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How new pricing works for freelancers - frequently asked questions

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Community Manager
1,470 Posts
Member Since: ‎10-29-2014

How new pricing works for freelancers - frequently asked questions

[ Edited ]

Hi Everyone,

 

We recently announced upcoming changes to the service fees that freelancers pay on Upwork. You’ll find our announcement here on our blog.

 

Today, freelancers pay a flat 10% fee on all project payments. Starting in June, this will change to a sliding service fee of either 5%, 10 or 20%. This will be based on a freelancer’s lifetime billings with each client (across all hourly and fixed-price contracts the freelancer has ever had with that client on Upwork).

 

You’ll pay:

 

  • 20% for the first $500 a freelancer bills a client across all contracts with that client
  • 10% for total billings with a client between $500.01 and $10,000
  • 5% for total billings with a client that exceed $10,000

 

The more business you do with a client, the lower the fee you will pay, and the more money you will keep.  This provides further incentive for customers to continue building long and substantial relationships on Upwork, which will ensure Upwork stays a vibrant marketplace now and in the future.

 

Below is an example of how this new fee structure will work on a sample hourly contract (and what will be displayed as you submit proposals).


Modal -service fees20%.png

We’ve anticipated some of the questions and comments we expect many of you will have as a result of this change. You’ll find those listed below, along with our replies. Take a look, and if there is anything we haven’t covered here, please reply and we’ll do our best to respond.

 

We know this is a big change and we expect a lot of you will have some feedback to share on this discussion thread. We encourage you to do just that, and we also want to give a friendly reminder of our Community Guidelines here.



Questions and Comments

 

Why are we making this change?

 

Why is Upwork making this change?

Smaller contracts cost us more to serve than larger projects. The costs of acquiring clients, helping you connect with the right opportunities, and providing services like payment protection outweigh the fees currently charged for small projects.

 

At the same time, larger, repeat projects incur fewer of these costs. To support our customers better, we’re increasing our fee on smaller projects and decreasing it when your relationships cross important thresholds. This provides our customers an incentive to continue building long and substantial relationships on Upwork, which we think will help ensure Upwork stays a vibrant marketplace now and in the future.



Doesn’t Upwork make enough with the 10% service fee I pay today? Why charge more?

Though it’s never easy to change pricing, we have learned that a flat fee does not serve our customers well. Smaller contracts cost us more to serve than larger projects and freelancers and clients have long requested a fee decrease on large, repeat projects to continue growing their businesses on Upwork.

 

Please know that we’re not changing our pricing to make a short-term gain. Some freelancers will pay more on small projects and some will pay less on larger contracts. In short, we are building a business for the long term. And to better ensure our vibrant marketplace continues grow and provide better outcomes for all, we need to realign our fee structures.



Many of my projects are under $500. How can I continue working on these contracts?

The new fee structure will be based on total lifetime earnings with each of your clients. We encourage you to seek repeat business with your clients and/or to consider modifying the costs you currently propose for new business. We are committed to attracting and helping you connect with clients and grow your business.



How many freelancers earn more than $10,000 with a single client? This change doesn’t benefit most of us.

A growing number of freelancers earn $10,000 or more with a single client, and this represents a very large proportion of earnings on Upwork. And we are investing heavily to attract more clients looking to connect with freelancers for these types of large and/or long-term projects. These investments include advertising campaigns as well as our new Upwork Pro offering for medium-sized businesses.



I’m going to raise my costs as a result of this change. What is Upwork doing to bring more clients here who will pay a higher budget?

We have several marketing campaigns underway to attract professional clients looking for expert freelancers for large projects. We market Upwork through many channels, including targeted digital advertising and media placements in national and international outlets where professional clients look to read about smart business practices.

 

Additionally, our new Upwork Pro and Upwork Enterprise offerings are helping to attract more mid-sized and large businesses.



Did you preview this change with any of us? Many of us work on smaller contracts and will be seeing higher fees as a result.

We conducted a great deal of analysis to finalize the new fees and thresholds. We did not make these decisions lightly and much thought and research was put into developing this new fee structure.


