Hourly Jobs vs. Fixed Price Jobse_darrellj | Aug 22, 2012
One question we’re asked often is whether it’s best to work on jobs by the hour, or to set a fixed-price before the job begins. It’s a query we get from our freelancers and clients, regardless of whether they’re newbies or seasoned Elancers.
Although there’s no easy answer, here are some basic guidelines to follow:
If you need wiggle room, hourly makes sense.
The best thing about working hourly is it allows flexibility for changing requirements and scope. If you’re creating a brand new multi-media rich website from scratch, the road ahead is more than likely a wee bit uncertain. Variables can change as quickly as the weather, and when the work is hourly you’re both able to adjust on-the-fly.
Hourly is also best for ongoing projects. If you’re creating a weekly newsletter, hiring a team hourly allows flexibility to alter scope as you go along. Some issues may only have five articles, while other issues have ten. If you want to keep the team together, but not over pay or under pay, there’s never a problem with hourly billing. Somewhat related to this, hourly billing also allows clients to auto-approve weekly timesheets and simplify the process. Of course this feature is available to anyone using hourly contractors, but it’s particularly nice for repeating invoices.
Keeping track of hourly projects is also simplified with Elance’s Work View™ feature. With the Tracker feature in Work View, clients can view screenshots of work in progress, as well as read contractor comments about the hours they’ve billed. Needless to say, an open line of communication is always a good thing. Another popular benefit of hourly billing, for both contractors and clients, is that jobs can get started much faster – as in pretty-much instantly. There’s no need to map-out every detail of the project too greatly in advance, crossing every “t” and dotting every “i” before work begins.
Another advantage of hourly pricing is that for many new users, clients and freelancers alike, it’s often more comfortable starting out with a small hourly project to get the feet wet. Once people realize how smoothly the Elance platform works, then on the next project simply choose hourly or fixed-price by what makes the most sense.
If it’s etched in stone, fixed price makes sense.
Your best bet for jobs with a well-defined scope is fixed price. Let’s say you’re translating 200 Help Pages into French. Since each Help Page is approximately the same length, it’s fairly easy to guesstimate what the time demands are.
Naturally Elance gives you the ability to adjust the budget when things change (if the total count goes down to 100, or new pages have to be created from scratch in French?). So simply discuss the specifics the best you can, take the time to lay out everyone’s parameters in detail, and work out a reasonable figure.
One reason clients and contractors both like fixed-price is the Elance Escrow feature. Elance will hold the money and only release it when clients have reviewed and approved the work. And by pre-funding Escrow, contractors can also be assured the funds are there before they start work.
To strike a balance between hourly and fixed price, many Elancers choose the latter but include lots of milestones. This breaks up the large project into smaller tasks, allowing the freelancer to get paid when milestones are met.
Hopefully that answers your questions?
Again, the best form of compensation should be determined by the variables involved. As a general rule of thumb, when in doubt, choose hourly. This option seems to save time for everyone (no going back and forth), and keeps everyone cheerful. But the client and contractor should discuss things in advance. And remember, if you do go with fixed price you always have the option to switch to hourly mid-job. And vice versa, from fixed-price to hourly.
So in a nutshell, talk and see what seems right, then adjust if needed. Flexibility is built into the platform at every step.