🐈 Community
» Forums » Freelancers » High Upwork fees
Page options
nikpopovic
Community Member

High Upwork fees

I know i´m not really discovering or mentioning anything new here, but it still bugs me a lot.  Don´t get me wrong, i love Upwork, it´s by far the best Freelancing platform, and the most professional.  But the fees just don´t inspire me to do much work here beside the contracts i already had before the increase happened. I know running a professional, multi country freelancing site isn´t cheap. I know having a good customer service isn´t free. And i know a site cannot advance and evolve without the necessary funding. But what´s the point of that when it doesn´t even pay off to do work anymore? I know the threshold moves back to 10% when the total earnings get over $500, but let´s be honest here. A lot of the tasks are either one time projects or have smaller budgets, and when i see that out of my $250 bid of real-cost-for-real-work , $50 will be taken away, i just loose any interest in applying for work. And that´s only a part of it, since i´m from the EU, and have one of the highest VAT in the Union, so add an extra 25%  on those $50.  I have 3 options: 

 

1.) Charge more the client to get the same amount. The client is in the disatvantage. 

 

2.) Charge the same amount, and work for less money, meaning: underpaid/work for free. I am in the disatvantage.

 

3.) Don´t apply at all.  I don´t get to work and make money, the client doesn´t get his work done and goes elsewhere to get it done, Upwork doesn´t get any fee money from my work and looses a potential client. Everybody looses. 

 

The last point might be exagerated, as there are probably other freelancers that will do the work instead of me. But what´s the point then being a constant 100% Job Success Top Rated Freelancer when you barely do any work? I doubt the goal of this site is to have excellent freelancers as a display, instead of reliable service providers aka quality work force.  Because of these policies i started looking elsewhere for work, and 95% of my clients are now working directly with me, without any platform attached. I am not writing this post to judge, offend or steam out angry emotions, i am writing it as a plea to balance things. I don´t depend on Upwork in any way as i earn my monthly paycheck from my direct clients exclusively, but i would love to do more work on the platform as well. There are specific tasks that i would like to take on, or i just know it would be a perfect fit for my skills. I enjoy providing a good service and making my clients happy, for a reasonable and fair price. It´s this fee structure that prevents me from doing that. I wouldn´t mind the VAT at all if the fees for all EU freelancers were the standard 10%, regardless of the earnings. Or at least if every freelancer could choose his plan, as i´m sure that there are ´lancers out there that have earned over 10k with a client and benefit from that 5% fee. For the rest of us, it would make sense to have the plan stick to 10% permanently. No 20% or 5%. I am pretty much sure there are other people that think similarly, or at least agree with me on some points written here. I accept constructive criticism and different opinions, but please keep this topic well argumented and polite. I am writing this in hope we can change something on Upwork for the benefit of us all, thank you. 

ACCEPTED SOLUTION
petra_r
Community Member

I build all fees and costs into the rates I charge. That's how businesses work.

 

View solution in original post

31 REPLIES 31
petra_r
Community Member

I build all fees and costs into the rates I charge. That's how businesses work.

 

When you have jobs and good clients all the time, there is no problem to pay 20%. 


@Milan R wrote:

When you have jobs and good clients all the time, there is no problem to pay 20%. 


 And when you have good jobs and good clients all the time, you DON'T pay 20%, because you quickly pass the $500 mark. You end up paying 10% + $50.

 

Upwork really doesn't work well for freelancers whose business model involves a lot of small one-off projects. That sucks if that's your business model (or just the nature of your industry), but those little jobs aren't profitable for Upwork. Any business is going to reward the type of business that makes it money.

versailles
Community Member


(deleted)
-----------
"Where darkness shines like dazzling light"   —William Ashbless

I live in the United States, and my marginal income tax rate is 25% -- and that is just the income tax rate that I pay to the federal government. I pay another 15% in Social Security taxes to the federal government -- so that's a total of 40% of my net income to the U.S. government. Then I pay about 6% of my income to the Commonwealth of Massachusetts.