Currently, freelancers pay a flat fee on all projects, no matter how large or small. However, smaller contracts cost us more to serve than larger projects. The costs of acquiring clients, helping you connect with the right opportunities, and providing services like payment protection outweigh the fees currently charged for small projects.

 

That said, we are committed to supporting small projects and the freelancers who work them. Once the new fees are in place and costs no longer outweigh the fees of supporting such work, we plan to invest in growing this part of our business to better ensure freelancers find a variety of opportunities on Upwork.  



The Upwork site has had bugs and other issues recently. Why is pricing changing now?

We are making these changes to our freelancer service fees after much research and discussion, and with a focus on building a business where freelancers and clients can connect, collaborate and succeed for years to come.

 

We understand that a significant part of this is making sure we provide a consistent and stable platform. During the past few months we’ve been steadily upgrading our infrastructure so that we can improve the speed, stability and overall performance of the Upwork platform and stay in step with the rapid growth of our marketplace.

 

We will continue to make technological upgrades a priority and better ensure that Upwork is a vibrant marketplace for both freelancers and clients.



Upwork will also start charging a payment processing fee to clients. Isn’t this going to make it expensive for clients to hire here?

We expect clients will continue to see numerous benefits to working on Upwork (including finding and paying talented freelancers efficiently and confidently) and that these updates will not make it cost prohibitive to do so. We’re also going to continue attracting mid-sized and large businesses via our Upwork Pro and Enterprise offerings.

 

We conducted a great deal of analysis to finalize the new fees and thresholds. We did not make these decisions lightly and much thought and research was put into developing this new fee structure.



 

How will this work?

 

Will clients know when my service fee is lowered?

Clients will be notified of this upcoming change. After this announcement, we will not be proactively telling clients when your fee is lowered due to meeting the $500.01 or $10,000.01 thresholds.



When do these new fees go into effect?

This is currently scheduled to go into effect in June, 2016. We will notify you via email prior to this change going live. You’ll also be notified in product when the change is live.



Are my fees based on how much I earn (minus the Upwork fee) or on how much the client pays (inclusive of the Upwork fee)?

Your fees are based on how much your client has paid, inclusive of the Upwork fee. Lifetime billings does NOT include the amount the client will pay as part of the payment processing fee.



Will my active contracts be subject to these fees?

When the new pricing takes effect in June, we'll honor the previous Upwork 10% service fee or grandfathered Elance fee (for Elance clients that you begin working with on Upwork) for all active contracts.

 

If you've billed over $10,000 with a client, we will automatically lower your fee to 5%. On all new contracts, the new pricing will apply. Please note this new pricing does not apply to contracts with Enterprise clients.



When I reach a new “tier” with my client, how will I get the lower service fee? For example, If I reach $10,001 in earnings from my client in July, what do I need to do to change from the 10% service fee to 5%?

We will automatically apply the lower service fee if our system detects that your total billings with a client have exceeded $500 or $10,000. You’ll be able to verify this by checking the service fee invoice breakdown in your Transaction History.



I completed a project with a client last year. They just contacted me again for a new project. Will I be charged 20%, 10% or 5%?

The new pricing applies to your lifetime billings with each client across all contracts—fixed-price and hourly. This means that all contract billings you have with the same client are summed up to calculate your service fee (for those from Elance, this includes Upwork contracts with clients you had on Elance). You can view your lifetime billings with your clients here.



Are bonuses included in lifetime billings?

Bonuses will count toward your lifetime billings with your client, while refunds will be deducted from those lifetime billings. We will automatically apply the lowest service fee applicable on any payments you receive, including bonuses and expense reimbursements.



I have an active contract with a client where I’ve already billed $10,000. Are you going to refund the fees I’ve already paid?

No, these fee changes will be applied to contracts once the change goes live in your category.



How does this work if my fee is supposed to lower during a contract? For example: I get hired for a $600 contract, will I be charged 10%?

