Announcing new, simpler fees on Upwork

[StanG]

Today we introduced two key pricing changes: on May 3, 2023, we are retiring our sliding scale fee structure and introducing a 10% service fee for all freelancers, and on April 26, 2023, we are implementing a one-time contract initiation fee for clients of up to $4.95 per contract. Click here for the full announcement.

Please share your questions and feedback in the thread below.

[williamtcooper]

Michele,

It is very possible Upwork needs to revisit the minimum hourly bid.

The minimum in the USA is too low at $7.25 per hour so I am sure it's much lower in some countries.

[apheiner]

I've seen them as low as 5$ for an expert datascientis job. Clients should be told what a reasonable price is. In Europe a burger flipper at McDonalds earns 10€/h, a cleaning lady 25€/h, a "nothing special" consultant charges 80€ (90$). Expert datascientists can charge 130€ (150$). 

Upwork should have freelancers **Edited for Community Guidelines**

[iain-robertson]

I recently saw a bid for  writing an M.Sc. thesis from the digital equivalent of a shoebox full of scraps of paper for less than $200. An absolute joke for the subject matter specialist.

[researchediting]

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Iain R wrote:

I recently saw a bid for  writing an M.Sc. thesis from the digital equivalent of a shoebox full of scraps of paper for less than $200. An absolute joke for the subject matter specialist.

---

Also against ToS, but who's counting?

[researchediting]

---

Michele G wrote:

He previously answered that the cut isn't possible because "Upwork needs to be profitable". But if they need more money so much, why don't they bring the minimum hourly pay to tates that wouldn't be illegal in their country? Or do they need to allow for digital exploitation to be profitable?

---

Apart from the inapplicability of labor law to private contracting, history suggests that the modest threshold rates for hourly work were dictated by Enterprise clients—one of whose industries I am familiar enough with to be tempted to name. I forbear.

[williamtcooper]

Andra,

In my opinion, Upwork needed to have universal fees to more easily manage the company.

That is the begining and the end.

By the way, the other main site's fees are 20%.

[aaadd152]

My friend, you're the loudest person here and the only one PRO this BECAUSE IT DOESN'T affect you at all. 
I checked your profile, YOU HAVE NO CONTRACTS OVER 10.000$. 
This doesn't concern you at all. The only "benefit" for you is that if others leave, you'll have less competition. Stop talking and trying to change other people's mind with ridiculous arguments. 
Your fees stay the same. Ours don't. 

[williamtcooper]

Andra,

Please refer to my response to Dean above.

[demizachinkor]

William, 

It's only a pay raise for those currently on the 20% tier. For those already on the 10% tier, there is no change. For those on the 5% tier, it's a pay cut. 

It's not hard to see the people most upset by this are people in long-term contracts, like myself. People who've transacted thousands of dollars through Upwork, providing Upwork with a steady stream of income. The reward for that loyalty is a pay cut. 

As many have pointed out, there is no problem with the new 10% flat rate. The problem is with the 5% rate only being honoured through 2023. 

This new pricing structure is going to backfire and will end up costing Upwork money.

They'll lose 10% on all new contracts.
As is evident by the overwhelmingly vast majority of posts on this topic, people with long-term contracts will be leaving the platform.  I'll have been with my main client for almost 2 years soon, and once I hit that milestone, we'll definitely be discussing payment options outside of Upwork. THEN, I'll get my pay raise, as Upwork will no longer be taking 5% of my earnings.

[williamtcooper]

Dean,

As already mentioned, the 5% fee isn't profitable in the longterm and there are 100 freelancers waiting in the wings who will gladly reduce their hourly rates and accept the 10% terms to take those clients off the hands of freelancers that want to leave.

[demizachinkor]

William, 

Your math doesn't add up.

0% is much less profitable than 5%, which is what Upwork will get when people in long-term contracts leave.
100s of freelancers waiting in the wings to accept 10% terms instead of 20% also results in a loss for Upwork over the current model.

The only ones who'll benefit are freelancers initiating contracts only losing 10% starting out instead of 20%. This will likely result in more people signing up for Upwork, but you've already stated you think there are too many freelancers on Upwork.

[williamtcooper]

Dean,

If I give you a $1.00 and you give me $.95 back, how many times can I do this before I become broke?

Upwork's overhead costs more than the combined 5% freelancer and 5% client fees. It's burning the company's cash and the fees needed to be adjusted.

[iain-robertson]

So, do what other prudent businesses do, look at your overhead costs and how they can be cut.

