Elance - Payment Methods and Mechanisms
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Elance is fairly typical of most of the big sites when it comes to its compensation policies and how it handles payments. It allows both fixed rate and hourly projects, and is based nearly entirely around indirect payment using the Elance.com website. It supports a relatively modest number of disbursement options, allows users to withdraw money at will, and does not charge fees for most of these methods.
Here’s a few more details.
Elance has traditionally favored fixed rate projects over hourly jobs. I can remember that when I first started there in 2008, it seemed that nearly all jobs were fixed price. This is borne out by Elance’s historical project figures, which show about a 10:1 ratio of fixed to hourly projects (about 116,000 hourly out of 1.18 million total). Elance supports both fixed price (flat rate) and hourly projects. Fixed rate projects can be negotiated based on a single payment, or with a set of project milestones that allow the contractor to be paid over time. The latter option is most commonly used for longer-duration projects.
The proportion, however, has slowly been shifting towards a higher percentage of hourly projects. They are still in the minority, but the percentage is increasing. As I write this, Elance shows a total of 8,743 projects posted in the preceding week, of which 19.1% are hourly. This is likely due both to changes in the marketplace as well as Elance policy.
Fixed price projects are arranged into tiers by dollar value; this is used both to signal the value of the project to contractors and to dictate the number of connects required for bids. The price ranges are as follows:
The majority of projects fall into the “under $500” range; very few are over $5,000, and only a very small number fit into the higher ranges. It is also possible for clients to post a project without a budget.
As mentioned in the Elance project quality overview, the company imposes minimums on its projects. The minimum for fixed rate projects is $50, and the minimum rate for hourly projects is $5 per hour. Unfortunately, it is possible to bid an hourly job at $5 an hour for as little as just a single hour; this means an hourly project can have a total value of just $5, undercutting the fixed rate minimum by 90%.
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