All contracts that cross a fee threshold are charged at a blended rate. For example, if you begin an hourly or fixed-price contract with a new client for $600, you’ll be billed 20% on the first $500 and 10% on the remaining $100. The same is true of a $15,000 contract – you’ll be billed 20% on the first $500, 10% on the next $9500, and 5% on the last $5000.



How do refunds affect my lifetime billings with one client?

If you refund your client, the refund amount is deducted from your lifetime billings with that client. You can view your lifetime billings with your clients here.



I started working with my client on Elance. What will I pay?

Pricing is based on your lifetime billings with a single client since your first job with them on Elance. When you work with one of your Elance clients on Upwork, we’ll continue to honor the fee you paid before (for most of you that’s 8.75) or the 5% fee should you reach $10,001 in lifetime billings with this client.



I work with an Enterprise client on Upwork. Am I eligible for a fee decrease as an Enterprise freelancer?

If you work with an Enterprise client, this new pricing does not apply. This is because we negotiate individual contracts with those companies on a case by case basis. Due to their size and complexity, these clients require additional features, functionality, and services. These can include consolidated invoicing and reporting, as well as talent sourcing services, program management, account management, and compliance services.

 

Upwork Enterprise contracts include different service fees, depending on the needs of the client, and may depend on the size of the company as well as the volume of work done on the platform.

 

How does this work for freelancers in VAT countries?

For those who pay VAT today, VAT will continue to be charged on the Upwork service fee. If applicable, VAT will be added in addition to your fee, and will not count toward a client’s lifetime billings.



I’m part of an agency. How does this new pricing apply to me?

We calculate agency service fees based on total agency billings with a client across all contracts. This means that all of the contracts any of your agency’s freelancers have done with a single client count towards your lifetime billings with that client.



What if:  i'm an agency contractor (non-owner). I did or didn’t work on client A's project. My agency reached $10,001 in lifetime earnings with client A. I left the agency and subsequently won a new project with client A. What is my service fee?

You would not receive the 5% with Client A unless you worked with that client. If you’ve never worked with Client A in your agency, this would be a new relationship and you will start at 20%.




Where can I find more information?

 

How will I know what fee I'm going to be charged on a contract?

As you do today, when you are submitting proposals, you will see a rate calculator on the site to help you calculate and adjust your rate. This rate calculator will display the service fee applicable to the specific client for whom you are creating a bid. 



Will my earnings reports reflect the new fees?

Yes. You’ll see the service fee in your Transaction History and in your invoices when this launches in June.



Do you have any resources available to help us calculate our total billings with a client?

You can view total billings with each of your clients through your lifetime billing report, which you can access through Reports.

Where can I share my feedback and suggestions about this pricing?

You are invited to attend one of our live Town Halls featuring Q&A with members of our leadership team. You can also leave your comments here in this discussion thread.

Community Guru
258 Posts
Member Since: ‎01-29-2016

Re: How new pricing works for freelancers - frequently asked questions

[ Edited ]

This change punishes freelancers, like myself, who offer one-off services. I write resumes for clients. If I do my job well, they don't need to come back and have me write another resume because they've successfully used the document I created to find a new job.  This new fee structure punishes me for a job well done.  There isn't anything on earth I can do to stretch a resume job into a $500 or $10,000+ job. Not a single thing in the world. 

 

If this change somehow incentivized clients to pay higher prices, pay a portion of the fees, or be more likely to enter into long-term arrangements, this would be a step forward. However, without any reason for clients to change their behaviors on the platform, it does nothing for the "little" freelancers like me but hurt us. I've been able to just barely make a living from my freelance income, but I have serious doubts about that now.

Thanks, guys.

Community Manager
1,470 Posts
Member Since: ‎10-29-2014

Re: How new pricing works for freelancers - frequently asked questions

Hi Signe,

We're not trying to punish anyone with this change. If you're doing your job well (which based on your profile it looks like you really are!) you're going to continue to see the benefits of Top Rated status and new clients finding your services through the platform.

