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Safer, Cheaper, Smarter Software Buying
By Michael Sharp
Rent a Coder Buyer and Top 10 Coder
As a buyer (and coder), I always want to save money, which is what drew me to Rent A Coder (RAC) in the first place.  There’s a terrific opportunity to get top quality work here at rock bottom prices, something I find to be quite refreshing in today’s high cost technology market. Along with the deep discounts I’ve found here, by taking advantage of RAC’s “Safe Project Escrow” TM a prospective buyer just can’t lose!
However, there are some potential mistakes that can be made by both first-time as well as veteran buyers that could come back to haunt you – I’d like to review these with you and offer some suggestions.
Probably the most important concept to understand is that RAC does not ever charge a fee to buyers for their use of the service.  Why is this so important? Mainly, to avoid misunderstandings with coders about who pays RAC’s project fee and the final project cost.
When a coder signs on with RAC, they contractually agree to pay a percentage (10% - 15% or  $3.00, whichever is higher) of the total project cost to RAC as a “Finder’s Fee”.  Obviously this fee supports RAC’s ongoing operational and administrative costs and is based on the type of project that was posted.  As far as I have been able to determine, this fee has never increased since RAC went into operation, which is by the way, a great deal for the coders.
In other words, there are no set fees for any particular project – it’s entirely based on the bid amount you accept, and paid for by the coder who won the bid in exchange for them using RAC to find work, maintain profiles, manage an escrow account for them, etc.  Unlike other freelancing sites where coders pay a monthly fee as well as a commission for bidding on projects, RAC only charges them a fee when they win a bid and complete the project!
More importantly, since this is a blind bidding system, there is no way for the coder to mark up his or her bid to pass the “Finder’s Fee” back to you as the buyer. Any coder bidding on a given project has absolutely no way of knowing of what the “other guy” bid on your project so every coder has an incentive to keep their bid as low as possible.
Given that, if a coder should ever indicate to you that he or she has to charge you “extra” for RAC projects, you should realize that this is something the coder is doing entirely on their own and that perhaps it’s time to look for a different coder to work with.
Your First Project and Auction Types
Whether you’re a first time or even a veteran RAC buyer, your first project is typically posted as either an Open Auction (where any coder can bid) or a Private Auction (where only those you invited can bid).  At this point, let’s assume that it’s your first project and you’ve never worked with any RAC coder.
After posting your project, you’ll receive bids from all over the world (and I’m certain they’ll be as diverse as the coders posting them.)  Many coders will offer a variety of incentives for you to choose their bid over any other but you have to step cautiously here. 
To a coder bidding on Open or Private Auctions this means that they will be paying a 15% “Finder’s Fee” to RAC when the project has been completed.  Because of this, a coder might occasionally suggest having you repost your project for him or her only as a One on One Project/Enhancement Auction (12.5% “Finder’s Fee”) or as a Bonus/Other Direct Payment (10% “Finder’s Fee”) – you should never do this because if caught, the coder is subject to strict penalties up to and possibly including being banned from Rent A Coder and all Exhedra sites.
Why would that happen?  RAC (quite legitimately) views this behavior as the coder attempting to “cheat” RAC out of it’s rightfully earned “Finder’s Fee” of 15%.  Once a project has been posted as a particular auction type, you can’t repost it without first obtaining permission from an RAC Facilitator ( 
Among other things, this might mean you have to go back and find another coder to finish your project – all because you tried to help the coder save a few dollars!  If you’re at all like me, your time and effort are probably worth a lot more than that.  You’re much better off waiting until the project is completed and then paying the coder a bonus to make up the difference if they did an outstanding job for you.
Even more importantly, if you send the coder a Bonus/Other Direct Payment before they have completed any work for you at all, you risk losing your entire project cost because this type of auction bypasses escrow and the coder’s account is credited immediately. Technically, the coder doesn’t have to deliver anything to you at all, which leaves little recourse for you if the coder disappears or reneges on the project.
Lastly, always remember that coders are expressly forbidden from requiring advance payments from buyers for any reason.  Coders are allowed to request “phased” payments, i.e.; 25% upon delivery of beta, etc., but only after delivering a commensurate portion of the work they bid on.
Working with Coders Directly on Other Projects
Now let’s assume that your first project went well (which is usually the case) and you’re thinking about your next one.  You may be considering using the same coder, which can work out exceptionally well for both of you because by now you’re familiar with each other and probably have a pretty good working relationship. 
This is the time to go back to RAC and post your project as a One on One Project/Enhancement type of auction for your coder.  This saves the coder 2.5% off the “Finder’s Fee” and is a discount to the coder for bringing repeat business back to RAC.
You might be inclined to work directly with the coder at this point and bypass RAC altogether (sometimes at the coder’s suggestion), but in all honestly, I can’t emphasize enough just how bad of an idea I think this is! 
Aside from the fact that this is a clear violation of both the Custom Software Buyer and Seller Agreements and, since using RAC costs you as a buyer nothing, there’s simply no better reason to continue to use them given the buyer protection they have to offer you. 
The only person who really stands to benefit from bypassing RAC is the coder and the benefit is usually so small that you should ask yourself if it’s worth risking your time, money and effort on.
For example, let’s say you have a project in the $100 range (let’s keep the math simple).  If you posted a One on One Project/Enhancement for your coder, this means that they will pay a “Finder’s Fee” of $12.50 to RAC.  But it also means that you can set a project deadline, have the cost of your project placed in escrow until you indicate it’s satisfactorily completed, and have someone to turn to ( in the event something goes wrong on the project.  Additionally, your coder is also aware that you will most likely be rating his or her performance so they have plenty of incentive to do a great job.
Using the same project described above, if you bypassed RAC and worked directly with the coder you’d have no recourse through RAC on this new project! If the coder does not deliver, then you’ve completely wasted your time.  If you paid the coder for all or even a portion of the project cost up front and they don’t deliver, you’ve just lost your money as well, all because you wanted to save the coder $12.50! 
Is it worth it?  Not to me – I’d rather send the coder a $15.00 bonus when the project is finished and at least know that RAC was there with me every step of the way through the project, protecting my investment. 
The best possible advice I can offer you is for you to put the onus on the coder to deliver a top-notch project, on time and the way you want it, and then use the Bonus/Direct Payment Auction type to make up for any difference.  Always remember though that you are never obligated to pay anything more than the amount of the bid you selected.
Lastly, as a very productive coder at RAC, I can say that I emphatically support the “Finder’s Fee” concept.  Without it, I would not have had the pleasure of meeting and working with over one hundred clients on my RAC projects! More importantly, I’ve had well over a year’s experience watching RAC evolve into the comprehensive and premiere freelance site it is today and I can plainly see that every “Finder’s Fee” I’ve paid has been put to excellent use benefiting both buyers and coders alike!
Good luck to all of you on your projects and thank you for choosing Rent a Coder!

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