Ridiculous Opt Out fee

chineseteacher · ‎04-18-2020

I have a client that I have been working with on and off for about 6 months.

I have earned a TOTAL of $6000 over the past 6 months.

There is the opportunity for me to focus on this client and increase my workload if I am able to work directly with the client so I inquired about the opt out fee.

Upwork replied the opt out fee would be over $18,000 !!!!

How is this crazy figure calculated ? Of course I will never take this opt out and continue to work through upwork as before. Based on the previous 6 months of $6000 that's an average upwork fee of $100 per month. Therefore if I continue at the same rate of work upwork will earn a TOTAL of $2400 or so over the 2 years after which I am free to leave upwork.

The minimum opt out fee is $3500 as stated in the terms.

So if I don't take the increased workload and continue as before upwork will earn $2400 from me

If they want to offer the $3500 opt out then I would consider it. Upwork would earn an ADDITIONAL $1100, but instead they want to try to make $18,000 which will never happen.

As a result everyone will lose out. Why ?

Is there anyone at upwork who is smart and can see the advantage of allowing me to take the $3500 opt out ?

If not then I will just continue as before and upwork will continue to earn a measily $100 a month or so. Everyone loses

gilbert-phyllis · ‎04-18-2020

Why does increasing your workload with this client depend on not working through Upwork? That's a strange condition.

The opt-out fee is structured to discourage people from leaving the platform. That is the only way UW can hope to turn a profit and stay in business. I get a good ROI on Upwork fees. I'd have to spend far more in marketing to connect with the best of the clients I've found (or who have found me) on the platform.

Once you hit $10k, the UW fee will drop to 5%. Let's say you continue at $1,000/mo. The first 24 months, you'll earn $24k and pay UW fees of $1,750, an average of $73/month. For that investment, you get the connection with the client in the first place; invoicing and payment processing; and, if you are tracking hourly using the desktop time tracker, near-bulletproof payment protection. Plus the benefit of the long-term client with high billing factoring into your JSS, so it helps you attract more quality clients. And it's a deductible business expense.

chineseteacher · ‎04-18-2020

It's because if I can opt out then I get a slight increase in my earnings which will make it worth it for me to accept an increased work load

I have many clients outside outwork that pay higher. My time is limited so I need to decide where I spend my time. If I can't pay the opt out fee then we will just continue to work as we have been ie passively when I have the time available

I need to focus on my higher paying clients.

I actually forgot about the $10,000 drop to 5% clause so even if upwork offered my a buyout at $3500 then it might be cheaper and easier to ride out the 2 years at 5%.

thanks for reminding me of that

But still, I want to know why I was quoted $18,000 to opt out. That's just insane.

prestonhunter · ‎04-18-2020

James:
It is not Upwork's intention that anybody actually pay this fee.

Upwork wants people who use the site to find work to simply work through the platform so that they collect a percentage of money earned. Typically that is 10%.

This really is not unreasonable.

If you really want to stop doing that after 2 years, then Upwork is fine with that.

chineseteacher · ‎04-18-2020

Based on the $18,000 quote I think it's obvious

I think I will certainly continue to use them, I forgot about the 5% reduction after $10k

However I still want upwork to reply about the $18k estimate. If they can give a reasonable opt out I might accept. If they stick to 18k then we just continue as normal 10% then 5%

Am I right in understanding after 2 years there is no red tape to opt out ? We can just start dealing directly on the 2 year anniversary ? No need to even notify upwork ? Has anyone done the post 2 year opt out ?

Thanks

versailles · ‎04-18-2020

James A wrote:

Am I right in understanding after 2 years there is no red tape to opt out ?

I don't think so. Well I hope there is no red tape since I pulled one contract off platform after 2 years 🙂

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

prestonhunter · ‎04-18-2020

re: "Am I right in understanding after 2 years there is no red tape to opt out?"

There is no red tape.

It is on the honor system.

chineseteacher · ‎04-18-2020

This is my first time using this forum.

Does upwork officially answer any questions here ? Or is this just a forum for other freelancers to share their knowledge and experience ?

I'm seeing replies from people with the title "guru" but I'm not sure if that means you actually represent and speak for upwork, or if you are just a very active and helpful contributor to the forum.

When dealing with things that pertain to legalities, naturally I want to be 100% clear on the legalities so as not to be surprised by some lawsuit.

Obviously I'm in no hurry for the answer. A lot can happen in the next 1.5yrs . I'm more than happy to continue with upwork at 10% now and 5% after $10k.

prestonhunter · ‎04-18-2020

re: "Does Upwork officially answer any questions here?"

Upwork moderators often answer questions in the Forum.

