In this endless digital transformation, freelancers are cultivating the businesses’ potential. This is why more and more companies are venturing into this type of setup. To outsource the majority of their tasks to freelancers is a bit risky. Yet, identifying the right payment approach for freelancers marks a big question. Hourly rate vs. fixed-rate, which of the two is best for your business?
Hourly Rate vs. Fixed-Rate, what does it mean?
These two payment methods are significant, depending on so many factors. These factors that every business owner should consider are:
- Type of project
- The complexity level of the workload
- The expertise and the freelancer’s experience
- The budget that you have allocated for the project
Paying your freelancer on an hourly basis implies flexibility. Assuming you have projects with unsure duration, like a long-term project. Since there are no fixed deliverables, paying per hour suits for continuous work. Since you don’t need to pay for Holidays, there will be less risk as you only pay the total hours rendered. You will not also need to pay for a vacation or sick leaves, which saves costs.
On top of that, using a time tracking tool will measure the freelancer’s productivity at an hourly rate.
This payment is ideal for projects with fixed deliverables. This means you have an exact timeframe in expecting the tasks. In this payment term, you will be paying an initial upfront fee upon commencement of the project. And you will be paying the remaining as soon as the freelancer delivers the tasks. Also, with a fixed-rate, it enables you to manage your budget effectively.
Advantages of the Hourly Projects and Fixed-Rate Projects
Hourly Projects Benefits
There are times when you have projects that have unexpected variables coming. Thus, there is flexibility when you pay on an hourly basis.
With an hourly rate, it will be an opportunity for the freelancer to have a firm connection with you. Clear communication plays a vital role. Thus, the moment a problem arises, the freelancer can update you immediately.
Because of the flexibility that an hourly project provides, retention opportunity follows. So, this type of project establishes a long-term relationship with your freelancer.
One of the benefits of having a fixed-rate project is meeting the set expectations. Before the project starts, you will be discussing terms with the freelancer. Also, highlighting the expected deliverables happen.
Short-term projects like graphic design dominate a fixed-rate pay since you already set the freelancer’s expected output and deadline. Yet, for bigger projects, it will need extra milestones later on.
Having a fixed-rate project enables you to know a new talent where you can leverage in your business. New talent means unique expertise that will benefit your business.
One excellent way of choosing a fixed-rate project is the ability to stay within budget. Since you have set the project’s budget upfront, you will ensure that the fund will suffice.
Hourly Rate vs. Fixed-Rate: Which Option is Best for your Business?
Lately, we have observed the uplifting of companies embracing remote workforce. Depending on which method you think suits your projects, prioritizing productivity and meeting goals must come first.
Now, are you ready to embrace freelancers on your team? Visit Surge, Sign up, and experience the BIG difference in your business.