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.

[simonincanada]

I just finished a contract that ended up lasting 14 months so for most of that period I've been on the 5% scale. That is the sort of work I hope to get more of through Upwork. Your thanks to me for that is to double my charges for most of the future work I was hoping to get? Like a 100% increase in charges? Highly disappointing decision and will very likely affect my future course.

[bilal1983]

So many FLs are currently on contracts that they went into with a long-term relationship in mind, with a goal to reach 5%. There are others who are already on the 5% fee. If it was known these changes are coming, people would've planned accordingly. 

At the very least, all existing contracts should remain on the same sliding fee scale, and be allowed to either reach the 5% level or to maintain it.

The changes should apply to all new contracts starting from May, 2023 onwards.

[mansfield_steve]

Been on Upwork 7 years, 400k and paid a ridiculous amount in fees in taxes. The only reason I stick around is 5% seemed fair, but 10%? On 80-90% of my contracts. The majority of my contracts are all in the 5% tier. I'm gone 31st December 2023. At least there's a few months to get it all in order. What a dumb move. 

This is the first domino. Without a doubt. 

[kbadeau]

You need to be gone long before December 31st. I believe the only way Upwork will reverse this disastrous decision, at least for existing contracts, is if they see us all start pulling our long term clients off the platform NOW.

It was a dumb decision on their part, but it was a smart move to give us until the end of the year, so we could be their guinea pigs. We have to make that decision backfire.

[bigtomjp]

Steve, I am in a similar place with the same amount in less than 3 years with mostly long term contracts. As of today, only one long term contract remains with UpWork for me. UpWork has wrongly assumed that the 10% fee will be tolerated well.

UpWork stock has dropped in value over 80% in the last 2 years, 30% in the past year and about 10% since this announcement. I think it is already clear where this is headed and UpWork may no longer exist by December 2023. I also find it quite concerning that this was announced on 3/16/2023 and I did not get a notice about it via email until 3/22/2023, a week later.

[pancevac76]

I would like to ask these questions:

• with Upwork fees now matching Freelancer fees, why would we even stay here?

Freelancer is notorious for low paid jobs for anyone outside USA, which would definately happen on Upwork. So what would be our motivation to stay here and not just set our linkedin profile status to "looking for remote work"?

But there is something I am more interested in. What exactly are we getting for this doubled fee? Because even as top-rated plus now, with close to $300.000 in earnings, I don't get any invitations at all. I have never been called for vetting, no talent cloud invitation... nothing. I withdraw my money once every 3 months and pay thousands of dollars every year for that.

So what are we getting for that extra fee?

Thanks.

[25005175]

Freelancer has about 1/12 the business of Upwork, according to published financials. So keep that in mind.

[dyumnin]

I am in the same boat.

• Approaching 100K+ revenue/year from upwork.
• The clients I work with also post on Guru and Freelancer.
• Many clients approach me directly via my website and linkedin.
• Freelancer also runs Escrow where the fees are fixed at 2%(i.e I pay $800 instead of 10,000)

What benefit do I get in return for my 10K payment to Upwork?

• I get access to new clients and I wont mind paying a finder's fees of 10% for it.
  • Given that I am locked into the platform for 2 years the fees are 2x...
  • With the new change I will offline the client once the lockin period is over.

[adaminoz]

As most have said. This punishes the type of freelancers that make Upwork usable. And rewards wildcard new users who may be just spitting out ChatGPT output or pasting together tutorials. 
I work and hire on here and there is nothing in this for me either way. It points to maybe the company trying to have a last big payday before AI starts to really bite, points to short-term profit-taking. All my long-term clients will be at 0% commission now.

[lnakazawa]

Having worked on Elance before it became Upwork, some of my contracts have been going for over 10 years. It seems unfair that the 5% rate increases to 10% after being faithful to the company for that long. Please reconsider the policy, as I am already searching for alternatives.

[bilal1983]

Here's what a different platform is offering:

- Over £5000-lifetime billing per buyer: 3.5% (excl. VAT) service fee. 

- Between £250 and £5000-lifetime billing per buyer: 7.5% (excl. VAT) service fee. 

- Below £250-lifetime billing per buyer: 20% (excl. VAT) service fee

I'm being forced to seek other options. 

[25005175]

To William T C's point, that platform may be greatly undercutting itself in order to gain market share. Eventually, those rates will go up. Will the marketplace of the platforms end up being a series of startups that never make any money, because as soon as they try to become profitable, everyone jumps ship to the next new startup attempting to get market share?

[bilal1983]

I do understand the concept of the loss-leader, but I'm not sure that is what's happened. Loss leader strat works short-term, and to gain market share. Upwork already had the market share for a very long time.

