oDesk - Payment Methods and Mechanisms
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oDesk is a bit different than many of the big sites, because while it provides support for both fixed price and hourly projects, it emphasizes the latter. oDesk requires payment using its own site, providing a buyout option that is fairly expensive. It uses a special weekly payment schedule for hourly work, and imposes a security waiting period that is atypical of the industry. oDesk actively encourages the use of advance payments, and it offers more withdrawal methods than most of its competitors.
That’s the summary. Now, some details. :)
Like several of its competitors, oDesk supports both fixed price and hourly projects. However, it is much more weighted towards hourly work than most other sites, in terms of both the actual split of job postings, and the site’s features and policies.
oDesk currently has a roughly equal number of hourly and fixed price projects. As of the day I write this, there are 26,135 open projects on oDesk, of which 45% are fixed rate and 55% are hourly. That may not seem to indicate an overwhelming dominance of hourly projects over fixed rate ones, but you need to put this in context: 55% is a much higher percentage of hourly jobs than is found on most other large sites that support both compensation methods. For example, Elance has a roughly 80%/20% split between fixed rate and hourly projects. Some other sites have under 10% hourly projects, and some have none at all.
Again, if you’ve read much of this review of oDesk, none of this is a surprise: oDesk favors hourly jobs because this is what its “virtual office” marketing is designed around. oDesk makes no secret of this, flatly saying during the project posting process that “Most employers choose hourly”, and listing what it considers the advantages of the method. For example, its automated time tracking and billing systems, and payment guarantees for contractors, are only relevant to hourly work. And as if that weren’t enough, oDesk is the only major site with no form of escrow to facilitate fixed rate projects, which further discourages flat rate work.
oDesk requires that all payments for site projects be done indirectly, with the company acting as a middleman. This policy is in place both to facilitate features such as time tracking for hourly projects, and of course, to ensure that oDesk gets paid. It’s pretty standard for the industry.
oDesk’s period of exclusivity—the term during which it expects a cut of all transactions between a client and contractor—is three years. This is quite a bit longer than the usual one year, and frankly, strikes me as a bit of an overreach. Is it really reasonable to expect a client and contractor who find themselves on oDesk to use the site exclusively for three whole years?
In the event that a client and contractor want to move their work outside oDesk legitimately, the company does have a buyout provision, though it’s a bit confusing. The employer is required to pay the greater of the following three figures: $500; 15% of a “good faith estimate” of the total funds to be paid to the employee in the following one year period; or 52 times the average fees paid to oDesk for that contractor in the most recent four weeks in which such fees were paid. Phew! My guess is that this buyout provision is not used very often.
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