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How do I get paid for project parts costs

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

 

I have searched the FAQs and forum but I have been unable to find the answer to this question.  I know many of you are programmers, in which case this question is not applicable, however the client has requested that I build a device for them.  This will incur some component costs before the project begins.

Please excuse me if I'm asking a dumb question, this will be my first project through Upwork.

 

What is the best way to bill for this?

 

Upwork takes 20% from any payment I receive, It doesn't seem fair that I should pay for part of the parts they will ultimately receive.

 

I could ask them to send the cost of the parts via PayPal outside of UpWork, but that doesn't sound fair to them (they would not receive any protection).

 

How do people usually deal with this situation?

 

I can't seem to find a way to contact technical support, since the contract has not yet begun.

 

Thanks.

 

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Moderator
Goran V Moderator Member Since: Mar 24, 2017
2 of 19

Hi Charlie,

Keep in mind that asking for payments outside of Upwork is a serious violation of our TOS. One of our team members will reach out to you and assist you further. Thank you!


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

You only have two options:

 

  1. Get the client to buy (and pay for) the parts for you and have them shipped to you.
  2. Build the price of the parts into your overall costs but yes, you'll pay the fee on the price.

Under NO circumstances must you accept any payment for any reason in any way outside the platform.

 

 

 

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

 

Thank you, I think I understand what you have said:

 

Either: I include the components cost in the first milestone and add an additional 20% so they pay for Upwork's fee.  And then I cannot place the parts order until the payment is received in my account (causing the client a delay).

 

Or: I give the Bill Of Materials to the client and ask them to place the orders and have them shipped to my address (doesn't this mean that they have no protection?).

 

Please let me know if I misunderstood the situation.

 

Thank you.

 

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Community Guru
Renante V Member Since: Feb 7, 2018
5 of 19

@Charlie P wrote:

Either: I include the components cost in the first milestone and add an additional 20% so they pay for Upwork's fee.


Just an advice so you don't lose money. Don't add 20%, add 25% instead.

 

Why?

 

Scenario 1: You add 20%

Say, the parts cost you $75.

You add 20%, which is $15, so you bill the client $90.

When client pays for the parts, Upwork will then take its 20% cut.

20% of $90 is $18.

So $90 less $18, you get $72.

You lost $3 right there.

 

Scenario 2: You add 25%

25% of $75 is $18.75.

So you bill $93.75

Upwork's cut (20% of $93.75) is $18.75.

$93.75 less $18.75 is $75.

You get exactly what you paid for the parts.

 

If you've earned more than $500 for the client (which means Upwork's fee is 10%) you can add 11.12%

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

 

Yes, now I feel dumb.  Of course percentages don't work the same way in both directions.

 

Thanks for pointing out my error.

 

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Community Guru
Preston H Member Since: Nov 24, 2014
7 of 19

re: "I could ask them to send the cost of the parts via PayPal outside of UpWork"

 

Charlie, if you did that, your Upwork account could be suspended or terminated permanently.

 

re: "How do people usually deal with this situation?"

 

I'm sorry you were not able to find information about this question. This has been discussed extensively here in the Forum. I would advise you to search for this topic in the Community Forum.

 

But as to how people deal with the situation, here is a short and simple answer:

 

- All payments go through Upwork

 

- There is an opton in the client-side interface to pay for expenses. The same fees apply when doing so

 

- As a freelancer, I can ask the client to reimburse me using that tool.

 

- OR as a freelancer, I can absorb the costs myself. I can charge enough in my fixed-rate quote or hourly rate that I can pay for the expenses and not ask the client to reimburse me.

 

- OR I can ask the client to purchase the needed items and send them to me. Most of what we're talking about are purely digital properties, anyway. So the client can purchase the software needed or the digitial content (photos, artwork, content, etc.) and send me the files or the license key.

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

Hey!

Dont buy anything yet. I don't see where you have been awarded a job. As a newbie you are ripe to be scammed.

Make sure you have been awarded job and money is in escrow (for fixed price) before you begin work. If you are building something, the time tracker protection won't cover you because it can't see you working at your shop building something.

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

 

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?

 

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%.

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.

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

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

Charlie:

Put all parts costs plus your fee and then add the Upwork fee and that is the amount they need to put in escrow if this is a fixed price job. Personally, I wouldn't do any type of fabrication job as an hourly job because the time tracker can't track your time and manual time isn't protected. If anyone reading this forum has experience doing fabrication work using the time tracker, please chime in and help Charlie so he doesn't get scammed.

 

If they want to add onto the job later, they can add a new milestone to the job or they can make it a new job. If they make it a new milestone, make sure you are paid for the first job before you start on the next part.

 

The Upwork fees change automatically once you cross the threshold to the next level and you will get an email letting you know. Don't change your costs calculations until you get that email saying fees for that client are reduced.

 

Be careful out there Charlie, Upwork is a great platform for connecting to new clients but it is also filled with scammers that prey on newbies like you. Just use caution until you have a feel for the place and how to protect yourself.