Also, I'm not buying the idea that UW was deliberately operating at a loss by offering low service fees. That's BS IMHO. I am sure the 20%-10%-5% structure was generating huge revenue, as was the previous structure. The overall loss is not because of UW was undercutting. The loss is due to other reasons and decisions. Yes, there may be a need to raise profit margins. Many companies do that. But not like this. It's announced transparently, addressing its client base (users) directly with the raise, and giving valid reasons. Bearing raised prices is always inconevnient, but if the users feel respected, they would want to share  a bit more than before, especially if the raise is across the board, uniformly, not selectively.

What's happening feels very dicey, and slimey. It's being portrayed as a reduction in fees, and something which is beneficial for us.

I asked William T C, to demonstrate what the costs are of running a platform like UW, but didn't get a response. Could you explain? How does the revenue generated from service fees and other income bleed out, and how does the company lose millions of dollars?

[lucmartzz]

I have a theory about what is happening...

Looking at the stock market it is clear that 2020 and 2021 were great years for UpWork, now that we getting back to normal, many people found or recover their jobs and UpWork had noticed that there is a roof in this market for freelancers, they may had to grow their staff and now they can not keep it up. 

The only way is to force us to increase the hourly rate to our clients.

End of the story.

[duoluo_tianshi]

Sounds reasonable. Why fire people or accept a lower margin if you can just exploit the people who generate your profit?

[dyumnin]

There is an upper limit to what we can charge our client. When we approach the point where the difference between what we charge and what a local freelancer charges is low, they switch away from upwork

[forddavis]

Short sighted move. 10% is way too much for long term relationships. I've been happy to pay the 5% and I feel I've earned that rate. I will not be looking for new jobs on upwork or recommending upwork to friends if this stands. Also, not what I signed up for. How can I trust you not to increase your fee to 20%? 30%? Very disappointing. Changing the rates on existing agreements is unacceptable.

For existing agreements, we are only obligated to use upwork for 2 years. I think you could justify 5% indefinitely, the platform has earned that goodwill in my view, the escrow and billing are convenient and generally good enough and the introduction is very valuable. But, at 10% there is no way we keep that contract on upwork. The incentive to leave would be too high once those 2 years are up.

I sincerely think you will lose money and talent with this move in the short term, while losing a lot of long term contractors who have been advocating on your behalf.

[kstean]

This is a clear sign that upwork wants to become the platform for short-term contractors and doesn't want long term long-term/full-time jobs that brings them the majority of the money. 

We'll find another way.

[abixbg]

I had this suspicion when they introduced bidding and proudly talking about the serch algo of "now everyone has a chance"... Now i am 100% sure they are becoming another Fiver which is the worst platform for my field.

[lucioric]

I don't know what are they aiming for by charging 10% to loyal relationships. It was like a reason to desire to reach the 10,000 USD barrier with a client. Is that like compensation for reducing the initial job stages from 20% to 10%? Because I think that inveterated freelancers are invited to move out of the platform once they reach the 2 years threshold, or worse, to start seeking work on other platforms.

[jaswinder_singh]

Hi

I believe even if a freelancer is under exclusive membership of agency then also it will be 10% for new clients ? pls advise

[AveryO]

Hi jaswinder, 

Yes, that is correct. The 10% freelancer service fee will be for all future earnings on contracts, including agency contracts, starting May 3. For agency contracts that are already paying a 5% freelancer service fee, the 5% rate will continue through the end of 2023.

[bigtomjp]

Avery, what additional benefits are we getting for the increased fees. There are still a lot of issues with the UpWork platform that have not been fixed for a long time. There are still bugs in the new Timesheet system after many months and other issues that have been around for years. If UpWork was actually making progress in the right direction, I would understand this a little better but that is not happeneing.

[bigtomjp]

This reminds me of the time when eBay changed auctions to a flat 10% fee from the sliding scale where you could get to 2% in certain categories. That was costing me thousands of dollars more a month for no extra benefits. That resulted in no more sales on eBay for me.

So while this all sounds good, I think we will see a lot of the long term contracts that go over $10k move away from UpWork after the two year requirement. I have already had clients ask to move off the platform after the two years because they did not like it as a client. The UpWork platform has continually worsened of the past few years and this is obviously a result of the many bad decisions and UpWork has made in how the platform works. People are happy to pay fees for a quality service, but UpWork is no longer what it once was and has managed to degrade over time.

I guess UpWork has decided that the 10% loss on small contracts and the 100% loss of large contracts after two years is worth the 5% increase in large contracts over 2 years. Sounds like a bad decision to me, but maybe UpWork will manage to lose a little less money in 2024. It is almost laughable.

[glen-s]

Start a new company based on investment. Run on debt and 'lower' prices to attract customers, retain the 'low price' model to establish growth and build an established audience, and then gradually alter the model to skew things in favour of the company. This is based on the assumption that people are so now reliant on the service that they will stomach the changes and continue to use the service, even if they are losing money.

