Fixed-Price Contracts- How it works and Best Practices

Upwork Fixed-Price Protection uses escrow to manage payments so you are only paying for work that you approve. This protects you and your freelancer since your freelancer can start work knowing funds are securely held in escrow and you can release funds to freelancer only when you approve the submitted work.

 

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Define and fund Milestones

  • Milestones are agreements to receive work and pay for it. You can define, submit, and pay for one milestone at a time, or plan out all milestones at the start of the project. Defining milestones clearly helps set expectations for your freelancer and prevent miscommunication. This is especially helpful for larger projects as it allows you and your freelancer to work together and earn each other’s trust before continuing on with the project.

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  • Although you can create multiple milestones at one time, you must ‘activate’ milestones individually. You must release the previously funded milestone before you can activate the next milestone.

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  • For each milestone you fund, we collect the escrow deposit to confirm your ability to pay, but releasing escrow is dependent on your satisfaction with your freelancer's work, as provided in the escrow instructions. Therefore, you should release funds from escrow only when you are satisfied with the work submitted by your freelancer.


Receive Work

  • Please discuss with your freelancer ahead of time how you'd like any files or other work product delivered to you.
  • Files can be sent using your project’s Message Room (recommended) or whatever third-party solutions you prefer. When your freelancer submits a milestone for your approval, it's important that you have some way to review their work.
  • More information on Messages can be found here.


Review & Approve a Milestone

  • You have 14 days from the most recent submission on a milestone to review and approve, or request changes. Approval releases the payment from escrow to your freelancer. You will be notified when your freelancer submits work.
  • If you fail to respond to a submission within 14 days, the escrowed funds are automatically released to your freelancer. Therefore, it is important to use the Request for Changes flow on the platform if you would like your freelancer to edit their submitted work.
  • Requesting changes will remove the review period until the freelancer submits their work on the milestone again.


Pay for Work

  • Release funds only when the work submitted is done and satisfactory. When you release funds from escrow, you are agreeing to pay the freelancer for their work. If you release funds from escrow before any work is submitted, you lose leverage over the work completed and may run into issues.
  • Your freelancer may also file an escrow dispute if you fail to release funds for a completed milestone. If you do not respond to the dispute in seven days, funds will release to freelancer.
  • If the job is not going as planned and you wish to get a refund from escrow, please see the Get an Escrow Refund on a Fixed Price Contract article for more information.
  • Escrow Protection won't cover milestone payments in excess of the amount in escrow, funds from unverified billing methods, or additional amounts that are discussed or promised between you and your freelancer.
  • See the Fixed-Price Escrow Instructions for more details, including our escrow Dispute Assistance Policy.


Adding a bonus or releasing more than funded milestone amount

If you choose to pay more than your deposit for extra work or as a bonus, the difference will be debited to your Upwork account immediately and your payment source will be charged at night.

Adding a bonus: For example, $10.00 has been funded for a milestone, but a $2.00 bonus is also given.

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The $10.00 in escrow will be released and the bonus amount will be charged at night (bonus, miscellaneous, and hourly payments are batched together and charged at night).

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Paying more than the funded amount on a milestone: For example, milestone was funded $10.00, but $13.00 was given

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Releasing less than the milestone amount

If you choose to pay less than the specified milestone or total amount, the excess funds will be held over for the next milestone.

For example, $15.00 has been funded for this milestone, but only $9.00 is released.

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Transaction history showing $15.00 funding request and a $9.00 release.

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The remaining $6.00 in escrow will fund the next milestone.

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Transaction history showing $4.00 funding request for a $10.00 milestone.

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Inactive Fixed-Price Contracts

Fixed-price contracts with money in escrow and no activity for 90 days will be considered dormant.  

Please see section 3 of the Fixed Price Escrow Instructions for more information on Dormant Contracts.


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