[williamtcooper]

Iain,

Companies only have two buckets to work with and Upwork appears to be working both. Increase revenues and cut costs. 

[apheiner]

Dean, you do marketing.

If you reduce the salary of your top employees will start voting with their feet (cf., Twitter) and move their contracts outside Upwork. There are plenty of other companies doing book keeping 

The largest beneficiaries of Upwork are the companies that use the same freelancers years on end. They have a continuous trial period in which the freelancer can be booted out the next day. Upwork should charge the big clients

[chrisangelisip]

This should be grand-fathered, if you are already at 5%, you stay there, all new ones start and stay at 10%

[3952a343]

Agreed. I'm out too.  Congrats Upwork.  Already being hit with too many fees, now this change. You'll lose both my freelance and client business.

[ljms]

+1. I'm jumping from this sinking ship and taking my long-term clients with me.

[williamtcooper]

Luke,

What business reason do your clients have to leave Upwork since their fees stay at 5%?

[shanementor]

Upwork charges the business clients a 5% fee as well? I did not know that, how in the world could Upwork have lost 89 million dollars last year with bid fees, the 20% model, charging business clients on their end. Sound like they should have been very profitable.

[williamtcooper]

Shane,

It cost hundreds of millions of dollars per year to run Upwork and it's a fairly complicated business model to manage.

[6bfcdaf8]

William you have attended the investor meeting, did they mention the "close rate"? I'd really love to see the timeline chart of close rates. I'm not sure where i came across this term first time but it is the rate of job posts ending up with a hire.

So if you really have a balanced view on this, clients are not exclusively somewhere, they have a problem and they are usually asking friends, posting on upwork and other platforms. So it actually matters if where the right person is or if they are available and actively engaging with the client.

I think it is especially true for your specific type of work too! A client who's looking for improving their b2b sales, they are not living on upworks isolated island, they are desparately looking for a unique talent that they can trust and that can deliver results. If you are available they will hire you, if you are not here, they won't randomly hire someone else. That job post will end up being cancelled like thousands of others after seeing no activity in 30 days. 

[williamtcooper]

Alper,

50% of the jobs posted result in a freelancer being contracted.

In my opinion because I don't work for Upwork, 95%+ of the freelancers are NOT following the guidance of Upwork including most of the Top Rated freelancers.

Profiles need to be optimized, Cover Letters need improvement, only submit to jobs that MOST appropriately match the freelancer with the client, bidding improperly, not promoting their Profiles on social media, not using the Consultation as the top of their funnel, not Upskilling, ignoring generative AI, not managing their freelancing as a business, and the list goes on.

If a freelancer doesn't want to adapt to their business environment, why get upset when things don't work out. Upwork as a company will continue to adapt and either freelancers change along the way or they don't. 

[eugeneoz]

Man, you are really bad at math. If for just 5% (by your stats) it is a 50% fee rise, then Upwork’s profit will be increased just by 2.5%. Simultaneously, Upwork will lose 50% of fees from 95% of non-top-rate freelancers: 2.5% - 47.5% = -45%

Do you still think it is a smart move? Do you still think that there is just 5% of affected?

[williamtcooper]

Evgeniy,

Upwork's gross total fees are about 16% including everything IE freelancers, clients, misc.

The numbers you are presenting are not Upwork's numbers.

[eugeneoz]

Again, learn some math.

I’ve calculated the part related to fees. Just multiply the result * 0.16 and you’ll still get a negative number 🙂

[williamtcooper]

Evgeniy,

Yes, Upwork lost $89 million in 2022 with 16% fee margins.

That would mean that fee margins need to expand and / or corporate costs need to be reduced to make the company profitable.

[eugeneoz]

Indeed. And they are lowering the fee, if your assumption that 95% of freelancers will benefit from this move is correct.

[williamtcooper]

Evgeniy,

A 10% fee for freelancers, 5% for clients and misc fee keeps the 16% margins.

IMHO once the fees are set, I would expect a combination of corporate cost reductions, an expansion of longterm clients, and the 10% fee to be increased to 12% if needed. Basically these are the financial levers for managing a profitable company.

[nhansen]

This is irrelevant to the complaints here. If you have a long term existing contract that you wish to continue with indefinitely, nothing about the profile or bidding or whatever is relevant. The points you make are good, so why doesn't Upwork instead charge for services that will make those people who are still looking for cotracts more attractive and skilled, rather than penalize those of us who aren't spending our time on those non-revenue generating activities?