 

You guys in Europe think you pay high taxes with VAT?

True, but some would argue that we have state 'communial taxes' whether you use the services or not, regardless of your income or where you live.
melaniekhenson
Community Member

If you were to advertise for yourself, it would certainly cost you money.

 

If you feel you could advertise yourself just as adequately, for free (on FB, for example), then do that instead - why pay Upwork fees? But my guess is you can't, or that's what you'd be doing, and bringing in just as much money without paying anything at all.

 

As for taxes - weren't you going to have to pay those anyway? All this should already be figured into your business plan, Upwork or no Upwork.

 

@Petra R wrote:

I build all fees and costs into the rates I charge. That's how businesses work.

 


Actually, savvy businesses try to charge the amount that will maximise their profits given market conditions. If they are already charging the optimum price, then an increase in their price will typically mean a fall in profits (due to lower demand). If businesses could automatically pass cost increases on to their customers without any loss of income, they would be indifferent to their costs. But that's generally not the case.

 

If you've managed to pass a cost increase on to your clients without losing money (other things being equal) then you were previously charging less than your optimum price.


@Richard W wrote:

If you've managed to pass a cost increase on to your clients without losing money (other things being equal) then you were previously charging less than your optimum price.


 Yup, guilty as charged 😄

 

But........................... look at the OPs profile.... He could (should?) charge significantly more, too.


@Richard W wrote:

  

Actually, savvy businesses try to charge the amount that will maximise their profits given market conditions. If they are already charging the optimum price, then an increase in their price will typically mean a fall in profits (due to lower demand).

 

In this context, this assumes that all freelancers (or, at least, a significant number of freelancers) are created equal. When a freelancer (or any other business) offers a premium service, there is no "market price" for what they provide, since it's in scarce supply elsewhere.

I agree with you on the advertising, but not necessarily on the taxes. Some countries have an income threshold and if you don't meet that each year; a part time job or retired and just looking for "pocket money" you don't qualify to pay tax.
tlsanders
Community Member


@Nikola P wrote:

 

 

2.) Charge the same amount, and work for less money, meaning: underpaid/work for free. I am in the disatvantage.

 

Not really. Not if you're thinking like a business person.

 

Different estimates place the percentage of time a freelancer spends on unpaid tasks such as seeking out work and invoicing at between 30% and 70%. 

 

Let's go with the optimistic view and say that your administrative investment in finding new clients, billing them, collecting, etc. would be 30% of your work time.

 

That means that in a 10 hour work day, you can bill 7 hours. Or, you can work through Upwork and bill 9.5 hours.

 

If your hourly rate is $20/hour, you can bill $190 through Upwork and pay $38 in fees, for a net revenue of $152. Or, you can bill 7 hours outside of Upwork with no fees for a net $140.

 

Of course, that assumes that you don't spend a single dime on your efforts to solicit business...which also means that your efforts to draw in new clients are probably much less successful than Upwork's widespread advertising campaigns.

 

 

sivavranagaro
Community Member

If you raise your rate to $20 you'll earn same as before, and no client will be on disadvantage because they choose to hire someone for $20 and not $15. I would recommend to go for the first option and continue applying for jobs. 

____________
Don't correct my grammar!
c2a4e43a
Community Member

Sad to see the Upwork fanboys and girls dismiss the high fee's argument.


@Sam T wrote:

Sad to see the Upwork fanboys and girls dismiss the high fee's argument.


 You mean the people who make a healthy profit through Upwork and find the fees to be worthwhile?

 

I'm not sure why you think it's "sad" that others are successful, but it doesn't speak well of you.

