Payment

After you discussed and confirmed specs together with the consultant you should figure out the project deadline and cost. There are two ways to agree about the price. The first one is to propose your own price to developer. You probably already composed the project budget and therefore you know how much you could invest in the development. The benefit of this way is that offshore programmers often frighten to detract clients by their rates and they are awaiting the initial steps from the client.

The second way is to find out consultant's rate. Some programmers prefer hourly rate while other prefer flat per-project fee. Be careful if the developer has low hourly rate. Many programmers have low hourly rate and compensate this by large amount of working hours, or including "add-ons" and "improvements" in the final bill. If the hourly rate is your case then ask him for the total expected working hours and ask to itemize the bill. Probably the fixed per-project fee is the best choice, but then be ready that the developer will require additional charge for the work that was not included in the original specs. Therefore you should include as much details as possible when you compose the specs.

It is quite possible that the developer will ask you for an advance before he starts. It is up to you, but this could be a good idea. You can treat this as a short (1-2 days) test term. Set the task for this time to the developer (for example, database structure creation), or ask him what task he is up to do first. Assign some small sum for its completion. By the test term results you could learn how well the developer can manage his time and do the work right in time. Next, if you show the results to your programmer friend (or post somewhere in the forum) you will find out how skilled and proficient the developer is.

The stage of test term is very important for the trusting the relationship between you. When the developer realizes your willing to pay then he ensures in your honesty; at the same time it is not a big risk for him to deliver the results of one day work. In the future he will be able to focus on the development itself and do not distract from the work thinking about payment. You at the same time can evaluate performance, working and professional skills of the consultant.

The question when to start working time accounting is quite contradictory. Consultations of the professional have its cost. You pay for the lawyer or physician for their time even if you just are asking questions. Consultant usually starts the work even before he receives the specs from you. He may research your problem, seek for the information in the Internet or prepare drafts for the new system. On the other hand offshore programmers almost never ask to pay out such kind of expenses, because it is unknown whether you and him will reach the agreement, and also there is no sense to transfer small amount of money by the Western Union (see below).

There are few ways to send money to the consultant. The first way is the systems like Western Union or MoneyGram. Because of the poor development of banks in the main offshore programming countries (India, Eastern Europe, Russia), most programmer prefer to use the W.U. The payment scheme is very simple - to send money you are required to know person's name and address. In the nearest W.U. office, you fill in the form and transfer the money. W.U. officer gives you the confirmation code (or PIN-code). You should send that code to the developer by e-mail (or tell by the phone). In order to receive money the developer needs to know your first and last name, address, expected amount and PIN-code. He receives the transfer in the nearest W.U. office in his town.

If you make payment with the W.U. be ready to pay more. Western Union charges a commission to sender for the money transfer. The more is the amount the lesser is the commission. For example, for $100 it is around $20. You may want to share the commission expenses with the developer.

Many programmers accept bank transfers and credit cards. In the latter case be ready that the consultant will require a fax or scan of your permission to charge your credit card for the certain amount.

To lower the financial risk you may want to keep money at the middlemen site. The example of such a site is www.smarterwork.com. The idea of its work is to provide a guarantees for both developer and client. The guarantee issued for the client is that you can refund your money if you are not satisfied with the developer's work. The guarantee for the developer is that once the completion of work is confirmed, the money is his.