diff --git a/server/unithand.c b/server/unithand.c
index cfcd28f875..2098aa39e7 100644
--- a/server/unithand.c
+++ b/server/unithand.c
@@ -233,13 +233,13 @@ static bool do_unit_upgrade(struct player *pplayer,
 {
   struct unit_type *from_unit = unit_type_get(punit);
   struct unit_type *to_unit = can_upgrade_unittype(pplayer, from_unit);
+  int cost = unit_upgrade_price(pplayer, from_unit, to_unit);
 
-  transform_unit(punit, to_unit, FALSE);
+  transform_unit(punit, to_unit, game.server.upgrade_veteran_loss);
+  pplayer->economic.gold -= cost;
   send_player_info_c(pplayer, pplayer->connections);
 
   if (ordered_by == ACT_REQ_PLAYER) {
-    int cost = unit_upgrade_price(pplayer, from_unit, to_unit);
-
     notify_player(pplayer, unit_tile(punit), E_UNIT_UPGRADED, ftc_server,
                   PL_("%s upgraded to %s for %d gold.",
                       "%s upgraded to %s for %d gold.", cost),
diff --git a/server/unittools.c b/server/unittools.c
index ff83798c6f..f8856db8fe 100644
--- a/server/unittools.c
+++ b/server/unittools.c
@@ -407,7 +407,7 @@ static void do_upgrade_effects(struct player *pplayer)
     struct unit_type *type_from = unit_type_get(punit);
     struct unit_type *type_to = can_upgrade_unittype(pplayer, type_from);
 
-    transform_unit(punit, type_to, TRUE);
+    transform_unit(punit, type_to, game.server.autoupgrade_veteran_loss);
     notify_player(pplayer, unit_tile(punit), E_UNIT_UPGRADED, ftc_server,
                   _("%s was upgraded for free to %s."),
                   utype_name_translation(type_from),
@@ -748,7 +748,7 @@ static void unit_convert(struct unit *punit)
   to_type = from_type->converted_to;
 
   if (unit_can_convert(punit)) {
-    transform_unit(punit, to_type, TRUE);
+    transform_unit(punit, to_type, 0);
     notify_player(unit_owner(punit), unit_tile(punit),
                   E_UNIT_UPGRADED, ftc_server,
                   _("%s converted to %s."),
@@ -1475,36 +1475,27 @@ bool is_airunit_refuel_point(const struct tile *ptile,
   test first to check that the transformation is legal (test_unit_upgrade()
   or test_unit_convert()).
 
-  is_free: Does unit owner need to pay upgrade price.
+  vet_loss: Number of veteran levels lost in process.
 
   Note that this function is strongly tied to unit.c:test_unit_upgrade().
 **************************************************************************/
 void transform_unit(struct unit *punit, struct unit_type *to_unit,
-                    bool is_free)
+                    int vet_loss)
 {
   struct player *pplayer = unit_owner(punit);
   struct unit_type *old_type = punit->utype;
   int old_mr = unit_move_rate(punit);
   int old_hp = unit_type_get(punit)->hp;
 
-  if (!is_free) {
-    pplayer->economic.gold -=
-	unit_upgrade_price(pplayer, unit_type_get(punit), to_unit);
-  }
-
   punit->utype = to_unit;
 
   /* New type may not have the same veteran system, and we may want to
    * knock some levels off. */
   punit->veteran = MIN(punit->veteran,
                        utype_veteran_system(to_unit)->levels - 1);
-  if (is_free) {
-    punit->veteran = MAX(punit->veteran
-                         - game.server.autoupgrade_veteran_loss, 0);
-  } else {
-    punit->veteran = MAX(punit->veteran
-                         - game.server.upgrade_veteran_loss, 0);
-  }
+  /* Keeping the old behaviour, so first clip top, then reduce */
+  punit->veteran = MAX(punit->veteran - vet_loss, 0);
+
 
   /* Scale HP and MP, rounding down. Be careful with integer arithmetic,
    * and don't kill the unit. unit_move_rate() is used to take into account
diff --git a/server/unittools.h b/server/unittools.h
index 1ca701a185..594f95e8ca 100644
--- a/server/unittools.h
+++ b/server/unittools.h
@@ -119,7 +119,7 @@ void unit_forget_last_activity(struct unit *punit);
 
 /* creation/deletion/upgrading */
 void transform_unit(struct unit *punit, struct unit_type *to_unit,
-                    bool has_to_pay);
+                    int vet_loss);
 struct unit *create_unit(struct player *pplayer, struct tile *ptile,
 			 struct unit_type *punittype,
 			 int veteran_level, int homecity_id, int moves_left);