Step 2 to Becoming a Successful Online Freelancer: Get Paid

In this post, I will reveal my secret to getting paid on-time, every time. Interested? Read on!

There are two ways that you can get paid online through freelancer platforms - hourly contracts and fixed-price contracts.

Your choice depends on your personal working style. Do you prefer to work a fixed number of hours per day and then move on to other non-work activities? Or are you always working even when you are not "working"? In fields like design, a lot of time is spent on research, "inspiration", sketches, communicating ideas over the phone or email, and more.

If you can transition between "work" and "life" smoothly, then I recommend hourly contracts. If you don't know what that means, then fixed-price contracts might be better for you. I have taken both kinds of contracts as a freelancer and I explain more about each below.

Hourly Contracts

Ideal for long-term, ambiguous projects particularly if the client has a generous budget (a.k.a "9-to-5 job with the perks of being a freelancer") This situation used to be rare in the past but has become increasingly common as larger companies source experienced freelancers online. For example, some of the companies that hire on include Amazon, Unilever, Microsoft, Cisco, Panasonic, NBC and the list goes on.

The pros and cons of this type of contract hinge on the same crucial variable, the hourly rate.

With a low hourly rate, you may get a lot of work but you will be overwhelmed with no time to spare. With a high hourly rate, you will get fewer jobs however you can still earn a comfortable monthly income along with a lot of time to spare for yourself, your family and friends.

So how do you set your rate when you are in the early stages of freelancing? Before I continue, I would like to insert an interesting quote that I came across earlier;

You don’t get paid for the hour. You get paid for the value you bring to the hour.
— Jim Rohn, American entrepreneur, author and motivational speaker

Here is my 5-step quick-and-dirty version to determining your hourly rate:

  1. Calculate your weekly take-home income (after deducting taxes). Let's call this "I".
    For the sake of illustration, let's assume this is $800.
  2. Calculate the number of hours that you worked per week at your previous job (I use the word "previous" because I'm assuming that you have already quit your job).
    • If you had a full-time job, the number of hours that you worked per week is not 40. It's never 40, even if you worked at one of those places that made you clock-in and clock-out. If you "felt" like you were working 60 hours a week because the work was so intense, then use 60.
    • Then, add the number of hours that you spent on your commute to and back from work.
    • Then, add the number of hours that you spent getting ready for work (include the time you took to shower, brush, do your make-up, get dressed, breakfast, etc)
    • Let's call this final number "H". For this example, we will use 50 hours.
  3. Divide I by H. Call this R (In our example, $800 ÷ 50 = $16/hour)
  4. Divide R in half. (In our example, $16 ÷ 2 = $8/hour).
    • Why? Because clients prefer to hire freelancers with an established profile and you need to be ultra-competitive with your pricing to bag your first few jobs.
  5. That's your starting hourly rate online - $8/hour. Let's call this "S0"

This might be uncomfortable to digest at first. Especially if you don't have a job anymore. Since I cannot possibly say anything that can make you feel better about this, I would like to insert another quote that might:

If you’re going through hell, keep going.
— Winston Churchill, ex-Prime Minister of the United Kingdom

Now that you feel better, here's what I have to say.

There's nowhere else to go but UP! And here's how you can do it in a systematic way:

  1. Multiply S0 by 2. This should be your 1st goal. Let's call this S1. (In our example, this would be $16/hour)
  2. Multiple S0 by 4. This should be your 2nd goal. Let's call this S2. (In our example, this would be $32/hour)
  3. After 100 hours of working at rate S0, give yourself a 25% raise. Continue this process every 100 hours until you cross S1 and then S2.

It helps to use a good tool to track your time. I use Harvest which works on all my devices and even has a web-based version for all browsers.

It is useful to note that offers its own personal time tracker, the Upwork Work Diary (software that needs to be installed on your computer to track your work). Use of the Work Diary guarantees that you will be paid for your hours logged.

Depending on how hard you work at Getting Business, these goals can take between 6-12 months to achieve.

Fixed-Price Contracts

This is ideal for short-term projects with a detailed scope-of-work and a deadline. In my opinion, I believe that this is best-suited for expert freelancers (defined as 1000+ hours of freelancing).

The reason for this is that the pros and cons of this type of contract hinge on one crucial variable, experience.

Your experience in dealing with clients, structuring projects, breaking down milestones, negotiating revisions/updates and more. As well as your client's experience in working with freelancers and on similar projects.

Here are some tips that you can follow to make this process smoother:

  1. Most of the online platforms have a detailed profile on each client. This includes how much money they have spent on previous projects as well as feedback from freelancers they have hired in the past. Use this as a starting point to gather data on your prospective clients.
  2. Ask relevant questions in your application cover letter to further clarify the scope of work. An experienced client will respond.
  3. Look up the client's profile on LinkedIn and other professional networking sites. If possible, connect over Skype or Google Hangouts to get to know the client and more about the project.
  4. Break the project down into as many smaller milestones as you can.

For clients that you secure offline or through channels such as LinkedIn, you will need the following tools to get paid:

  1. An invoicing software - This will make you appear professional and organized. I use Zoho Invoices.
  2. A payment processor - The most commonly used one is PayPal, although I highly recommend 2Checkout. 2Checkout supports transactions in 196 countries through 8 payment methods, 26 currencies, and 15 languages. The best part however is their customer service and international fraud prevention, which I have personally tested.

I'm at the end of my post so its time to reveal my secret. How do I get paid on-time, every-time? It's simple.


This only works with fixed-price contracts. I spent about 18 months taking on hourly contracts as a freelancer before I moved on to fixed-price contracts. At that point in time, I had logged over 1000 hours across 100+ jobs with a 5-star rated profile and had earned the leverage to demand 100% advance payments online. There are a lot more intricacies to successfully structuring and completing fixed-price projects that I intend to cover in a separate "advanced" post in the future.

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