A Writer's Income: Hourly Vs. Fixed Rate

Creative professional freelancers such as artists and writers are likely to all agree that an income can be absolutely wonderful at times, at other times it can be the equivalent of slave wages, and still other times an income can be literally nonexistent. It's the price you pay for doing work you love, work that is rewarding in other ways.

The internet has thankfully made it possible for individuals to work from home, providing a service they specialize in. (The internet has also unfortunately increased the rate of competition, including competition willing to work for much less than you would even consider working for.) There are many websites available for providers to find such jobs. Popular sites including Elance and Get a Freelancer are the last websites I would ever recommend to a freelancer, because they expect you to pay to be a member and to be able to bid on jobs.

A firm rule of freelancing is to never pay to get paid.

One of the websites I would strongly recommend to a serious freelancer lookig for professional job opportunities is Odesk. I recommend this site because there is no fee to a provider for membership, to apply to jobs, or even to work. There is a 10% increase added to your rate, that is paid by the buyer, so there is a provid for Odesk as a 3rd party, but never paid by you.

Now Odesk is just one of the freelance job websites that offers wonderful services as a 3rd party, including dispute resolution and tracking of work performed when an assignment is taking place. More importantly, there are many jobs posted daily on Odesk, and membership is a great starting point for "newbies" looking to get started as a professional freelance service provider, as well as frequent work opportunities for existing professional freelancers.

On websites like this there are two different payment options and it helps to fully understand both of these. Every provider should have a preference, and while I am slightly bias towards my own preference I will try to explain the elements of both payment opportunities as open mindedly as possible.

Using Odesk as an example (my apologies, this is the website I use most frequently to find new work and secure ongoing clients) I will begin by discussing the hourly payment option.

The Pros and Cons of the Hourly Payment Option

Odesk has a downloadable tool called the Odesk team, that allows you to correspond with other workers on the same assignment, and to "clock in" and record time worked. Random screen shots are taken, giving the buyer proof that you were working during the time you were clocked in. This useful tool helps to prevent any disputes, and that is a big plus.

Pros

As just mentioned, the hourly payment gives you security. Unless a provider has good reason to believe you were not working (which would mean that you were not working) during the time you claimed to work, then you will recieve your payment as agreed upon.

You are in control of what you expect to be paid by the hour. You can charge 50 cents an hour or $50 an hour, and when you are hired for a job this is what you will be paid.

Cons

As previously mentioned, the Odesk team takes random screen shots of what you are doing on your computer. Now I don't know about you, but while working I still check emails. I lost a very big client once for having checked my email during an assignment, because I did not remove that "time block" from my reported hours of work. All I'm saying is that if you work on an assignment for a stretch of time, without doing anything other than the research/writing/etc that is related directly to that assignment, you shouldn't have a problem. Otherwise, any thing you do that is not directly work related can back fire and cost you more than you would like to risk.

Another downside to the hourly wage is that a freelance provider must set a competitive hourly rate against other freelancers, including foreigners. It puts a whole new meaning on "slave wages" when you have to compete against others willing to work for $3 an hour (or less.)

On the same note, having freedom to come up with your own hourly rate... how much you think your time is worth. You can't be too cocky, but if you are high quality with strong experience you really can't be placed in the "competitive wage" war.

Finally, and this is just word for word what I tell clients when convincing them to consider the fixed rate (my bias is shown) that as a creative professional, I feel the hourly wage belittles the work I do and all efforts I make to deliver quality work quickly and efficiently.

So that brings me to the (better) option.

The Pros and Cons of a Fixed Rate Payment Option

In this scenario, the Odesk Team can still be used to document work performed, but is not necessary. The biggest difference between the two is obvious. Instead of saying "I'll pay you $X for the hours you work on this assignment" the agreement is "I'll pay you $X for completing this assignment."

Pros

As mentioned earlier, I personally make every effort to shock and secure permanent clients by not only meeting, but greatly beating proposed dealines. In an hourly arrangement, I would lose a lot of money in doing so but when the assignment is entered into as a "whole"... there is often opportunity for a bonus if you can surprise a client with speedy delivery of exceptional content (or other service.)

The hourly rate is so darn restrictive, and it really does put more value on time than on creative energy. It's no secret that I am "anti system" and like to think "outside the box" but I do believe that hourly wages in all career opportunities is degrading. Time is not what is important, it is the quality. Yet my bias is showing again, so let us move on to the cons of the better option of payment for freelancers.

Cons

Given in the form of a scenario, let's say you take on an assignment to reconstruct a 20 page manual in a 2 week deadline. You are given the choice of $10/hour payment, or a flat pay of $500 (with a 10% deposit up front.) A bonus of $50 is offered for exceptional services (quality content delivered before the estimated due date.)

Based on your preferences, you are probably already sure which option you will take. Here in lies the "grass is greener."

Let's say you work hard and complete this assignment within 30 hours. Under the hourly option, you just lost $150 for working so quickly.

Or let's say the project is a bit harder than anticipated, and you need to put in extra research. Let's say you work a total of 60 hours on this assignment. Under the fixed rate, you have lost out on $150.

It could go either way. The biggest con with the fixed rate is not knowing how many hours you will be committing to an assignment, and if you would actually be making more money being paid by the hour.

Summary

Here, you have freedom to form your own summary but I will still give mine. Freedo is everything! Freedom to work on an assignment for 5 minutes, take a break to play a few addicitng games of Zen Gems on World Winner and then finish up the assignment. It could only take you a total of 20 minutes to write an article, and obviously the fixed rate option is a better solution. You get to play your games and pay your bills too!

A few things to understand: there is no mediation available for the fixed rate option. Work is not documented, and Odesk is a great way to find new jobs but if you are going to use the fixed rate option you are just as safe working directly (and saving your buyer the additional fee charged through Odesk as a 3rd party.)

New relationships with a buyer are always flexible regarding payment arrangements and other factors, but as you secure ongoing relationships with clients you will be more capable of "calling your own shots." A cardinal rule for new clients and the direct fixed rate... do not deliver any work without havng recieved your comfort level of a deposit. Until trust has been formed, you have to play it safe.