 

 

versailles
Community Member

(deleted)

-----------
"Where darkness shines like dazzling light"   —William Ashbless


@Rene K wrote:

(deleted)


 Deleted as well. Fanboys/fangirls? Really?  

msublette
Community Member

I know that I've also said this before.  If you are working through Upwork, you are working for yourself.  You are not working FOR Upwork.  You can set your fee to whatever you want.  If you believe you can make more locally, doing the job you are doing, you should definitely do that.  I have clients on Upwork and I have local clients.  But I live in a small city and local clients are not readily available.  Plus, cost of living differences and all, my clients on the coasts will pay me more than my local clients for the same work and I don't have to move and I can continue to live in an area with a lower COL.  If I did not use Upwork, I would have to be out every day drumming up clients.  I would incur significant costs...website, brochures, lunches, travel, other advertising, etc.  I may go weeks and weeks between projects.  Plus it's tiring.  To me, Upwork is a luxury.  It is a cost I incur to match my skills with clients who need to hire a small (1-person) company.   If I have 2 days that I don't have a job, then I can spend an hour replying to bid invitations and get something in a matter of hours to fill that time.  Where else can you do that?

 

Also, after just $500, the fee drops to 10%.  At this point most of my clients are able to hit that within the first day of me working for them.  That's nothing compared to advertising.   If you are truly offering a service that people need, with experience to back up your fee, people will pay.   If you don't, then it's possible this isn't the right platform for your skills.  I read here all the time about people not being able to find work.  I turn work away every.single.day. here on Upwork.

jbmaverick
Community Member

The 20% fee is outrageous - you can't possibly defend that. Hell, a personal literary agent doesn't charge that much!
Even 10% is way too much once you learn that they only charge clients 4%. Yeah - the companies that have money only have to pay a measley 4%, while Upwork takes 20% out of the pockets of the starving freelancers. Whose idea of fair is THAT?

So, Upwork gets a total of 24% of every job - and freelancers pay 80% of that total. How fair do you think that fee structure is NOW? Huh?

 

I can tell you this much, too - and this is another clear indication that the freelancer fees are way too high. Before Upwork raised the fees from 10% to 20%, I think I had one client in three years ask about paying me outside of Upwork (in order to get a lower rate - because I do build Upwork's fees into my fees and I tell clients that right up front, that part of the reason for my fee is that when they pay me $100, I only end up getting $80.) Since Upwork DOUBLED their freelancer fees, I'd estimate that about three-out-of-four of the many clients I've dealt with have asked me about making payment arrangements outside of Upwork.

J.B. Maverick

re: "The 20% fee is outrageous"

 

The fee is voluntary.

Nobody in the entire world is required to pay Upwork fees.

Nobody is required to use Upwork.

 

You are welcome to use other comparable services with lower fees, or set up your own website or other resource from which you market your services.

 

re: "I'd estimate that about three-out-of-four of the many clients I've dealt with have asked me about making payment arrangements outside of Upwork."

 

That is not my experience. I think if you ask most regular Forum participants, they would say that such a thing is very rare.

 

Maybe there is something about your communications with clients that lead to this.

"Maybe there is something about your communications with clients that lead to this"
Seriously? Well, since my communication style is pretty consistent, please enlighten me with your logical explanation as to why the drastic change in the frequency of this happening.

"The fee is voluntary."
Well, DUH, yeah. But not really - it's not like it's a donation and I can just pay Upwork whatever I want to. It's ony voluntary to the extent of, "If you want to get any work from here, here's what it costs. If you'd like to try to live without any income, then you can VOLUNTARILY opt not to pay it."
The fact that it's voluntary has no bearing at all on the question of whether or not it's a fair or reasonable fee.

 

Just a point of information: With most successful companies, the price of their goods or services goes DOWN as they become more successful, not UP - this is due to the business achieving economies of scale.  In short, when a business is first starting out and has few customers/clients, it might need to have a 50% profit margin just to make enough absolute dollars to stay in business - but once it has, say, a thousand customers, it can usually afford to do with a lower overall profit margin. Well, Upwork isn't shy about crowing its success, but apparently, for Upwork, having twice as many customers somehow necessitates them charging twice as much for their services. (Can you spell "GREED"?)

