Set rates and scope that stick: Getting agreements right from the start

Clear scope prevents disputes and keeps projects on track. The key principle: define scope first, then price based on that scope. Use milestones to break work into manageable pieces and change orders to handle scope changes fairly.

Starting with clear scope

Scope defines what the contractor will deliver. It's the foundation for everything else—pricing, timeline, risk, and expectations.

Start with deliverables, not hours. Don't think "I need 40 hours of design work." Think "I need 5 landing pages, each with 3 layout options, responsive for mobile and desktop, delivered as editable Figma files." The deliverables are what you're paying for, not the time spent.

Be specific about what's included. Example: "Design includes layout, typography, color scheme, and responsive optimization. Design does not include copywriting, user testing, or developer handoff."

State what's out of scope. This prevents scope creep. Example: "Out of scope: changes to brand guidelines, integration with existing systems, or ongoing maintenance." Being explicit about what you're not paying for prevents assumptions.

Include revision rounds. How many rounds of revisions are included? Example: "2 rounds of revisions included. Additional revisions billed at $100/hour." Clear revision policies prevent the "let me see one more version" conversation from spiraling.

Common scoping approaches:

Fixed deliverable scope: "Design 5 landing pages with 2 revision rounds each." Clear, specific, measurable. Best for projects with well-defined outputs.

Time-boxed scope: "20 hours of development work per week for 8 weeks." Good for work where the exact deliverable is less clear, but the time commitment is predictable.

Milestone-based scope: "Phase 1: Research & wireframes. Phase 2: Design. Phase 3: Handoff." Best for phased projects where each phase builds on the previous one.

Retainer scope: "Available 10 hours per week for ongoing support, prioritized by importance." Good for ongoing work where the exact tasks vary week to week.

The more specific your scope, the easier it is to price fairly and manage expectations.

Choosing the right rate model

Different rate structures work for different types of work. Choose the model that aligns incentives and reduces friction.

Hourly rates work well for ongoing, variable work where the scope isn't fixed. Pros: flexible, easy to adjust if scope changes. Cons: requires time tracking, makes budgets less predictable. Use hourly when you don't know exactly how much work is needed.

Fixed project fees work well for defined deliverables. Pros: predictable cost, aligns incentive on contractor delivering. Cons: scope creep risk if scope changes. Use fixed fees when deliverables are clear.

Milestone-based rates work well for phased projects. Pros: ties payment to progress, breaks up payment. Cons: requires clear milestone definition. Use milestones for longer projects with distinct phases.

Retainer rates work well for ongoing availability. Pros: predictable for both sides, contractor priorities you. Cons: you may not use full hours, underutilization costs. Use retainers when you need consistent availability.

Day rates work well for short-term intensive work. Pros: simple billing, fair for contractor. Cons: less granular than hourly. Use day rates for project-based bursts of work.

You can mix models. For example: fixed fee for initial project plus hourly rate for revisions. Or: retainer for base availability plus project fees for larger work. Document each arrangement clearly in separate statements of work.

Setting fair rates

Research typical rates for the role, location, and experience level. Rates vary significantly by:

Location: Contractors in New York cost more than those in Eastern Europe. This is market reality.

Experience: Senior contractors charge more than junior ones. Higher rates reflect expertise.

Urgency: Rush work costs more. Allowing 4 weeks costs less than demanding 1 week.

Scope: Complex work costs more than straightforward work.

Use freelance platforms (Upwork, Toptal, Fiverr) to research market rates. Talk to peers about what they pay. When you have a contractor proposal, assess whether it's fair for the scope, experience, and location.

If a rate seems high, either negotiate respectfully or adjust the scope. "That rate is outside our budget for this project. Can we reduce scope to fit our budget?" Or: "Can you help me understand how you arrived at this rate?" Understanding their reasoning helps you evaluate fairness.

If a contractor proposes a rate that's unusually low, flag it. It might indicate they're willing to work for less, or it might mean they're underestimating the work. Discuss scope to ensure mutual understanding.

Managing scope changes with change orders

Projects evolve. A good change order process handles scope changes without creating conflict.