But the forum is called the "Community Forum" because the people who participate in it come from throughout the Upwork community: cients, freelancers and (sometimes) Forum Moderators who are official Upwork employees and (even less frequently) other Upwork employees.

All of the people who participate in the Forum do so voluntarily, except the Moderators, for whom it is their job. The Upwork employees including moderators have a little Upwork logo next to their names. The rest of us do not.

It is extremely rare for an answer to actually be needed from a Forum Moderator. Most of the time they don't particpate in threads at all. And usually when they do, they are only confirming information that has already been provided by knowledgable Upwork users.

petra_r · ‎07-12-2020

deleted as I was responding to an old post

alexandernovikov · ‎05-02-2022

The only thing i don't like about opt-out fee is that it does not seem to take the "time from first contact" into consideration. That is, after 2 years of first contact there is no need for opt-out fee because i can work with a client directly anyway, according to the rules. But somehow opt-out fee 6 months and 18 months after first contact seems the same, which isn't logical to me.

Never did it anyway; because clocking up Upwork history improves sales, which is what i recommend everyone anyway.

gilbert-phyllis · ‎04-18-2020

James A wrote:
It's because if I can opt out then I get a slight increase in my earnings which will make it worth it for me to accept an increased work load

I have many clients outside outwork that pay higher. My time is limited so I need to decide where I spend my time. If I can't pay the opt out fee then we will just continue to work as we have been ie passively when I have the time available

I need to focus on my higher paying clients.

I actually forgot about the $10,000 drop to 5% clause so even if upwork offered my a buyout at $3500 then it might be cheaper and easier to ride out the 2 years at 5%.

thanks for reminding me of that

But still, I want to know why I was quoted $18,000 to opt out. That's just insane.

"The Conversion Fee is 12% of estimated earnings over a 12-month period. It is calculated by taking the freelancer’s highest hourly rate and multiplying it by 2,080 (40 hours/week X 52 weeks). "

https://support.upwork.com/hc/en-us/articles/360043210654-Move-Outside-of-Upwork

lysis10 · ‎04-18-2020

James A wrote:

I have a client that I have been working with on and off for about 6 months.

I have earned a TOTAL of $6000 over the past 6 months.

There is the opportunity for me to focus on this client and increase my workload if I am able to work directly with the client so I inquired about the opt out fee.

Upwork replied the opt out fee would be over $18,000 !!!!

How is this crazy figure calculated ? Of course I will never take this opt out and continue to work through upwork as before. Based on the previous 6 months of $6000 that's an average upwork fee of $100 per month. Therefore if I continue at the same rate of work upwork will earn a TOTAL of $2400 or so over the 2 years after which I am free to leave upwork.

The minimum opt out fee is $3500 as stated in the terms.

So if I don't take the increased workload and continue as before upwork will earn $2400 from me

If they want to offer the $3500 opt out then I would consider it. Upwork would earn an ADDITIONAL $1100, but instead they want to try to make $18,000 which will never happen.

As a result everyone will lose out. Why ?

Is there anyone at upwork who is smart and can see the advantage of allowing me to take the $3500 opt out ?

If not then I will just continue as before and upwork will continue to earn a measily $100 a month or so. Everyone loses

**Edited for Community Guidelines** They want you to stay on the platform for 2 years so they can generate revenue. They spend millions in marketing so that we can sit in our jammies and earn money. Let them have their cut. It's well worth it. Obviously DUH they will want more upfront if you want to just bail without giving them their cut.
**Edited for Community Guidelines**

chineseteacher · ‎04-18-2020

I didn't ask my question to be insulted

There are obviously scenarios where it works out better for all 3 parties.

I'm not going to waste my time showing you those scenarios.

You shouldn't give your comment on something you know nothing about. My question is legitimate. You don't know all the scenarios or offers that are on the table. You know absolutely NOTHING about my life or earnings, NOTHING and yet you feel like you can just come and troll my legitimate question and insult me. Shame on you

kochubei_valeria · ‎04-18-2020

Hi James,

When customers choose Upwork they agree to follow our Terms of Service, which includes a fee on freelancer earnings. This fee, paid by freelancers, is one way we are compensated for operating Upwork and helping clients and freelancers connect. When customers use Upwork to find and meet each other but don’t use Upwork to make and receive payments, the fees to cover our costs are lost. For that reason, we require customers to pay a Conversion Fee instead.

I see Phyllis has already shared how the fee is calculated, but you can also check out this help article as well as Upwork TOS for more information.

~ Valeria

shawnvw · ‎07-11-2020

I'm in a similar situation to the Original Poster.

