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.
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?"
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.
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.
@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.