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Hourly Jobs vs. Fixed Price Jobs on oDesk – Advantages and Disadvantages
Outsourcing your work as fixed price jobs or paying for hourly jobs on Odesk is highly dependent on the nature of your project.
There are advantages and disadvantages of outsourcing both types of work that you need to be aware of.
Advantages of outsourcing as an hourly job:
- Hourly paid jobs are well-regarded from your providers due to the secure payment system from oDesk.
- The hourly paid jobs are manageable for the employer since your provider logged hours by using the oDesk team room and you can review their work diaries on a regular basis.
- Many providers apply for hourly jobs online because they need a sustainable income they can count on. It takes time to hunt after numerous fixed price assignments – even if sometimes they can be more profitable.
Disadvantages an hourly wage jobs:
It is sometimes difficult to estimate the hourly wages for jobs done online if you are only habituated to “normal” offline work.
In my personal experience, proposing wages between 1 and 4$/hour will result in finding an appropriate provider for your project.
It also depends on the skillset needed and your budget. Of course, you need to have the right tactics for your hiring process, too.
Advantages of a fixed price projects:
- In fixed-price jobs you don’t really have to overview your provider regularly and you don’t need to really check on what they are doing.
They can surf internet of chat on Facebook as long as they want to, until and unless they deliver the required work by the deadline and after receiving the work you can review their work and then you can release the payment.
- In general, fixed time jobs will cost you less money as an employer: If you ask “I want this result for $50” the provider may be spending much more time than you paid him hourly for the same job.
Disadvantages of outsourcing as a fixed price project:
If the work is not satisfactory you will need to discuss how this will work out beforehand. So some providers agree to work for free until your satisfaction, otherwise they can say that I will not work on this anymore and you can give me bad feedback and just pay me what we decided and I am finished with your project.
It is a weakness of Odesk’s system that it does not guarantee payments on fixed price jobs.
In my personal opinion I see that I was less successful in hiring people on fixed time jobs than if you post hourly jobs.
Bottom line?
Providers like hourly paid jobs much more. They are guaranteed to be paid.
Hourly made money is there in their pockets. However, if you make a big project over $100 and you cancel it for whatever reason – then the provider ends up with nothing! So that is why providers don’t prefer it.
Note that there are also exceptions. From time to time, you’ll find providers specialized on fixed-price jobs that are not all small and easy to do.
You’ll have to use your own judgment to find out if the provider is the right person for you.
You’ll have two power tools at your fingertips:
- The interview during the hiring process.
- The feedback information and portfolios from past jobs.
Fixed Price vs Hourly Rate, Which One Is More Beneficial And Why?
Fixed price vs hourly rate is part-2 of the second interview from Stefan from Germany, who lives the Four Hour Work Week lifestyle in Thailand.
Click here to read part 1– What to Look For In a Virtual Assistant
Summary:
- Sometime providers do not work for exact hours they have committed at the time of hiring, often they work less than that.
- You should check the profile of your contractor to know that how many active jobs he is having at the same time.
- If you have an agreement of 10 hours with a provider and he is continuously failing to meet this limit, then this is a clear breach of the contract.
Start of the Interview:
Francis:
Okay. I have a question to you first. It seems to me that you are paying your worker based on a milestone agreement. In other words, you are paying him on a fixed price schedule. Did you ever employ someone with an hourly pay?
Stefan:
Yes.
Francis:
What was your experience with fixed price vs hourly rate?
Stefan:
What my experience was when I paid my workers hourly was they still did less often after a while. But to me, it seems like they don’t care if they earn less.
They just work less hours. And if I ask them, “What’s going on? Why are you not even working the 10 hours per week?”
Francis:
Yes.
Stefan:
You just work 4 hours per week. What’s going on? They will just say, “I couldn’t do more.”
Francis:
Didn’t you ever check out the profile of your worker in oDesk and see how many other actual contracts they had going on at the same time? Sometimes people work into several employers at the same time.
Stefan:
Yes.
Francis:
Was this perhaps the reason that they could not work more for you?
Stefan:
Can’t give you a feedback on that, I think, because I don’t know too much about that.
Francis:
Okay. Sometimes this happens and then of course you have to talk about this. And say, “Well if you work for 10 other people, it’s clear you cannot work 10 hours per week for me.”
Did you make an agreement beforehand that they have to work 10 hours a week for you?
Stefan:
When we had a contract for time, yes.
Francis:
Okay then, in my opinion, that’s a breach of the contract. And that in my opinion you can tell them square and fair, “Well, we had an agreement 10 hours per week, you’re not delivering. What would be the next step?”
Stefan:
Leaving the job. That’s my experience. That’s what the workers are doing.
Francis:
Okay. So clearly you have a problem setting up the initial trust.
Stefan:
Because just leaving the job seems easier. It seems like an easy escape, “Oh, there’s a problem. I just flee.” You know?
Continue reading part 3 – Virtual Assistants retention problems
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