Upwork Strategy

Fixed Price vs Hourly on Upwork: Which Should You Choose in 2025?

By Christoph
October 2025
14 min read

Choosing between fixed price and hourly contracts on Upwork can make or break your freelance career. One offers payment protection, the other doesn't. Here's everything you need to know to protect yourself and choose wisely.

The Critical Difference Nobody Tells You

When you're starting on Upwork, the choice between fixed price and hourly contracts seems simple. Fixed price for projects with clear scope, hourly for ongoing work, right?

Wrong. There's one massive difference that many freelancers learn the hard way: payment protection.

⚠️ Critical Warning:

Fixed price contracts have ZERO payment protection unless you use milestones correctly. Hourly contracts automatically protect you through Upwork's time tracker. This single fact should heavily influence your decision.

Hourly Contracts: Maximum Payment Protection

How Hourly Contracts Work

With hourly contracts, you install Upwork's time tracker software (Upwork Desktop App). This tool:

  • Takes random screenshots of your screen while you work
  • Tracks keyboard and mouse activity
  • Records the hours you log
  • Automatically bills the client weekly

✅ Payment Protection for Hourly Work

Here's the game-changer: If you log hours using the Upwork Desktop App with the "Work Diary" feature enabled, Upwork guarantees payment even if the client disputes the work or refuses to pay.

As long as your time shows sufficient keyboard/mouse activity (the tracker needs to record activity during at least 6 out of every 10 minutes), you get paid. Period.

Pros of Hourly Contracts

  • Automatic payment protection through time tracker
  • Weekly automatic billing - consistent cash flow
  • Great for unclear scope or evolving projects
  • Client can't refuse payment if you tracked time properly
  • Works well for ongoing, long-term relationships
  • You get paid for all time spent, including revisions

Cons of Hourly Contracts

  • Clients can set weekly limits - you can't exceed them without approval
  • Must use time tracker (screenshots can feel invasive)
  • Efficient workers earn less (finish faster = less pay)
  • Clients may micromanage your hours
  • Not ideal for specialized work where you provide high value quickly

💡 Pro Tip:

For beginners on Upwork, hourly contracts are generally safer. You're protected from non-payment, which is crucial when you're getting your first clients and building your reputation.

Fixed Price Contracts: High Risk, High Reward

How Fixed Price Contracts Work

With fixed price contracts, you agree on a total project price upfront. You submit deliverables, the client reviews them, and (hopefully) releases payment.

❌ NO Payment Protection

Here's what most freelancers don't realize: Fixed price contracts have ZERO automatic payment protection.

If a client decides not to pay after you've delivered the work, Upwork will NOT guarantee your payment. You'll have to:

  • Open a dispute
  • Provide evidence of completed work
  • Hope Upwork sides with you
  • Wait weeks or months for resolution

And even then, there's no guarantee you'll get paid.

The ONLY Way to Protect Yourself: Milestones

Milestones are escrow payments. The client funds a milestone before you start work. The money is held by Upwork in escrow and released when you deliver the milestone.

🔒 Golden Rule for Fixed Price Projects:

NEVER start work until the milestone is funded. If a client says "I'll fund it later" or "Just start and I'll pay when you're done," that's a massive red flag. Learn to spot these warning signs before accepting projects.

How to Structure Milestones Properly

Bad approach (risky):

  • $1,000 project with one milestone for $1,000
  • You complete all work and submit
  • Client disappears or asks for endless revisions
  • You're stuck with no leverage

Smart approach (protected):

  • Milestone 1 ($250): Research and planning phase
  • Milestone 2 ($250): Initial design/development
  • Milestone 3 ($300): Revision round and refinements
  • Milestone 4 ($200): Final delivery and handoff

This way, if a client becomes problematic after Milestone 2, you've already secured $500 and only invested time worth that amount.

Pros of Fixed Price Contracts

  • Earn based on value, not time - efficient work is rewarded
  • No time tracking or screenshots required
  • Clear scope and expectations upfront
  • Can charge premium rates for expertise
  • Great for specialized, high-value work
  • More flexibility in how you work

Cons of Fixed Price Contracts

  • NO payment protection without funded milestones
  • Scope creep can kill your hourly rate
  • Client can request unlimited revisions (unless contract specifies limits)
  • You bear all the risk if project takes longer than expected
  • Harder to get paid for additional work beyond original scope
  • Must wait for client to release milestones manually

When to Use Hourly vs Fixed Price

✅ Use Hourly When:

  • You're working with a new client with no Upwork history
  • The project scope is unclear or likely to change
  • It's ongoing work (virtual assistant, maintenance, support)
  • You're a beginner and want payment protection
  • The client has low ratings or payment issues in their history
  • You're doing research, consulting, or time-based work
  • The project involves multiple phases with unclear requirements

✅ Use Fixed Price When:

  • The scope is crystal clear with defined deliverables
  • You're working with a trusted client with excellent payment history
  • You can deliver high value quickly due to your expertise
  • The client agrees to fund milestones upfront
  • You have a detailed contract with revision limits
  • It's a short, one-off project (logo design, landing page, article)
  • You want to maximize earnings by working efficiently

❌ NEVER Use Fixed Price When:

  • The client refuses to fund milestones upfront
  • The client has zero payment history on Upwork
  • The scope is vague or "we'll figure it out as we go"
  • The client says "small project to test you" (often a scam)
  • The client wants all work delivered before any payment

Real-World Examples: What I Choose and Why

Scenario: New client wants a WordPress website built. Budget: $2,000. Client has 5-star rating but only 2 jobs completed.

