Upfront payment on fixed price jobs

Providers can request upfront payment during the fixed price job application process. Why would they do that? Why would a buyer agree to it? Here's a quick breakdown of the risks, benefits, process, and an alternative.

Risks:

• To Providers: Not all buyers are willing to give upfront payments. They are not mandatory, and the buyer may choose to dismiss your application just because you asked for it.
  
  
• To Buyers: Not all providers are worthy of upfront payments. You SHOULD NOT give upfront payment to providers UNLESS they have a strong, established work history on oDesk (or you already know and trust them personally). If a provider disappears during the assignment or otherwise fails to perform as expected, oDesk CANNOT recover your money once it has been withdrawn by the provider. If you have any doubts about the reliability, credibility, or trustworthiness of a provider DO NOT award them an upfront payment.
  
  

Benefits:

• To Providers: Upfront payment helps to mitigate the risk that a fixed price job otherwise poses. Because the oDesk payment guarantee does not apply to fixed price jobs, you may request partial payment upfront to help ensure that a buyer is trustworthy and not going to disappear without paying for the work. And if the buyer fails to make full payment at the end, at least the job was not a total loss.
  
  
• To Buyers: Upfront payment helps prove to the provider that you are trustworthy and not going to disappear without paying for the work. Many top-notch providers refuse to wait around until the completion of the assignment to find out if they will be paid. Upfront and milestone payments can help dissipate this appearance of 'working for free.' So you may need to make an upfront payment (think of it as a retainer) to get the best provider.
  
  

Process:

• A provider may specify a percentage of a fixed price job payment to be made upfront instead of at the completion of the project. In the example below, the provider has bid $100 and is requesting for 10% payment upfront ($10). The upfront payment percentage is always calculated off the provider's bid price, NOT the total oDesk Charge Amount. Generally speaking, 10% is a reasonable amount to request if the provider has a strong oDesk work history. Depending on the job and the budget, they may request more or less.
  
  
• When a buyer agrees to an upfront payment on a fixed price job the buyer's credit card is charged as soon as the provider is hired. The funds are made available to the provider 6 days after the buyer's payment has cleared (just like all other fixed price job payments).
  
  
• It is only appropriate for buyers to give upfront payment to providers with strong oDesk work histories and feedback scores, or individuals they know and trust.
  
  
• A buyer is never required to agree to an upfront payment. The buyer and provider should discuss the request during the interview process. Only the provider can change the requested amount of upfront payment.
  
  

Alternative to consider: Milestone Payments

• Milestone payments can be made instead of or in addition to upfront payments. Milestone payments are made on a fixed price job by the buyer in exchange for intermediate deliverables from the provider. These have essentially the same risks and benefits as upfront payments, except that the buyer would only make the payment in exchange for proof of progress on the job.
  
  
• For example, if the job is for 5 articles to be written with a total budget of $100, the buyer could make a payment of $20 each time an article is completed. A website project could be paid with milestones per page, data entry per line, coding per feature, etc.
  
  
• Milestone payments are not required, but are often appropriate. Although these payments are totally at the discretion of the buyer, we recommend that the amounts and their timing be discussed during the interview process.