When change requests come up, acknowledge them, assess impact, and propose a change order. Example: "The authentication feature wasn't in the original scope. Adding it will require 15 hours at $100/hour = $1,500. This pushes the delivery date from October 15 to October 25. Would you like to proceed?"

The change order should include:

• Description of the additional work
• Estimated hours or fixed fee for the change
• New timeline impact (if any)
• New total project cost
• Timeline to implement

Both parties should agree in writing. Email confirmation is fine: "I approve the change order for the authentication feature. Proceed with implementation." This creates a record.

Update milestones if needed. If the change adds a new phase or extends the timeline, adjust your milestone structure accordingly.

Why this matters: Clear change control protects both parties. Contractors get paid for extra work instead of doing it unpaid. You maintain budget visibility instead of discovering cost overruns at the end.

Real-world examples

Example 1: Design project

• Scope: Design 3 landing pages with 2 revision rounds each
• Rate: $4,500 fixed fee
• Milestones: 50% ($2,250) upfront, 50% ($2,250) on final delivery
• Timeline: 3 weeks
• Out of scope: copywriting, animation, ongoing maintenance

Example 2: Development retainer

• Scope: Available 20 hours per week for feature development and bug fixes
• Rate: $8,000 per month (equivalent to $100/hour)
• Terms: Billed monthly, 30-day notice to cancel
• Expectations: Prioritized response to bugs, no hard deadline on features

Example 3: Content writing

• Scope: 4 blog posts per month, 1,500 words each, SEO optimized
• Rate: $500 per post ($2,000 per month)
• Payment: Net 15 after delivery and approval
• Revisions: 1 revision round included, additional revisions at $50/hour
• Timeline: First drafts by the 20th, final by the 28th

Example 4: Mobile app development

• Scope:
  • Milestone 1: Design and prototype ($6,000)
  • Milestone 2: Core features ($10,000)
  • Milestone 3: Additional features ($8,000)
• Total: $24,000
• Timeline: 4 months
• Out of scope: backend infrastructure, user testing, marketing website

Handling common situations

What if the contractor proposes a rate that's higher than expected? Research market rates for the role and location. If the rate is fair for their experience and location, consider accepting it. If it's high, discuss scope adjustments or negotiate respectfully. Don't demand they lower their rate without reason—experienced contractors know their value.

What if scope creep happens anyway? Use a change order process. "I realize we keep adding small requests without officially changing scope. Let's create a change order to document the additional work and adjust the fee accordingly." Most contractors appreciate clear boundaries.

What if the contractor wants to change their rate mid-project? Honor the original rate for the current project. Discuss new rates for future work. If they insist on changing rates immediately, review your contract. A sustainable contractor relationship depends on honoring agreed terms.

What if you underestimated the scope? Acknowledge it and propose a change order for the additional work. "We didn't anticipate that the integration would be as complex as it is. This requires 12 additional hours. Can we agree on a change order for $1,200?" Contractors appreciate honesty.

Should the scope be very detailed or leave room for interpretation? Detailed enough to prevent misunderstandings, but not so rigid that it stifles collaboration. Include deliverables, revision rounds, timeline, and what's explicitly out of scope. Leave room for reasonable interpretation and discuss any ambiguities before work starts.

Documentation

Always document scope and rates:

Scope document. Create a statement of work that includes deliverables, revisions, timeline, payment schedule, and what's out of scope.

Rate agreement. Clearly state the rate, model (hourly, fixed, milestone, retainer), and payment terms.

Change orders. Document all scope changes in writing with updated cost and timeline.

Signed agreements. Both parties should sign or email confirmation of the scope and rate.

Store all documentation in one place for at least 7 years. This protects you if disputes arise and makes audits straightforward.

The bottom line

Clear scope and fair rates prevent disputes and keep projects on track. Start by defining what the contractor will deliver, not how many hours it will take. Choose a rate model that aligns incentives. Use change orders to handle scope changes fairly.

The investment in clear scoping and documentation prevents hours of disputes, confusion, and rework. Contractors appreciate knowing exactly what's expected and what they'll be paid. You appreciate knowing exactly what you're getting and what it will cost.

Get this right at the beginning. It's the foundation for everything that follows.