In freelancing, there are two types of jobs. Pay per hour jobs or often called hourly jobs and pay per project jobs, often known as fixed price jobs. Both of these job types have their own pros and cons. In this article we have explained both advantages and disadvantages of hourly and fixed price jobs.
Pay Per Hour Job
Pay per hour job, as the name suggests, is the type of job where freelancer is paid per number of hours worked. Freelancer completes the task and sends the timesheet to the client. Client pays Total Number of Hours Worked x Hourly Rate. This approach has following advantages and disadvantages.
Advantages
  • Hourly job means you get paid for what you do. You don’t have to make an estimate about the time required to complete the task. You will only have to tell the client your hourly rate and rest is client’s headache.
  • Both client and freelancer can change the requirements at any time during the job.
  • Good for long term jobs where requirements are not well defined. Less risky because you are being paid on weekly basis.
Disadvantages
  • Pay per hour jobs can lead to privacy issues because often times client require you to install screen monitoring software so that he can monitor your work which leads to privacy concerns and also some people don’t like to be monitored while they are working.
  • You cannot increase your hourly  price for big clients because usually clients know each other and they can verify your rates from each other.
Pay Per Project
Pay per project jobs are jobs where client and freelancer agree at a fixed price for the whole project.
Advantages
  • No privacy issues as there is no screen monitoring involved.
  • You can easily increase or decrease the price depending upon the project.
Disadvantages
  • Not suitable for jobs with not well defined scope. For example if you are building a complex website, it is very difficult to make an estimate about the time and amount required to complete the project.
  • Unable to embrace changes during the project development. Requirements once decided are frozen in case of fixed price jobs.

Whether to choose fixed price payment option or hourly payment option depends upon the type of project. If the project is not well defined and requirements are ambiguous, hourly payment is best option but if project has well defined scope and milestones, pay per project is better.