In short
- Fixed-price moves estimating risk to the freelancer; hourly keeps it with you.
- Known deliverable, stable scope: fixed-price.
- Moving scope or ongoing direction: hourly, with a weekly limit.
- Mixing both across phases is normal and often the honest answer.
This choice is usually made out of habit, and then the project argues with it. The useful way to decide is to ask who should carry the risk that the estimate is wrong, because that is the only thing the two models really trade.
What each model actually does
Under fixed-price, the freelancer takes the estimating risk. If the work takes longer than they thought, that is their problem, and they price accordingly. Under hourly, you take it: if the work takes longer, you pay for longer, and in exchange you can change your mind as you go.
| Fixed-price | Hourly | |
|---|---|---|
| Best for | A known deliverable with stable scope | Moving scope, ongoing direction, exploratory work |
| Risk of a bad estimate | Falls on the freelancer | Falls on the client |
| Changing your mind | Needs a new milestone | Absorbed as it happens |
| What you approve | A deliverable | Hours worked, in a weekly diary |
| Cost certainty | High | Bounded by the weekly hour limit |
| Admin | Low, per milestone | Weekly |
Choose fixed-price when
- You can describe the finished thing and would recognise it when it arrives.
- The inputs exist: designs, copy, access, decisions.
- The work splits into stages with something to show at the end of each.
- You want a number you can put in a budget.
Fixed-price carries one obligation that clients underestimate: you have to hold still. Every change is a renegotiation, because the price was quoted against a scope. That is not friction for its own sake, it is the mechanism keeping the price fixed.
Choose hourly when
- The work will be directed week to week rather than specified up front.
- You are fixing, investigating or maintaining, where the size is unknown until you look.
- You expect to change priorities mid-project.
- You want someone embedded in a team rather than delivering an artefact.
Hourly on Open Lance is not open-ended. A contract has an agreed weekly hour limit, the client funds that week in advance, the freelancer logs hours in a work diary, and the client approves at the end of the week. Approved hours are paid from that funding and anything unused goes back. The limit is what makes hourly safe to agree to: your exposure is a week at a time, not a blank cheque.
The mistake that causes most disputes
Fixing a price on work nobody can size yet. It feels safe for the client and it is not: the freelancer either pads the number heavily or takes the job at a price that only works if nothing surprises them, and one of you loses on that bet.
Weak
Fixed price to "fix the performance problems on our site".
Better
A small hourly investigation to find out what is slow and why, then a fixed price for the fixes once they are known.
Nobody can price a cause they have not found. Splitting it means the unknown part is paid by time and the known part is paid by outcome, which is where each model is actually strong. It also gives you a cheap exit if the answer turns out to be a rewrite.
Mixing both is normal
Most longer engagements use both across phases: hourly for discovery, fixed-price for the build, hourly again for maintenance. On Open Lance these are separate contracts with the same person, which keeps each phase honest about what it is.
Two other shapes exist. A Dedicated Hire (how they work) is a monthly engagement for steady capacity from one person, and a Drop-In is a packaged service at a set price, for work standard enough to sell that way.
How the money moves in each
Both run through escrow. On fixed-price you fund a milestone before that stage starts and release it when you approve the work. On hourly you fund the coming week up to the agreed limit, and approved diary hours are paid from it. Either way the freelancer can see the money is committed before they start, and you are not paying for work you have not seen.
Fees are the same in both: an escrow handling fee when you fund, and a one-time contract initiation fee, both added on top and shown before you confirm. How it works covers the flow and pricing has the current rates.
Which is cheaper?
Neither, reliably. Fixed-price includes a margin for the estimating risk the freelancer is taking. Hourly removes that margin but transfers the risk to you. On well-specified work fixed-price often ends up lower; on vague work it is usually the more expensive of the two, because it is priced for the worst case.
Can I switch from hourly to fixed-price mid-project?
Yes, and after a discovery phase it is often the right move. Close the hourly contract and start a fixed-price one now that the work can be described. Keep them separate rather than converting one into the other.
How do I stop hourly work running away?
Use the weekly hour limit, review the diary each week rather than at the end, and agree what the week is for before it starts. Hours are approved weekly, so a week that drifts is visible immediately instead of at the end of a month.
What happens to unused hourly funding?
It goes back to the client. You fund up to the weekly limit and pay for the hours you approve.