up the contract as Fixed-Price, instead of an Hourly Contract.

Hourly Contracts work really well where there isn't a defined deliverable, like where you are doing consulting or customer service for a client for instance.

As others have mentioned, you can factor the full costs into your fee that you and your client will agree on so that you are not paying out of pocket for materials. 

You can read about the differences between the two kinds of contracts here.

Milestones can be added on to a Fixed-Price contract if/when the scope of the project expands, and you should only work against milestones that have been funded in escrow. So if you and the client establish multiple milestones that you will complete over time, only work on milestones that have been backed by funds in escrow.

Definitely make sure that you have been hired on a contract on Upwork before doing any work and you can also check out this thread which has information that is very helpful to know when starting out on the platform. Please feel free to follow up with any questions.

Community Guru
Kathy T Member Since: Jul 17, 2015
17 of 19

@Charlie P wrote:


Thanks for the warning Cheryl!

So, first I calculate the parts cost (plus the appropriate Upwork percentage) and ask them to modify the fixed rate job cost to add that in?  Then I ask them to award me the job before I make any parts purchases?


Yes. that's correct.but, First, my suggestion to you is to have this job as a fixed rate. if it's an hourly job and you enter manual hours, the client can dispute them and all those manual hours will be deleted.  Once this is a fixed rate job, and you're awarded the project, BEFORE you purchase the parts, make sure escrow is FULLY funded either for the entire job or for each milestone as they come up. Include the cost of purchasing the equipment  plus the percentage amounts.,


They say they might want to add new features later in the job.  Can it be extended or do they have to create a whole new project?  If the latter, does Upwork's percentage go back to 20% or does it remain at 10%.


The client can add a new milestone to the job. and fund it for whatever work etc you'll be doing. The client at a future date can also create a new contract. I'm pretty sure the percentage stays the same as long as you work for that specific client. I may be wrong, and if so, I hope someone will jump in and correct me.

You said that the parts cost won't be counted by the timer tracker so I won't be covered for that?  How do I correct that situation.


I would suggest making this a fixed cost job so that you can include those costs in your proposal. On hourly jobs, you would need to use the Tracker which takes screen shots of what you're doing. The tracker can't record purchases, or building, or research. Those hours that you do those things will be recorded in tracker as Manual hours, and the client can just dispute those hours which would then be deleted and you won't get paid for them. That's because there's no proof you were actually doing the work when you enter in manual hours, therefore the client doesn't have to pay for them if they don't want to. Remember, you need to protect yourself. There's a ton of scammers here, (not saying your client is one of them) but they are a stranger you met on the internet.

Sorry about the newbie questions, for some reason I cannot find the answers to these things in the Upwork help system.  Thanks again!


Community Guru
Phyllis G Member Since: Sep 8, 2016
18 of 19

Charlie, I get the distinct impression you are new to freelancing. If so, you are especially vulnerable here on UW until you find your feet. It's easy to get taken advantage of not only by outright scammers but also by clients who are also unfamiliar with the platform and/or disorganized and/or incompetent and/or less scrupulous than they should be.


My work doesn't involve making anything that can't be transmitted as a PDF. But if I were you, I would determine the cost of shipping the finished product via FedEx Ground or some other traceable method that can be estimated with some precision. I'd mark that up to cover UW's cut and build it into my fee. I would give the client a choice of having the parts shipped to me, or paying me to procure them -- so they'd pay cost plus a mark-up that covers UW's cut plus your handling costs. If they chose the latter option, then the first milestone would need to cover parts+mark-up AND be payable upon execution of the contract. Or--if it's possible for the client to pay a bonus at the beginning of the project instead of the end--it might be better to handle the parts as a bonus instead of a milestone.


In any case, good luck and be careful!

Community Guru
Cheryl K Member Since: Jul 16, 2015
19 of 19

Just to add to the comments from Phyliss, make sure you send that final product signature required so you have proof of delivery.


In addition, make sure that the description of the product deliverable describes exactly how the client expects it to perform. There should be no question as to whether or not the finished product meets specifications. In other words, make specifications specific!


We don't mean to scare you off, we've just seen too many nice people be taken advantage of by people that aren't so nice