In a 'normal' economy that would probably work out fine for the business - but given where we are in a post-COVID economy I doubt this outdated approach is going to work out how they have planned in the longterm. There are far too many competing factors that people have to contend with at the moment and what these platforms refuse to acknowledge is that they are expendable  - people will always find new ways of sourcing income and the stranglehold Upwork believes it has on the market is nowhere near as strong as it believes.

[harrissuzanne]

Dear Upwork,

I've been with you since you were oDesk and have paid you about $30K in commissions.

Such a shame you keep nickel-and-diming your best freelancers AND your best clients.

This (along with the new $4.95 "contract initiation fee" for clients) is extremely short-sighted and self-destructive.

Today I am contacting all my long-term clients to go direct, and I will no longer recomment Upwork to other clients or freelancers.

Ciao.

[decodistny]

Imagine a company that respects and delights its customers.

Imagine thousands of those customers are embedded in some of the world's most influential workplaces. They're highly-trusted and connected people, working across dozens of sought-after professions around the globe.

Imagine those customers sharing positive experiences about that company - they're advocates, promoters and maybe even shareholders. 

Imagine being that company.

[proactiveh]

Nice way to take a big cut from your most reliable and profitable freelancers. This is definitely not a win for the talent. Looking for another platform. 

[jericogamotin]

I've been with you since 2010. I've amassed more than $190k in that time, with just one client, because they are satisfied with my performance and were keen on keeping me. When I got 5%, I was glad because I felt that was a fair trade with the services you offered.

Now, the old client sold their business to another, but they recommended the new owners keep me, because I was a very valuable hire. So the new owners set up an account here in Upwork so they can continue hiring me, using your service. The downside is that I was reverted back to 20% fee, which I eventually reduced to 10% in a couple of months. I was looking forward to getting the 5% again, which I calculated would be by June. But now you pull this stunt, and telling me that I'll be stuck at 10%???

Once I've established enough of a relationship with my current employer, you can be sure I'll float the idea to get out of your platform and just pay me direct. 12+ years with you, gritting my teeth at the fees you subtract because I figured you are providing me a service with your escrow and payment handling, but since you've shown that you don't care about your longtime users, why should I give you a share of my hard-earned money?

[giobertuol]

It is nice too see some Upwork employees are looking at this thread, but also sad to see they don't reply to any of the criticism people are making. This shows us how they "care."

Guys, do you know any other good freelance platforms to work on? I think this would be more productive than thinking of ways for Upwork to be profitable, which is not our job.

[hparoon98]

So us long term, consistent Upwork users are being penalized.  Make it make sense.

[dmiyekomarinelli]

I would strongly request that you let old-timers keep their 5% contracts as is. Moving forward, I'm okay if none of my future long-term contracts go down to 5%, but taking away these long terms (and YES the 5% makes a difference....if not, why take it from us?) - that we've hard-earned (when you took the 20% from us at the top of it) - is just unfair.

[estellenagel]

Maybe Upwork can do us a solid and get rid of clients who are offering $0.001 a word or $0.50 per hour? (Yes, I've seen those jobs on here!) Many other forums refuse to let employers on who charge less than the market average. That would be a good way to spend my extra 5% I need to hand over for a regular contract I've had for 2 years. 

[hernan_ci]

Hi Stan,

I don't even get this 5% rate increase in a year and this means much more burden on my pocket being a sole provider for my 2 children. Do you have special exceptions for single parents, PWD and other valid circumstances? I belong to two of those I have mentioned. Thank you.

Best,

[AveryO]

Hi Claire, 

I don't have this information right now, but I'll make sure to flag it to the team for their consideration if it's not yet part of our plans. 

[researchediting]

You cannot expect a rate break for the circumstances you mentioned. It is possible to register as a PWD for the sake of companies who have setasides for hiring within that category.

[sherie]

Upwork keeps running commercials during the day on Cable TV, like this one https://youtu.be/LZGJC7qy1Xg

A lot of them!! Mainly on the news channels like CNN. You know this has to be expensive, it's the same time slot as the pharmaceutical commercials. They are spending lots of money. Money they don't have. Upwork, you could of raised the fee to 6%. I'm sure that would of brought in a lot for you. Didn't you see the movie Office Space?

[kobor]

I can't understand what that comercial is trying to sell, that there are zombies available for hire on UW ? Zombies which you would avoid face to face, but they are great for remote work ?

[bruderdog]

I plan to to leave upwork once the 10% change goes into effect for long-term contracts. I've earned strong six figures on this platform over just the last couple years, and they've taken what I consider a very reasonable cut. Doubling to 10% of what is essentially a salary is out of the question. So long and thanks for all the fish.

[sherie]

Thanks for the fish 🤣