[cindysmith89]

You might not understand this since it looks like most of your clients are short-term, but many businesses build a relationship with their long-term contractors, and will not appreciate them losing 5% of their income over a fee change. For that reason, there are plenty of businesses who will want to continue to work with their contractors and will leaving, saving both the contractor AND the business from having to pay fees. 

[williamtcooper]

Cindy,

I have been freelancing for 25 years and clients have ranged from $200 to $2,000,000 each. I have had some clients for 20 years.

The 5% fee was never economically sustainable.

We might find out that 10% for everyone is not sustainable either.

The best policy if someone is truly a freelancer not an employee is to continually Upskill so you can bill more per hour.

[omar_vector]

If they want to increase the profit for better way, they could just shift the threeshold to 20K profit to have 5% , but not just fixed 10%

The only one who get benfits from 10% those who work on low contracts less that 500$ , 500-10k has no advatnage , and +10K are the only losers

Its Wrong move, mathmatically abusing to freelancers. you want profit, then increase threeshould and encourge long term collabration , also maybe add Job Add Boosts as well. there are many way to get more money without abusing all great freelancers who worked hard to earn .

[williamtcooper]

Omar,

It's just not profitable at 5% in the longterm at any threshold.

[b33f2159]

Why I'm I seeing ANOTHER round of Fees for hard working Freelancers?

As a job poster (never a freelancer), I think UpWork is AGAIN penalizing the freelancer.

UPWORK - Here's a tip.... Charge $5 to POST a job.   This way, the freelancers (may) be able to get out of another UpWork fee... but best of all, a $5 job posting fee will reduce CRAP job posts, &/or job posts that are basically made on a whim (I've made numerous job posts only to cancel them or let them run out after I decided to do the job myself).

• If the job is canceled or never filled - Upwork gets to keep the $5.
• If the job is FILLED, the $5 goes towards the project / fee.

You're Welcome!

Kevin  (UpWorker since 2017)

[celgins]

Charge $5 to POST a job.

That is already in the works. However, the fee will be $4.95. Oh, and it starts today. Is that why you posted this today?

If the job is canceled or never filled - Upwork gets to keep the $5.

I think this was always in the plan.

If the job is FILLED, the $5 goes towards the project / fee.

In the announcement to clients: "We will charge this fee when you make the first payment on a contract, and we will add it to the escrow amount that you deposit for a new fixed-price contract. No action is required; this will be an automatic charge for future contracts."

[b33f2159]

Nope - I posted it as I saw a yellow banner that mentioned another fee for FREELANCERS... not job posters.  It just struck me as odd that UpWork was charging another fee for freelancers.

[kochubei_valeria]

Hi Kevin,

I encourage you to check out this Product Update about the changes you're referring to. We have also merged your comments to the feedback thread about these changes. A summary of changes is the following:

• We are moving all freelancers to a 10% fee rate and retiring our sliding scale fee structure. For those currently working on projects at the 5% level of our existing tier structure, we are pleased to honor those rates through the end of 2023.
• We're implementing a client contract initiation fee of up to $4.95 on Upwork's Marketplace and Project Catalog. This is a once-per-contract fee, assessed when clients make their first payment to a freelancer.
  
  

I would also like to clarify that the client initiation fee is charged when the client make their first payment to the freelancer not when they post a job.

[arya_larijani]

Hi,

As you already might know, the contract initiation fee is charged once per contract when clients make their first payment to a freelancer. The fee is per contract, which means if clients start a new contract with a previously hired freelancer, they will pay the contract initiation fee "again" for the new contract!

With that in mind, the contract initiation fee, in my view, creates three major issues:

1) With the contract initiation fee, new talents may have even fewer opportunities to work with active clients for small and medium-sized projects as the fee locks them to the previously hired freelancers (infinite milestone-based contracts to avoid paying the fee).

2) Many freelancers wish to showcase their experience through the number of successful projects done on Upwork. With the introduction of this fee, now most long-term (and even one-time) clients will only choose the freelancers open to keeping a mile-stone-based contract open forever to evade the contract initiation fee.

3) As expected, clients who wish to avoid paying the fee may keep the contract open for a prolonged period, leading to freelancers possibly not receiving feedback for an even longer duration or never, creating a lifeless platform with non-existent testimonies for numerous projects completed on a mile-stone based contract.

[spectralua]

It is true for small contracts.

For rich clients with x0000 deals $5 is nothing.

But for newbies it is critical, them can never receive JSS.