Just out of curiosity, do you think it's fair that the freelancers should have to bear the burden of providing 80% of Upwork's total fees while clients only contribute 20%? Between clients and freelancers, who do you think generally has a greater ability to bear the cost?

And if you think a fair price for merely hosting a site where you can connect with potential clients is TWICE what you'd pay a literary agent who ACTIVELY seeks out work for you and negotiates deals...well, you're welcome to that opinion.

J.B. Maverick


Johnathan M wrote:

"
"The fee is voluntary."
Well, DUH, yeah. But not really - it's not like it's a donation and I can just pay Upwork whatever I want to. It's ony voluntary to the extent of, "If you want to get any work from here, here's what it costs. If you'd like to try to live without any income, then you can VOLUNTARILY opt not to pay it."

 

Exactly: if you find it more cost-effective to work through Upwork despite the fee, then you can choose to do so. If you could generate a larger profit finding work through other channels, any sensible person would of course choose to do so. So, only those of us for whom the arrangement is profitable will choose to stay (unless we're very, very poor business people).


The fact that it's voluntary has no bearing at all on the question of whether or not it's a fair or reasonable fee.

 

Sure it does. Because, again, if what you're getting from Upwork isn't worth the fee, you will of course leave.

 

Just a point of information: With most successful companies, the price of their goods or services goes DOWN as they become more successful, not UP - this is due to the business achieving economies of scale.  In short, when a business is first starting out and has few customers/clients, it might need to have a 50% profit margin just to make enough absolute dollars to stay in business - but once it has, say, a thousand customers, it can usually afford to do with a lower overall profit margin. Well, Upwork isn't shy about crowing its success, but apparently, for Upwork, having twice as many customers somehow necessitates them charging twice as much for their services. (Can you spell "GREED"?)

 

I don't know where this "crowing" is going on. Upwork has never made a profit. Even after raising fees to stop bleeding money on the tiny jobs that were a net negative for it, the company continues to operate at a loss. 

Just out of curiosity, do you think it's fair that the freelancers should have to bear the burden of providing 80% of Upwork's total fees while clients only contribute 20%? Between clients and freelancers, who do you think generally has a greater ability to bear the cost?

 

Clients provide 0% of Upwork's fees. What the client pays is a payment processing fee that is charged to Upwork and passed on to the person processing the payment.

 

I think that's entirely fair, since Upwork saves the freelancer a huge amount of time and money while providing almost no services to the client.

 


Johnathan M wrote:


Just out of curiosity, do you think it's fair that the freelancers should have to bear the burden of providing 80% of Upwork's total fees while clients only contribute 20%? Between clients and freelancers, who do you think generally has a greater ability to bear the cost?


100% of the money comes from the clients.

Oh and the client payment processing fee is 2.75% - not 4%

 

The fee is also only 20% for the first $ 500, then it drops to 10% and eventually to 5%.

When the fee increased I recalculated my prices to take this into account, which means I was no worse off, and after $ 500 / $ 10.000 I get a rate increase.

 


Johnathan M wrote:

because I do build Upwork's fees into my fees and I tell clients that right up front, that part of the reason for my fee is that when they pay me $100, I only end up getting $80.) Since Upwork DOUBLED their freelancer fees, I'd estimate that about three-out-of-four of the many clients I've dealt with have asked me about making payment arrangements outside of Upwork.



Well, that's hardly surprising, since you're raising your rates and then announcing to client's that you'd work cheaper if you didn't have to pay Upwork fees. Sounds more like YOU'RE asking to work outside of Upwork, but doing it in a way that makes the client think it was his idea.

J.B. Maverick:

I do not doubt that you are sincere.

 

But the types of questions you are asking just don't hold resonance with me.

 

When it comes to Upwork, I'm clearly not as philosophical as you are.

 

I'm more of a mercenary than a philosopher.

