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Client Minimum Budget and Hourly Rate Criteria

lanwanman
Community Guru

If I recall correctly, Upwork previously imposed a minimum rate requirement of $3 per hour for hourly jobs, which to me was a first-step, move in the right direction for all involved. However, with the more recent introduction of the new sliding service fee structure, I believe it is time for Upwork to take both a budget minimum and the hourly minimum rates to the next level.

 

A realistic budget minimum and a more realistic hourly minimum need to be set that are commensurate with the new sliding service fee structure. My hope is to eliminate or reduce job descriptions and invitations like the scenario described below:

 

Scenario: Today, I received and promtly declined an invitation (that I am supposedly required to reply to within 24 hours in order to maintain my 100% CS score -- unfair performance criteria I have suggested be eliminated)...for WordPress development of a website from scratch -- indicating less than 5 proposals, seeking Expert Level $$$, and on a $30 budget! In addition, the client had a poor rating of 4.36 with only 18 reviews. Now, how dumb is that?

 

With the new sliding service fee structure in mind, in my declining message I suggested to the client that he/she try Fiver.

 

Additionally, I do not think that clients are even reading freelancers' profiles before inviting them to bid. My profile includes some verbiage regarding payment e.g., "Pay rates are negotiable dependent upon...and estimated gross earnings...." Regarding earnings I added "$501 or greater preferred" in light of the new sliding service fee structure, which I fully support.

 

If Upwork intends to improve ROI for Upwork itself, Upwork clients, and even Upwork freelancers, and as long as Upwork has to compete with the likes of professional sites like Toptal and Flexjobs (TT and FJ), they need to make changes that will advance the more successful and professional freelancers and clients on the Upwork platform.

Ron aka LanWanMan
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tlsanders
Community Guru

@Ronald T wrote:

 

 

Regarding earnings I added "$501 or greater preferred" in light of the new sliding service fee structure, which I fully support.

 

 


 How exactly does $501 help you? You get to keep 90% of that one extra dollar, sure, but it's not going to have a big impact on the bottom line.

 

If the job is $499, you pay 99.80 and keep 399.20. If it's 501, you pay $100.10 and keep $400.90. 

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tlsanders
Community Guru

@Ronald T wrote:

 

 

Regarding earnings I added "$501 or greater preferred" in light of the new sliding service fee structure, which I fully support.

 

 


 How exactly does $501 help you? You get to keep 90% of that one extra dollar, sure, but it's not going to have a big impact on the bottom line.

 

If the job is $499, you pay 99.80 and keep 399.20. If it's 501, you pay $100.10 and keep $400.90. 

Hi Tiffany!

 

I maintain both a formal business plan and financial plan all tied into forecasting, budget, and tracking documents established using Excel. My $501 minimum criteria is intended to avoid dealing with the 20% fee at all; maintaining my previously budgeted expense for the 10% fees with hopes of reaching the $10,000 metric in order to maximize profits.

 

My business strategies are not necessarily based on outcomes from one or just few jobs -- a few dollars. I attempt to establish and document business practices that will succeed meeting targets and goals based on three to five year planning.

 

As indicated in my Upworjk profile, I have not had much success on this platform since oDesk became Upwork. I still like the Upwork platform and hope to return to work here someday. Upwork offers me one sole benefit that I cannot find elsewhere.... For now, my work stems primarily from referrals, FJ, and some from TT.

 

ADDED: I am not certain, but in your example I think the 10% fee would apply to the entire $501 gross earnings. Maybe, maybe not. Nonetheless, I am looking at the collective, long-term outcomes not on a job-by-job )client-by-client) basis. Maybe one of the Mods can comment on how the fees would apply given a $501 gross.

Ron aka LanWanMan

Either I'm misunderstanding you or you're misunderstanding the system. If you earn $501 from a given client, you pay 20% on the first $500 and 10% on the remaining dollar.

Hi again Tiffany!

 

You are correct as I ADDED to one of my previous posts, I hope the Mods will clarify how the 20% fee (if any based on my interpretation) and the 10% fee would apply to a $501 gross. Tiffany, I suspect your interpretation is correct. I had not taken the time to look at all the examples Upwork supplied.

 

Again, I am looking at things from a long-term prospective -- the bigger picture. I have always considered the 10% fee as part off the cost for doing business via Upwork aka oDesk and had bid accordingly. Next, I need to determine the targets and goals that would make pursuing the 5% fee a worthwhile objective or not.

Ron aka LanWanMan

Ron, I can also confirm that Tiffany is correct. 20% fee is charged on the first $500 paid by the client to a freelancer, then 10% is charged on everything paid up to $10000 and after that 5% fee is applied.

 

You can read more information and examples here.

~ Valeria
Upwork

So can you please tell us that how many of your Contracts on Upworks are Lasting more than 10000$ ???

I think not more than 3 to 4 % 😛

"One thing I know, that I know nothing. This is the source of my wisdom"

Excellent question Mr M! Unfortunately, I doubt the answer is publicly available or that Upwork Community Mods or Managers will provided that information (information proprietary to Upwork?). I wondered the same thing...among other statistics not readily available if at all.

Ron aka LanWanMan

Why they are going to tell us this secret info ??
They never can..
Its just a way of marketing.
If they are really going to charge 20% on each and i can say that on 99% of their projects then this will be the most expensive freelancing website among all of the famous sites.

Note to upwork >>> Keeping the Freelancers away of your decisions and updates can never make you rich... That you want in just seconds 😛

"One thing I know, that I know nothing. This is the source of my wisdom"

@Mr M wrote:

So can you please tell us that how many of your Contracts on Upworks are Lasting more than 10000$ ???

