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Applying Service Fee to Bonus Payments?

Ace Contributor
Ozan S Member Since: Dec 30, 2017
1 of 13

I've seen a few threads discussing this, but no official response from Upwork regarding the matter, so I'd like to know why.


I understand that any form of payment without a service fee applied is open to abuse, but this can be avoided by setting up bonuses by percentage (just like tipping IRL) and by capping them at an amount. Instead, the exact same service is applied to bonuses.


I'd like to know:


1. Whether the bonus payments have ALWAYS been charged, or this has started after a history of abuse;


2. If clients know that Upwork takes cut from the bonuses.


Honestly, this is the first time I see a service charging tips. They are typically (at least in my case) ~$10 anyway, and seeing that 20% taken as a cut is just discouraging and even somewhat unpleasant.

Community Guru
Preston H Member Since: Nov 24, 2014
2 of 13

Ozan: This has been discussed many times. You can search for already-existing threads discussing the topic.


To answer your question:

1) Yes, fees have ALWAYS been charged for bonus payments. System designers knew from the outset that to do otherwise would open up the system abuse.


2) Do clients know that fees are taken from bonus payments?


Some know. Some don't.

In a very real sense, it is a matter for freelancers, not clients.


There is certainly no rule prohibiting a freelancer from telling clients that fees are taken out of bonuses. I certainly would never do that. But you are allowed to tell clients.


"Franklin: Thank you for the $20 bonus. I really do appreciate it. It wasn't necessary of course. But it meant a lot to me. By the way, Upwork takes 20% out of bonus payments. So can you pay me another $5 to cover the fees that Upwork collects?"

Ace Contributor
Ozan S Member Since: Dec 30, 2017
3 of 13
Thanks Preston. As I mentioned, I've seen the threads discussing this, but couldn't see any responses directly from Upwork employees, or they just escaped me.

How could the system be abused if the bonuses were set by percentage and then capped? For example, 5%, 10% and 20% bonuses would be allowed, say, capped at 20$. If the budget was 100$, the maximum a freelancer get would be 20$. Am I missing something here?

"It is a matter for freelancers, not clients." -- I disagree. Most would consider charging tips inappropriate. I, for one, would not even tip the freelancer in that case. I want to award her/him for the extra work/care s/he provided me with, completely voluntarily -- why does Upwork get something out of this? And even then, why as much as 20%, the exact same rate as the regular payments?

I personally would never bother a client that way. I'm really just trying to understand the motivation behind this and would like to hear it from Upwork in particular.
Community Guru
Petra R Member Since: Aug 3, 2011
4 of 13

Ozan S wrote:

"It is a matter for freelancers, not clients." -- I disagree. Most would consider charging tips inappropriate. I, for one, would not even tip the freelancer in that case

Really? How incredibly mean. You'd deprive the freelancer of a bonus tip simply because obviously, the fee applies?


Ozan S wrote:
I want to award her/him for the extra work/care s/he provided me with, completely voluntarily --

Why would freelancers do free work?

What in the world do you mean "extra care?" - Either you take care with your work, or you do not.

Free work is inappropriate, "extra care" is nonsense.


Rather than whining about the fee, I think freelancers should concentrate on the 80%, 90% or 95% of the bonus they have in their pocket.


Obviously, if you resent the fee so much, simply refund all the bonus money your clients send you and be done with it.




Ace Contributor
Ozan S Member Since: Dec 30, 2017
5 of 13
First off, please mind your language. No one's "whining" here, this is a forum for discussion and that's exactly what I'm doing.

Secondly, if the client is unaware of the fact that their tip is not paid to the freelancer in full, they may not agree to paying it at all, not to deprive the freelancer of the tip, but to protest the cut. It's not an appropriate practice in my country, and I know some countries even ban services/places charging fees to tips.

The client sets the requirements and says the turnaround is a week, I handle the job in an hour, so he decides to pay a few dollars extra. This is not free work.

There are more important things than "pocketing 80%, 90%". But I won't judge you for having such mindset, especially after seeing your language and your tone. Have a nice day.
Active Member
S Z Member Since: Sep 10, 2019
6 of 13

Just a note from a client doing a little research regarding Upwork's fee structures.  I had no idea that the same fees were charged on Bonus payments, and I'm actually a bit dismayed to read that.  Strictly speaking from my own perspective, when I'm paying a bonus, I'm giving a gift.  I'm saying thank you, for going above and beyond the service we contracted for. 

Now granted I understand a) Upwork is in the business to make money and b) they don't want people abusing the system to avoid the fees.  But, if the freelancer does a good job, then the clients will continue to hire Upwork and Upwork will continue to profit from the fees charged for the contracted services.

As far as minimizing gaming of the system - it would be very easy to build controls into the system that discourage this...  e.g. as mentioned by someone else previously, bonuses could be offered as a percentage of the contract (5%, 10%, 20%.  There could even be an option to pay your freelancer a higher bonus with the understanding that a service fee would be charged, etc.). 


Please know, BTW, I'm not in any way suggesting that the example above is the "right" answer. There are a million ways to structure this that would minimize "gaming" and a lot more thought would need to go into this than what I've put in up to this point.  I just think the current system is flawed and I believe most clients would be disappointed to hear their gift was not going to the people who earned it.  (As a client, offering my own personal opinion, it feels to me like the restaurant is taking money out of the waiter's tip jar - and I'm not quite comfortable wtih that).   


Anyway, enough said.  There is a structure that could be put in place that would make "most" people happy - if Upwork were genuinely interested in addressing this.  Unfortunately I don't believe this is likely to occur unless more clients become aware of this and it becomes a problem that begins to affect their bottom line.  


So, my thanks to all of you for letting me know the situation with your bonuses.  I wish I could do more other than say I support you.

Community Guru
Ramesh K Member Since: Oct 25, 2015
7 of 13

Anyone paying Upwork a bonus in order to thank them to provide such a wonderful medium to link the freelancers & clients? Smiley Happy

Ace Contributor
Ozan S Member Since: Dec 30, 2017
8 of 13

@Ramesh K

Sure, because they do it for free, right?

I too love this platform, but you lot are being unbearably nonsensical every now and then.

Active Member
Zufi s Member Since: Jul 29, 2019
9 of 13

Upwork is already getting bonus in the name of service fee 

Ace Contributor
Ozan S Member Since: Dec 30, 2017
10 of 13

@S Z Honestly I have been expecting more attention to this matter, yet since the forum is mostly (unsurprisingly) used by those who earn many thousands here, they don't really seem to mind the cut from their bonuses (perhaps because they don't receive that many). Call me presumptuous, but I've been here for long enough to see this happening over and over again -- these people NEVER talk against the way things work here.


Thanks for bringing this up again, especially as a client. I sincerely hope it will be addressed one day.