Learn the key differences between hourly and fixed-price contracts on Upwork to choose the best option for your project.
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What's the difference between hourly and fixed-price contracts?
When hiring on Upwork, you can choose between two main contract types: hourly and fixed-price. Here’s how they work and when you might want to use each.
Hourly contracts
With hourly contracts, you pay your freelancer by the hour. The minimum hourly rate is $3.00 USD, but you can negotiate the rate before starting the contract. Here's how it works:
Freelancers track their hours using a work diary
You can choose to allow manual time, tracked time only, or a mix of both
You can set a weekly limit on how many hours can be billed
You’re billed based on hours logged each week
This option is great for ongoing projects, tasks that need flexibility, or work where it’s hard to define exact deliverables upfront.
Fixed-price contracts
With fixed-price contracts, you pay your freelancer a set amount for a defined project or deliverable (we call them milestones). The minimum project rate is $5.00 USD, and pricing is fully negotiable.
You can break the project into milestones (or keep it as one)
You fund each milestone before work begins
Payments are released only once you approve the work
Milestones can be added, updated, or removed during the contract
Fixed-price is ideal for projects with clear goals, timelines, and deliverables.
How does billing work for hourly and fixed-price contracts?
Billing works differently depending on whether you're using an hourly or fixed-price contract. Here’s how payments are processed in each case, so you know what to expect.
Hourly contracts
With hourly contracts, billing happens on a weekly schedule:
Freelancers log hours throughout the week (Monday–Sunday, UTC time)
Logged hours are billed automatically every Monday
You have until Friday to review the hours and file a dispute if needed
If there’s no dispute, funds are released to the freelancer the following Wednesday
Fixed-price contracts
With fixed-price contracts, payments are tied to milestones or the full project:
You pre-fund each milestone in escrow before work begins
Once a milestone is submitted, you have 14 days to review and either approve the work or request changes
If you approve the work (or the 14-day window passes), funds are released to the freelancer
Not sure whether to start a fixed-price or hourly contract? Learn which payment model suits your needs and how to make the best choice.