I have one client who doesn't like working through Upwork and would prefer to pay me directly. I've made $70 from him this year, and his latest contract will pay $75. I doubt I will make more than $250 from him all year.

I asked Upwork what the conversion fee woud be, and they said $19,968.

It's bad enough that this is 80 times what I'll think he'll pay; it's three times what I think I'll earn all year.

Can't they base it on what the client actually pays?

tlbp · ‎07-11-2020

Shawn W wrote:
I'm in a similar situation to the Original Poster.

I have one client who doesn't like working through Upwork and would prefer to pay me directly. I've made $70 from him this year, and his latest contract will pay $75. I doubt I will make more than $250 from him all year.

I asked Upwork what the conversion fee woud be, and they said $19,968.

It's bad enough that this is 80 times what I'll think he'll pay; it's three times what I think I'll earn all year.

Can't they base it on what the client actually pays?

This client's value to you is probably not worth giving up your access to Upwork to attain. And, if he contacts you infrequently, then his inconvenience using Upwork should be minor.

I think that the 'new' conversion fee is excessive as well. It has been an incentive for me to look for new channels to find client leads. Although, even at the previous fixed fee amount, I didn't have any clients for whom it would have made financial sense to leave Upwork prior to the end of the 2-year commitment period. No one was interested in spending $2500 or $3500 for the sake of convenience.

richard_wein · ‎07-12-2020

Shawn W wrote:
I'm in a similar situation to the Original Poster.

I have one client who doesn't like working through Upwork and would prefer to pay me directly. I've made $70 from him this year, and his latest contract will pay $75. I doubt I will make more than $250 from him all year.

I asked Upwork what the conversion fee woud be, and they said $19,968.

It's bad enough that this is 80 times what I'll think he'll pay; it's three times what I think I'll earn all year.

Can't they base it on what the client actually pays?

Looking at it from Upwork's point of view, they don't know how much you're going to earn from the client over what remains of the 2 years. It makes sense for them to base it on the most extreme scenario. If they based it on what you've earned so far it would be open to abuse by a freelancer who expects to massively increase his earnings in the coming months.

martina_plaschka · ‎07-11-2020

The opt-out fee is designed to be prohibitive.

jimscheel · ‎10-14-2021

I have been working for a client through Upwork for a year. They want to hire me, but according to the Terms of Use, they have to pay a fee which would be Conversion Fee = 12% of hourly rate x 2,080 hours (52 wks x 40 hrs)!!!

That is insane! First, no one works full time for 52 weeks. People take holidays, vacations, sick days!

I have worked through consulting firms in the past and usually after 6 months you are free to get hired by the client. Also, what about prorating the fee?! It has been 13 months since I started working for this client. The fee should at least be cut in half by now!

It is unreasonable that I could work 1.5 years for a client and the client would still have to pay this insane fee! Again, at a minimum, it should be prorated!!!

prestonhunter · ‎10-14-2021

Jim:

Upwork doesn't actually expect people to pay the opt out fee.

They expect users to work through the platform for two years.

That is what "prohibitive" means.

In your situation... the client you are working for doesn't need to pay a fee in order to hire you. The client has already hired you. They hired you through Upwork.

There is nothing wrong with the current situation, with you working through Upwork. If, after two years, the client wants to have you work for them directly without involving Upwork, you may do that.

jimscheel · ‎10-15-2021

Preston,

There is a huge difference. I do not get benefits like health insurance, dental insurance, etc. I don't get paid vacation nor paid holidays. Employees get bonuses, I do not.

Also, if they hired me, I would get paid more money than I am now, because Upwork would not be taking their cut.

Also, there is more security for the company and for me if I was to be hired.

Additionally, the idea of prorating the fee makes sense. Not to do so seems overly punative.

Again, two years is a long time. Every consulting firm I have worked for had a 6 month window.

prestonhunter · ‎10-15-2021

re: "There is a huge difference. I do not get benefits like health insurance, dental insurance, etc. I don't get paid vacation nor paid holidays. Employees get bonuses, I do not."

That is an important point.

I didn't know that they wanted to hire you as an employee.

Some freelancers choose to be hired directly by clients - while remaining independent freelancers - after the two-year period is over. That's not what you're talking about.

jimscheel · ‎10-15-2021

Preston,

Exactly! They want to hire me as an employee. Sorry I was not clear about that.

nhansen · ‎05-02-2022

Isn't there a way though to hire someone as an employee through Upwork?

kirkwood-robert · ‎05-02-2022

Wow! I checked into the 2-year out. I'm going to do that.

It's surprising that they don't pro-rate that as the 2-year mark approaches.

Regarding the argument in a later note that the cut goes down to 5%, that's only partially true. I believe your customer is also paying a percentage on his end.