My choice: Fixed price with 4 milestones ($500 each)

Why: Clear deliverable, I can work efficiently, and milestones protect me. If client becomes difficult after milestone 2, I've secured $1,000.

Scenario: Ongoing virtual assistant work, 20 hours/week. Client wants help with email management, scheduling, and admin tasks.

My choice: Hourly with weekly limit of 20 hours

Why: Scope will evolve, tasks vary week to week, and time tracker ensures I'm paid for every hour worked.

Scenario: Security audit for a web application. I'm highly specialized and can complete in 4 hours what takes others 20 hours. Budget: $1,500.

My choice: Fixed price with 2 milestones ($750 each)

Why: I'm getting paid for expertise and value, not time. Hourly would mean earning $375/hour, which clients might resist. Fixed price at $1,500 is easier to justify.

Scenario: Client wants a "simple" app built. Budget: $3,000. No detailed requirements. Client has 0 jobs on Upwork. Wants to pay after completion.

My choice: DECLINE or insist on hourly with weekly limit

Why: Massive red flags. Vague scope + new client + no upfront milestones = high risk of non-payment or endless scope creep. Not worth it.

Advanced Tips to Protect Yourself

1. Always Check Client Payment History

Before accepting ANY contract, review the client's profile:

  • How many jobs have they posted?
  • What's their payment verification status?
  • Do they have good reviews from other freelancers?
  • Have they completed projects or abandoned them?

2. Set Clear Revision Limits for Fixed Price

In your contract terms, explicitly state:

"This project includes up to 2 rounds of revisions. Additional revisions will be billed at $X per hour or require a new milestone."

3. Use Manual Time for Hourly Work You Can't Track

Some tasks (client meetings, phone calls) can't be tracked with the Desktop App. Upwork allows "manual time" entries, but these are NOT protected.

Best practice: Keep manual time under 10% of total hours and only with trusted clients.

4. Know When to Switch Contract Types

You can have multiple contracts with the same client. For example:

  • Hourly contract for ongoing support (10 hours/week)
  • Fixed price contract for specific feature projects

5. Calculate Your True Earnings

Remember Upwork's fees:

  • 20% fee on first $500 with a client
  • 10% fee on $500.01-$10,000
  • 5% fee on $10,000+

Factor this into your rates when deciding between hourly and fixed price.

Common Mistakes That Cost Freelancers Money

1

Starting Fixed Price Work Without Funded Milestones

This is the #1 reason freelancers don't get paid. Client promises to "fund it soon" and you start work. Then they disappear or refuse to pay. Never start without funded milestones.

2

Using Manual Time for Most Hourly Work

Manual time has zero protection. If you're logging most hours manually because you "don't like the tracker," you're exposing yourself to non-payment.

3

Not Defining Scope for Fixed Price Projects

"Build me a website" is not a scope. You need specific deliverables, page counts, features included/excluded, and revision limits. Otherwise, you'll work for free on endless changes.

4

Choosing Hourly for High-Value Specialized Work

If you're an expert who can solve in 2 hours what takes others 20 hours, hourly contracts limit your earnings. Fixed price rewards your expertise.

5

Accepting Fixed Price from Clients with Zero History

New clients + fixed price + no funded milestones = recipe for disaster. Always use hourly for first-time clients unless they fund full milestones upfront.

Quick Decision Framework

Ask yourself these questions:

Q: Is the scope 100% clear with defined deliverables?

✅ Yes → Consider Fixed Price | ❌ No → Use Hourly

Q: Is this a new client with limited Upwork history?

✅ Yes → Use Hourly | ❌ No → Either works

Q: Can you deliver high value quickly due to expertise?

✅ Yes → Use Fixed Price | ❌ No → Use Hourly

Q: Is the client willing to fund milestones upfront?

✅ Yes → Fixed Price is safe | ❌ No → Use Hourly or decline

Q: Is this ongoing work that will evolve over time?

✅ Yes → Use Hourly | ❌ No → Consider Fixed Price

Q: Are you a beginner still learning the platform?

✅ Yes → Use Hourly for safety | ❌ No → Either works

Final Thoughts: Protect Yourself First

The choice between fixed price and hourly isn't just about how you prefer to work—it's about protecting yourself from non-payment.

I've seen too many talented freelancers lose hundreds or thousands of dollars because they:

  • Chose fixed price without demanding funded milestones
  • Trusted a new client with vague promises
  • Delivered all work before getting paid
  • Didn't understand Upwork's payment protection rules

My general recommendation:

  • First job with a client: Always use hourly (unless they fund 100% of milestones upfront)
  • Ongoing work: Hourly
  • Well-defined projects with trusted clients: Fixed price with milestones
  • High-value specialized work: Fixed price if scope is crystal clear

Remember: Getting paid is more important than getting hired. Don't let the fear of losing a potential client push you into accepting risky payment terms. The right clients will respect your boundaries and fund milestones without hesitation.

📚 Related Reading:

Want to optimize your entire Upwork strategy? Check out our guide on how to research your niche and learn 10 profile mistakes that cost you clients.

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About Christoph

I'm a Top Rated Upwork freelancer with 100% Job Success Score and $100K+ in earnings. I've worked on both hourly and fixed price contracts, been scammed early in my career, and learned these lessons the hard way. Now I help other freelancers avoid the same mistakes and build successful, sustainable freelance businesses.

Learn more about my story → Get in touch →

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