I think not more than 3 to 4 % 😛


I'm sure there are a few.  I figure the largest percentage is between $500 and $10,000 in which the rate is saying the same.   

"Fairness is giving all people the treatment they earn and deserve. It doesn't mean treating everyone alike-Coach John Wooden"

I am not talking about the job posted by someone and the budget is more than 500$ .... 

"One thing I know, that I know nothing. This is the source of my wisdom"

@Mr M wrote:

I am not talking about the job posted by someone and the budget is more than 500$ .... 


I understand that.  I assumed you were talking about any one freelancer's lifetime earnings with any one client.   

"Fairness is giving all people the treatment they earn and deserve. It doesn't mean treating everyone alike-Coach John Wooden"

Katrina, I would like to believe the "largest percentage is between $500 and $10,000 in which the rate is saying the same [10%]." However, I would not be surprised if the largest percentage are those below the $500 mark. Furthermore, even with a 20% fee, I believe that is barely a break-even point for Upwork. In other words, with a 20% fee it has been deemed by Upwork to be an acceptable loss.

Ron aka LanWanMan

Mr M,

 

Ron is correct and have explained before that this is not the kind of information we are able to share at this point. We have been discussing it with the team and will see if there is more we could share.

~ Valeria
Upwork

Ok i can understand but since upwork came .... I am hearing the same thing about anything that is been asked . 😛

"One thing I know, that I know nothing. This is the source of my wisdom"

Mr M, I believe it is about the same with Upwork as it was before the Elance / oDesk merger. That is, there has always been a reluctance to reveal too much information; information that could be misused or would give Upwork competition an advantage.

Ron aka LanWanMan

@Mr M wrote:

So can you please tell us that how many of your Contracts on Upworks are Lasting more than 10000$ ???

I think not more than 3 to 4 % 😛


More than that have been accounted for by a handful of people who have posted about the state of their own client lists in the forums in the past couple of days. 

Hi Ron, Tiffany is right: the fee for a 501$ earning would be of 100,1$ with the new sliding fee policy.
With the older one you would pay 50,1$.

 

 

Alessandro, I agree. What you and Tiffany are saying does make more sense. With that concept in mind, from approximately $501 to approximately $9,999 would be a 10% fee, and the amount from $10,000 and up would be a 5% fee.

 

In my particular case, I do not think I would benefit enough from the high-end of the new sliding scale fee structure; only because I would have too few clients whereby I would meet the $10,000 criteria. In my case I will, therefore, attempt to stay in the 10% fee bracket.

 

Alessandro / Tiffany, thank you both very much for your input!

 

ADDED: Thank you Valeria! Was that 5% or 3%?

Ron aka LanWanMan

I've been thinking about this.

If UW imposed a minimum hourly rate (you say they do of $3) that's fine but still not enough. At least not for those of us in industrialized nations. Freelancers in other nations may be happy about this still-low hourly. But doesn't help others.

And really, why should UW care about imposing a minimum hourly rate? If there are buyers that want to pay that low and freelancers willing, that's the free market at work. We who want $25 per hour or more can whine and complain but that's the reality of a certain segment of the market.

For UW to impose a minimum budget for the project, this amounts to the same thing. Not sure how that would work. I'm sure there ARE some small jobs that could be done for $25 even if you charge that per hour. I don't think UW wants to police that so don't expect something like that to happen.

I see job postings in my field too where the buyer is unrealistic, at least in my view. The solution is not to bid on them.

I had a joint venture with a developer and asked one day if they could develop a site (a job here on UW) for $3000 as that's what the maximum budget was. They say no, too busy and would only take new clients if the project was more than $10,000.

So that's what people like us have to do. Ignore the unrealistic and other vague descriptions or those with low value jobs and bid only on the higher value jobs. Of course, these are fewer but that's what you need to do. Leave the low value jobs to the low value freelancers.

As for the $501 thing, I see what you are trying to do. But I think you'll get curious responses. Typically, prices are x99. You don't see items at stores at $10.01 but at $9.99 so your $501 will seem strange to buyers.

Also, if the job is a $500 job, you gain nothing with the new structure. Even a $600 job you pay $110 or 18.3%

You are hoping that you'll get a job to reach $10k eventually. But how often does that happen? Maybe in your case if you develop sites but not for the vast majority of other types of jobs. There are a lot of writers here and I don't think many of them have long-time clients and reaching the $500 mark. It's a freelance site which by definition, most times it's short-term. But I hope it works for you.

The new fee structure is clearly stated: if you have a $501 job, you pay 20% on the first $500 and 10% on the rest up to $10k. That means you would pay $100.10 for that $501 job. That's a 19.98% rate overall.

Pierre, I appreciate your input regarding these matters. I too support the concept of a free market.

 

However, Upwork has highly suggested that freelancers raise their rates. Moreover, with the advent of the new sliding service fee structure (and charges to clients), Upwork has justifed their changes based on their adminstrative and support costs -- I agree with their claims. Upwork has made it clear on-site and off-site that Upwork is striving to improve their Upwork Enterprise operations.

 

Recall Upwork released statements publicy that one of their many objecives was to match clients with frrelancers within three minutes? (Or, was that three seconds...lol.... either way, sales hype in my opinion). Nonetheless, refering to the senario in my oringal post, how are such improvments going to be acheived? Clients wanting expert level $$$ work with a $30 dollar budget? Senarios such as these are a waste of time (probably more costly for Upwork), and often result in poorly executed contracts between lessor quality clients and freelancers.

Ron aka LanWanMan
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