Community Guru
258 Posts
Member Since: ‎01-29-2016

Re: How new pricing works for freelancers - frequently asked questions

[ Edited ]

That's not true, Garnor -- it does punish me. I only have so many hours in my day; I can only take on so many projects at once. Even if I had 10 offers today, I wouldn't be able to accept them all because my time is limited. I won't be rolling in a ton of extra dough when these offers start pouring in; I'll just be working the same number of hours and paying a higher fee.

 

I know, I know. Raise my rates by 10%. Sure...but I'm already being passed over for quite a few jobs because clients think my fees are too high, so I'm not terribly optimistic about that solution.

Community Guru
1,399 Posts
Member Since: ‎02-09-2015

Re: How new pricing works for freelancers - frequently asked questions

[ Edited ]

I see, the new Upwork really likes the idea of ranges...

 

Well, I guess, thank you: The latest changes have made me realize just how much I need to push my business outside of Upwork. 

 

'Make your clients rehire you again and again' is just like 'make them end contracts and leave (good) feedback'.

 

*sigh*

 

 

Edited to add: I shall keep marking even more jobs in my 'Job Feed' as 'Budget too low'.

If only Upwork were to pass that on to clients...

 

 

Community Guru
399 Posts
Member Since: ‎02-02-2012

Re: How new pricing works for freelancers - frequently asked questions


Ela K wrote:

 

Well, I guess, thank you: The latest changes have made me realize just how much I need to push my business outside of Upwork. 

 


Trust me Ela, it's like a breath of fresh air. ;-) 

Power Member
16 Posts
Member Since: ‎05-03-2016

Re: How new pricing works for freelancers - frequently asked questions

[ Edited ]

Well I found this game is very interesting look like a Sudoku game you can tell! Let see how its work: 

 

  • 20% for the first $500 you bill your client across all contracts
  • 10% for total billings with your client between $500.01 and $10,000
  • 5% for total billings with your client that exceed $10,000

Well lets think 95% of freelancer get paid less than $500, so they pay 20% and 4% are the 2nd category mean between $501 to $10k so they pay 10% and 1% freelancer in the 3rd category paying $5%. But in reality all of the 3 category have to pay 20% first then 10% and 5 eventually. So if you understand the catch here that is all of you will pay eventually 35% = (20%+10%+5%). It's really a very good Sudoku, that is a great CEO brain I suppose Smiley Happy

Active Member
3 Posts
Member Since: ‎04-14-2016

Re: How new pricing works for freelancers - frequently asked questions


Ozzi L wrote:

Well I found this game is very interesting look like a Sudoku game you can tell! Let see how its work: 

 

  • 20% for the first $500 you bill your client across all contracts
  • 10% for total billings with your client between $500.01 and $10,000
  • 5% for total billings with your client that exceed $10,000

Well lets think 95% of freelancer get paid less than $500, so they pay 20% and 4% are the 2nd category mean between $501 to $10k so they pay 10% and 1% freelancer in the 3rd category paying $5%. But in reality all of the 3 category have to pay 20% first then 10% and 5 eventually. So if you understand the catch here that is all of you will pay eventually 35% = (20%+10%+5%). It's really a very good Sudoku, that is a great CEO brain I suppose Smiley Happy


As much as I am disgusted by this new change, your math is funny! Smiley Very Happy

Power Member
16 Posts
Member Since: ‎03-04-2015

Re: How new pricing works for freelancers - frequently asked questions

I wonder how many clients will lower the amount they are paying to account for the fee they will have to pay to Upwork.

Active Member
2 Posts
Member Since: ‎06-22-2015

Re: How new pricing works for freelancers - frequently asked questions

It's so sad to hear what UpWork is planning to do. Most of us the freelancers who work here at UpWork cannot give a 20% to the platform. I find it difficult even a 10%, imagine a 20%. This option will kill us all.

I was not agree with the past changes such as "connects", the VAT feature, and even the 10% was a huge effort for us all. Clients don't want to pay high prices, most of the works taken are below $500.

UpWork may not be able to stand this feature, but we the freelancers, the hard workers, are absolutely disagree.

We work very hard for UpWork, they limit us the connects, force us to add our VAT, and now they want a 20% from our work? No, I am not agree at all.

Thanks for reading me.