 

Consider this case study:

 

John worked for 10 hours on "Platform A". He earned $1000.

 

John worked for 10 hours on "Platform B". He earned $2000.

 

He did the same type of work on both platforms.

As a mercenary, I look at these numbers and think that Platform B is better. Because John earned twice as much.

 

But I haven't told you the full story yet:

 

Platform A charges a 5% fee.

Platform B charges a 30% fee.

 

The philosopher looks at the 30% fees and says "That is bad." Or "that is unfair."

 

The mercenary doesn't care that Platform B has an "unfair fee percentage." The mercenary is just glad that he earned twice as much money working on Platform B.


Preston H wrote:

 

The mercenary doesn't care that Platform B has an "unfair fee percentage." The mercenary is just glad that he earned twice as much money working on Platform B.


I fall somewhere in the middle of this, since the fees do somewhat irk me, but at the same time there is just no way I would have the time or energy to source out the amount of high-quality, reliable clients that I can find here with some quick scrolling and reading. The time that saves me is already worth it because that's so much less time I would have to be productive and earn money.

Petra had mentioned that clients benefit very little from the platform; financially, sure, but at the same time I do think that it is almost impossible to find another freelance site with qualified candidates available on tap like this - it saves them a LOT of time and effort to be able to make a job post and have some indicators such as top rated, earnings, etc. to give them a filtering method to choose someone. So I kind of genuinely do believe the fees should be shared, but at the end of the day it still won't stop me. My earnings are still worth it. And Petra's point about building the fees into your pricing is 100% true because it works for me, the only time I ever mention the fees is if the customer tries to haggle me down a bit and then I say I'm sorry but that's not possible due to the hit I'm taking from site fees, unfortunately that is the price. If they protest a second time, I don't want to work with them anyways since it's asking for trouble. While this doesn't work for everyone, if you have the skills / talent / reputation, 9 out of 10 times people aren't going to try and haggle over it.

Yes, but as I said, it has to be relative. There are jobs that are highly skilled but taken for granted and treated as those we are still living in the dark ages. Such jobs are manual jobs and deserve to be paid in pounds/dollars and not in nickles/pennies.
Incidentally, to gauge if there is unfairness, it would be interesting to know what services of work people provide if they're fighting off work and making £500 in a few days, against those who are equally talented in their own right, but not in a position to achieve that because of the 'worth' of their services.
wlyonsatl
Community Member

Upwork can't report earnings to its shareholders even with its current fee for freelancers, so don't expect any reduction in those fees for the foreseeable future.

Freedom of choice is a wonderful thing.  Upwork isn't for everyone.  For that matter freelancing isn't either.

bgies
Community Member

Yeah, I feel your pain. I don't bid for any projects less than $500 anymore, it's just not worth it, and I don't bid on projects that have more than 20 bidders. Since the change in Upwork fees, I calculate my costs per bid as about $1 for every other bidder. After all, if there are 35 other bidders, then if everything is equal, I'd get one in 35 of those jobs, and it costs about a dollar per bid now. I also check the clients profile very carefully, and don't bid on any jobs for new clients. 

 

I'm very disappointed with Upwork lately. I've never done that much work on Upwork because I get a lot more per hour when I find the clients myself, and now with the additional costs I think about every bid, and most of the time, I decide not to bid. 

 

Upwork must be under new management or they're trying a new business model, and it doesn't work well for me anymore.  

 

 

craftandsew75
Community Member

Even though this is an old post, this type of payment structure is very current. I have to agree. Most jobs have to be worth doing and paying for. You wouldn't charge someone £100 just to sew on 4 buttons, because you can't afford to be penalised by the % of low paid jobs. The client wouldn't pay that anyway, but my point is, whatever you're offering to do or pay, it has to be relative.
Latest Articles
Upcoming Events
Jan 31
Feb 28
Upwork Community Virtual Hour
Community Hour English
Mar 28
Upwork Virtual Community Hour
Community Hour English
Learning Paths