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Hourly Versus Fixed-Price

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What are the differences between hourly and fixed-price jobs for buyers?
Buyers Hourly Fixed-Price
Advantages
  • Work diaries for verifying every hour billed is an hour worked.
  • Hiring just once and maintain the relationship as long as you'd like.
  • Integrated reporting and automated, weekly billing.
  • Flexible specifications and deliverables; targets can evolve.
  • Well-projected expenses (when scope is clear and adhered to).
  • Pay per deliverable (article, image, module, etc.).
  • Suitable for small, well-defined jobs.
Disadvantages
  • Should review work progress on a weekly schedule and file disputes only during the review period.
  • More management may be necessary to maintain budget constraints.
  • Not suitable for large, complicated jobs that may evolve.
  • Not integrated reporting or automated billing.
  • Must manage providers without the assistance of work diary visibility.
  • Reduced candidate pool because most experienced providers prefer guaranteed, hourly jobs.
  • No dispute policy.
You need to hire a web developer to revamp your website.
As an hourly job, you simply agree to a rate, set a weekly limit on hours and pay for whatever work you need done. Think of additional pages or modules you want added? No problem - just keep sending more work and paying as you go. If you run out of work, keep the developer 'on the bench' until the next time you need something.
As a fixed-price job, you'll need to negotiate exactly what you want done, how much you will pay and your criteria for payment. If anything changes, you'll have to renegotiate. When the job is complete, you send final payment, give each other feedback and go your separate ways.
You need to hire a graphic designer to create a logo.
This is one of our more common fixed-price jobs. But what happens when you suddenly decide you want that logo converted into a embroidery-friendly format for company t-shirts or need someone to help create a promotional flyer?
The fixed-price buyer needs to renegotiate and probably rehire the designer. The hourly buyer can seamlessly continue the existing relationship.
What are the differences between hourly and fixed-price jobs for providers?
Providers Hourly Fixed-Price
Advantages
  • Pay per deliverable is a strong performance incentive.
  • No need to log hours.
Disadvantages
  • Offline hours aren't guaranteed payment.
  • Subject to closer buyer scrutiny of work habits.
  • Earn the same amount of money whether you finish in more or less time than originally estimated.
  • Risk nonpayment because there's no guarantee.
  • No hours accrued in oDesk profile.
tags/REL_20091118 built on 2009/11/19 01:27