Should I offer to refund an upfront payment for a job I failed to complete?

Question

I work part time as a freelancer at odesk. Recently, I got a fixed price job of around 6 hours. I requested a 10% upfront payment for the job. However, after spending 1:30 hours trying to do the job, I figured out that I couldn't do it because it was too difficult. So, I politely told the client the same and sent him the refund. Note: It was not possible to determine the job difficulty level before starting it.

Now, I am just wondering what I should do in such cases in the future. What do professionals do in such cases?

A) Refund the upfront payment to the client because I didn't make progress in the job.

B) Refuse to refund because even though I failed I spent time doing the job.

Answer 1

In situations like yourself, refunding is something what every good contractor would do. If the client is good, then he could let you something to keep because you also spent time on the project. So YES, you did an honest and good thing. And 90 min of your time is not too much comparing the bad feedback he could have given you in case you refused to refund.

So the only time you should never refund is when you made a concrete product. For example, I also ask for a upfront and I use it to make detailed project specs. It takes me from 8 to 40 hours, depends on the project complexity. Sometimes, clients want to cancel the job after I made specs and in such cases I do not refund, since I spent my time and made something concrete. If an upfront sum is too large, then I return only the part above the value of my work.

Also in the future, if estimation will take 1 or 2 hours, you can do that without being chosen for the job. Some clients may write a bad feedback even thou you refunded them - they simply dislike the fact they lost time with you.

Answer 2

Well, I'm not a big professional with a lot of years of experience but I would have probably done the same thing as you did. Just think of it this way: you are the client and pay a freelancer money to do something. After some time he says he can't do it. I can see 2 major aspects that will affect the client:

1. The time spent waiting for you. Maybe he needs this finished in 1 week and after 4 days you say you can't do it. You can imagine the stress he goes through to get another freelancer to do this job and finish it, and all this in just 3 days.
2. The money spent on you and on the next freelancer. Think of the price that new freelancer will ask to finish this job faster, which will certainly be higher.

Answer 3

I only bill hourly, so my perspective is going to be a bit different. To start off, in your specific case, I would have probably done the same thing.

What's your reputation worth? You did spend some time, and there's no guarantee (that I'm aware of) on oDesk's fixed bid jobs - so you could have kept it. But what would that have cost you in reputation (not just with that client, but in general)? In your specific case, considering that oDesk's ratings are directly tied to the amount spent, it makes sense to refund (at least some) when the project failure falls on you (you increase the potential of positive feedback, while lessening the impact of any negative feedback on your rating).

What did the client get? In some cases, just knowing something isn't possible is a worthwhile outcome to the client. In this case, you seem to be saying that another freelancer could have completed it - it was just more than you were comfortable. So the only thing the client got was a better understanding of your abilities - and they shouldn't have to pay for that.* On the other hand, maybe I'm misunderstanding the situation, and the client asked for something that just may not be possible. If that's the case, and the client was aware of that possibility, there's less reason to refund - especially if they're not asking for it.

In cases like that, I generally let the client know I'm going to take a few hours to test their concept, and see if it's possible. That's certainly billable time, but the likelihood of failure is made clear.

However, with fixed big projects, you're selling the final product (and a product with parameters that someone else has mostly defined) - so it's harder to do that. Since I only sell my time, it's easier for clients to understand what they're paying for (but that's a topic of it's own).

[*This may sound harsh, I don't mean it to. You realized this at the right time, a much better time than when the project is supposed to be reaching completion.]