Weighing Up-work Pay Methods: Hourly vs Flat Rate

One of the biggest debating points that you will have with yourself (and with fellow Upworkers if you get involved in the community) is how you will charge your clients. Upwork offer two methods: hourly rate using time logging software, and flat rate. There are advantages and disadvantages to both. In this post, I am not going to tell you what you should charge, but help you understand the best way you can charge your clients.

I started off preferring the hourly contract but now prefer flat rate. I will explain why at the bottom.

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Hourly Rate

New clients and new freelancers often prefer this for a number of reasons. It gives more protection to both parties. Until Upwork (or Odesk as it was then) switched to Escrow, it was the only way that wouldn’t have you tearing your hair out in frustration. Yet there are also disadvantages.

Advantages to Upwork Hourly Rate
  • It offers guaranteed payment as the client is billed at the end of your working week. You both have a period where you check your log and all is fine before payment clears.
  • For the client, it ensures the work is being done as it records activity by taking screen shots and recording key strokes. A contractor can’t simply turn it on, let it run and surf Facebook as intermittent screen shots will record this
  • Automatic billing means freelancers don’t have to wait for clients to release funds and clients don’t have to keep adding money into the pot. You can also set a maximum number of worked hours to ensure they don’t go over this
  • More flexibility with longer jobs, especially if a task takes longer than expected
  • There are fewer distractions when you know you are on the clock
  • Hourly rate is more suitable for when a contractor produces a large amount of content on a regular basis. It cuts down on administration for the client
  • If a client changes their mind halfway through, you simply log the hours. Some will argue over the value of changes when it is flat rate and the negotiation will start again, wasting time that you would rather spend earning money
Disadvantages  to Upwork Hourly Rate
  • It takes 10 days following the end of the log week to get the money paid into your account
  • There will be variation in how much you charge a client for the same task. A 500 word article will not always take an hour, it will sometimes take less so you will not be maximising your profit
  • You are capping your working week. The average work day is 8 hours, perhaps a little less. You will get less work done because you probably are not in a rush to get things finished faster

Flat Rate

You may struggle to get flat rate jobs until you have a few contracts under your belt. You may find you dislike flat rate jobs at the beginning because it doesn’t contribute to your experience rating. Some jobs require that contractors have a minimum number of hours for application.

Advantages  to Upwork Flat Rate
  • Flat rate offers you the flexibility to stop and start on tasks without having to worry about the time tracking software. You will get phone calls, urgent emails and Skype messages and Facebook will come a-calling
  • When a job takes less time to do, you are effectively earning more for the same amount of work and can get more done in the same time. Be sure not to be slapdash though
  • You don’t have to worry about the contract being put on hold when the work is sporadic. Flat rates are suitable for jobs where you might go months without work for a client and then they send you a lot at once
  • The client will know exactly what they will pay when you’ve negotiated the price
  • You can do the job in stages and request payment after each stage.
Disadvantages  to Upwork Flat Rate
  • Depending on how on the ball a client is, you may have to way for payment. You need to send a payment request upon completion – every time – and way for them to clear it. If they don’t, it will clear after something like two weeks
  • It used to be a nightmare, especially if clients refuse to add the payment upon contract allocation. Now they have to do so. You are more protected than you used to be (client and contractor) but hourly is still the safer option
  • It’s easy to miscalculate how long a job will take and undercharge the client. You will inevitably base your flat rate on how long a job will take you and use a base hourly rate. What happens if you come up against a snag and it takes longer? With the hourly rate they will have to pay you more. With a flat rate, unless they are super reasonable, they are unlikely to accept your request for more funds

What Should You Charge?

What and how you charge is up to you, but I will explain my preferences. For writing contracts, I prefer to charge a flat rate. I charge per word / 100 words. That way, the client knows exactly what they will pay and can even specify length or number of articles depending on their budget.

For proofreading or editing, I prefer the hourly rate. No two proofreading jobs are the same. Correcting the poor English of a non-native speaker will take longer than a quick spruce of a native speaker whose English is good, but could be better. I can usually edit between 1000 and 1500 words per hour. If a client insists on flat rate, I will cost based on expected amount of time. Sometimes it is longer than expected, sometimes shorter. I get it right most of the time but still prefer the flexibility of the hourly rate.

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