Fee structure of Upwork and client/freelancer rates

[placebofx]

I feel that the 20% fee Upwork charges freelancers is akin to Usury, meaning interest at unreasonable rates. I'm a freelance writer working in a market of competitors who charge next to nothing for an article. My jobs that take 2 days to do pay about $5/hr or less. I don't know how it works. Are clients getting charged nothing and we freelancers are bearing the burden of supporting Upwork? Can someone explain to me the system: are the clients are getting charged something or nothing. If they are getting charged, how do they pay and what is their rate?

[prestonhunter]

re: "Are clients getting charged nothing and we freelancers are bearing the burden of supporting Upwork?"

A client's credit card is charged.

Upwork doesn't charge my credit card.

I do some work, and a bunch of money goes into my bank account.

That's how it works for me.

When I go to spend all that money... At (for example) a restaurant, they are just happy that I'm paying them for the food they make. They don't care if Upwork's fee was 5% or 10% or 20% or 50%. And they don't care if the fee was paid by the freelancer or the client or somebody's grandmother.

If all the money is actually coming from the client's credit card - then precisely what the percent is and who is paying what is immaterial to me.

[mystudiomke]

Maybe look at it from a different perspective. You noted is unfair because you're competing with those would do the same next to nothing. That's the problem - you're competing with those in the lower range. Up your price, there is little to no competition up here. I tell you this from experience. 

I know I am not answering your question. Just giving you a different perspective. 

If you google how the Upwork rates work on the client side you will find the answer in the first page. 

Best,

[akbgill]

Clients are charged a 3% payment processing and administration fee on all payments.

The fee is assessed any time we charge your billing method and will show up as a separate item on your transaction history and payment receipt. The fee is calculated as a percentage on top of the payment you are making. For example, if you make a payment of $1,000, Upwork will charge an additional $30.00 fee for processing the payment.

For hourly projects, billing occurs weekly, so the processing fee is assessed when we charge your billing method each week and on any additional bonuses. For fixed-price projects, the processing fee is charged each time you fund a milestone or give a bonus.

Exceptions

The above fees and options don’t apply to clients who’ve signed a contract for Upwork Enterpriseservices, Upwork Business services, or have another agreement that provides for different terms.

[tlsanders]

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Annie T wrote:

I feel that the 20% fee Upwork charges freelancers is akin to Usury, meaning interest at unreasonable rates.

This strongly suggests that you don't really understand usury or why it is illegal.

I'm a freelance writer working in a market of competitors who charge next to nothing for an article. My jobs that take 2 days to do pay about $5/hr or less.

Don't take those jobs. My freelance writing jobs through Upwork pay $90-125/hour.

don't know how it works. Are clients getting charged nothing and we freelancers are bearing the burden of supporting Upwork? Can someone explain to me the system: are the clients are getting charged something or nothing. If they are getting charged, how do they pay and what is their rate?

The clients are not charged, which makes a lot of sense, since Upwork provides services to freelancers, not clients. for instance, Upwork does your marketing for you (at a cost of millions of dollars per month), takes care of your invoicing, provides payment protection (if you use the system correctly), and processes payments for you.

The clients pay the payment processing fee, which I believe is 2.75%. The vast majority of Upwork revenues come from its customers--us.

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[richard_wein]

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Tiffany S wrote:

The clients are not charged, which makes a lot of sense, since Upwork provides services to freelancers, not clients. for instance, Upwork does your marketing for you (at a cost of millions of dollars per month), takes care of your invoicing, provides payment protection (if you use the system correctly), and processes payments for you.

The clients pay the payment processing fee, which I believe is 2.75%. The vast majority of Upwork revenues come from its customers--us.

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Upwork takes a slice out of the payments from client to freelancer. It doesn't make much difference which party hands over that slice to Upwork.

When I buy goods in a shop, it's the shopkeeper who hands over the VAT to the taxman. That doesn't mean that I'm not paying any VAT.

Petra says that she sets her rate at a level that covers Upwork's fees. So who's paying the fees, Petra or her client? 

Why do so many scammy clients try to pay for work outside Upwork if it's the freelancer who pays Upwork's fees? Are they just doing the freelancer a favour? 

[petra_r]

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Richard W wrote:

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Tiffany S wrote:

The clients are not charged, which makes a lot of sense, since Upwork provides services to freelancers, not clients. for instance, Upwork does your marketing for you (at a cost of millions of dollars per month), takes care of your invoicing, provides payment protection (if you use the system correctly), and processes payments for you.

The clients pay the payment processing fee, which I believe is 2.75%. The vast majority of Upwork revenues come from its customers--us.

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Upwork takes a slice out of the payments from client to freelancer. It doesn't make much difference which party hands over that slice to Upwork.

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It is purely window-dressing. Until 2013-ish it was officially the client paying the fees, afterward, it became the freelancer. On paper.

In reality, nothing changed, all the money came and comes from the client. The client pays $ 10 and the freelancer ends up with $ 8 either way.

All of the $ 10 comes from the client.

[feed_my_eyes]

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Richard W wrote:

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Why do so many scammy clients try to pay for work outside Upwork if it's the freelancer who pays Upwork's fees? Are they just doing the freelancer a favour? 

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I imagine that in most cases, the scammers want to take their projects off-site because they're doing something illegal and/or they don't intend to pay at all. 

[pankajmyra]

Very true but Up work is helping us.

[petra_r]

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Annie T wrote:

 My jobs that take 2 days to do pay about $5/hr or less. I don't know how it works.

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Clearly.

[tlbp]

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Annie T wrote:

I feel that the 20% fee Upwork charges freelancers is akin to Usury, meaning interest at unreasonable rates. I'm a freelance writer working in a market of competitors who charge next to nothing for an article. My jobs that take 2 days to do pay about $5/hr or less. I don't know how it works. Are clients getting charged nothing and we freelancers are bearing the burden of supporting Upwork? Can someone explain to me the system: are the clients are getting charged something or nothing. If they are getting charged, how do they pay and what is their rate?

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If you borrowed money from Upwork, and they charged you interest, then your post might make sense. Otherwise, it just appears that you found a word you like and want to use it. There are many writers here who make a very comfortable hourly rate for their work.

Clients are charged for the work they purchase from freelancers. They are charged whatever rate the freelancer chooses. Choose to charge your clients a rate that represents your value.