Where is the balance between compassion and business?

I recently hired a freelancer to do a project on a fixed-price contract. The payment schedule was fixed to certain milestones, but our contract specifically said the contract was fixed-price and not time-and-materials.

It turns out he underbid the contract. He is now taking a loss on the project (or at least claims he is) and wants to pay more. I have made every payment on schedule, and even accelerated a payment when he had a cash flow problem.

The compassionate Stever wants to pay him enough so he makes a decent profit on the job, since he is doing a good job.

Yet, business Stever objects. We had an agreement that was based on my believing the project would cost a certain amount. It doesn’t seem fair that I step up to cover his inability to price well.

He is doing good work. The contract is not yet done (and I don’t want him to stop in the middle), and I’ve paid him about 90% of the originally agreed-upon amount in accordance with the milestones.

I would love to hear from freelancers and hirers alike … How do you handle a situation like this? I feel conflicted between heart and head.

How do you balance compassion and business?

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