What is the Best Way for Freelancers to Get Paid? Fixed or Hourly Freelance Rates?

20/03/2017 4 comments

Freelancers have two options to get paid – fixed or hourly freelance rates. Which one is better and why? In this post I will try to get deeper into the matter and attempt to help you make this decision next time you are negotiating with a new client. Just bear in mind that both fixed and hourly rates have their advantages and disadvantages, which sometimes depend on the type of freelancing work you do (for example, its different for freelance writers and freelance web designers), so don’t expect a clear cut winner here.

Between Fixed or Hourly Freelance Rates, Why You Should (or Shouldn’t) Pick Fixed Rates?

Fixed freelance rates

Let’s start by examining the fixed freelance rate here, otherwise known as “per project”. By agreeing to a fixed rate project, you essentially get paid a “lump sum” for a finished job. This can work both in your favor and against you.

Where a fixed rate can work against you is when the client decides to change the scope of work. This is what Brennan Dunn, author of Double Your Freelancing Rate sees as the biggest disadvantage of fixed priced jobs. As I already mentioned, a fixed rate means that the client will pay you a certain sum upon the completion of the project. But what if the client wants to add something and change the scope of the project? You still get paid the agreed sum when the project is finished, only it will now take longer than you’ve anticipated. This is why a fixed rate may not be the best option if you’re a freelance web designer. The client can add new requests and send you dozens of revisions until they are satisfied. Believe me, sometimes clients are not entirely sure themselves what they want from the start.

If you’re a content writer, this isn’t so much of a problem, as any revision the client will ask you is usually minor compared to what a web designer would have to do.

The best way to protect yourself against countless revisions is to have a set scope of work and detail how and when it can change. For example, you can state in the freelance contract that you will only do one or two quick revisions for free. The client will then have to pay extra for additional ones.

Fixed or Hourly Freelance Rates: What About Per Hour Payments?

Hourly freelance rates

An hourly rate seems to be a more secure option when it comes to getting paid. It usually doesn’t involve making mistakes when you prepare an estimate for a client. This is why many freelancers check it when a client asks them whether they would like fixed or hourly freelance rates. Typically, we often tend to overestimate (or underestimate sometimes) our own productivity, causing a lot of problems for us when it comes to completing freelance projects. For example, an estimated 3-week project may turn into a 4-week project.

Plus, you get more protection against scope of work changes, when  get paid by the hour and not a fixed rate. This gives you more control over how you spend your hours and allows you to be more time-effective.

However, keep in mind that, especially if you’re working fast, a short-term project (like writing a 500-word article), working per hour may not be the best option. Mainly because you may end up completing it in far less time than you anticipated.

Fixed or Hourly Freelance Rates on Upwork Explained

Since many freelancers are working on Upwork, I also thought to tackle the fixed or hourly freelance rates debate as it relates to the biggest freelance platform.

On Upwork, you are protected for both. So it’s really a matter of personal preference when choosing between fixed or hourly freelance rates. Under Upwork Fixed-Price Protection for fixed rate and for hourly contracts under Upwork Hourly Protection. This wasn’t the case during oDesk days, but now the client must make an escrow payment to Upwork. This doesn’t mean you’ll get paid automatically. The client first needs to release the money upon the completion of a milestone. After that, you need to wait for a 5-day security period to pass to finally get your money.

When working with hourly rates, you are guaranteed payment as long as you had the Upwork Team Managment app running. However, this is where it can get tricky. The client may choose to dispute your entire work based on the screenshots (the app takes screenshots every ten minutes). In other words, close all other windows so that the app only takes screenshots related to that client.

Payment for hourly jobs is on a weekly basis and you can get your money after a 5-day security period.

Another “problem” with hourly jobs on Upwork is that the client may restrict the number of hours you have available. So if you thought to “stretch” the project a little, you can toss that plan away.

What is your prefered payment method? Fixed or hourly freelance rates? Let me know why in the comments below.