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The Service Fee is Way Too Much

Community Guru
Petra R Member Since: Aug 3, 2011
11 of 25

@Prashant P wrote:

Upwork gives you 50 connects for free.  I guess that is about 25 free bids. 


 60 / 30 or 70 / 35 with the Plus Plan Smiley Wink

Active Member
Ugur U Member Since: Sep 12, 2016
12 of 25

Your comment/suggestion is not realistic. The fee is too high and now we have to pay also for bids. I believe paying for bids is something good since it will attract only relavant and serious bidders but this 20 percent is way too high. The rate should be 5% nothing more. That is why high quality freelancers are staying away from Upwork and this will increase. 

Active Member
Mishel M Member Since: Apr 17, 2018
13 of 25

this is duplicate i wanted to renew my replay so i duplicated it please remove this.

Active Member
Mishel M Member Since: Apr 17, 2018
14 of 25

@petra_rwrote:

3) ALL the money comes from the client. The client pays the 20% as well, as you will have built it into your rate. The 2.75 is passing on the cost of processing payments (which is charged by banks and payment processors)


Hello, Dear Petra R

Yes so all the money comes from client lets imagine the fees were 80% instead of 20% does that mean the poor client had to pay 80%?

Client pays for his job done and the freelancer pays 20% of earned money for the service client is using as well. so we dont wanna fool ourself its a fact, client is king. Or no the freelancer sites are kings. anyway

 

Not only freelancer pays for the 20% but also freelancer cant easily ask for extra money to fill the 20%

So I have a suggestion. As you say the client pays for the 20% so change it so it be.

Like change whole process to show it that way.

 

Like when I place 8$ per hour rate client would see 8$ per hour + the fee he should pay cause he uses your site's service. 8$*20% = 1.6$ so if client should pay 20% he should pay 1.6$ for getting job from freelancer worth 8$ per hour. However you take 2$ for each 8$ instead of 1.6$ and you take it from freelancer. so its not 20% its more!! Yes hear me out.

 

2/8 *100 = 25% yes based on what you say you take 25% .Why? let me explain.

 

when client pays he should pay extra 20% for service fee. (i know you would say its not 20% it can be 10% or 5% as well but we would talk about them later, cause what im saying now is not related about the fee its about the way you calculate it). So client pays 120% instead of 100% cause he is using your service and its completly fair. Even if it was like 150% would still be fait cause its like client is free to choose to use your service or another service or what ever. So I was saying the client pays 120$ instead of 100$ job and its fair ok?

 

Now this is what happens instead of you taking 20$ and freelancer taking 100$, you take 20% out of the 120$ which is 0.2 * 120 = 24$ and freelancer gets 96$

 

So either you take the money from freelancers not clients or you take 25% instead of 20%

 


@petra_rwrote:

If you buld the fee into your rate / bid / quote you are quids in after the first $ 500 with any client as the fee reduced to half (and again to 5% after $ 10.000)

 

Countless people have all or most of their income at 10% - and many at 5%


Countless? come on we only have ~7,616,021,138 people currently live on the earth and as a programmer I know its not the hardest thing to run a query to see how many freelancers are using 10% and 5%

and you say most of their income and 10% what does that mean? I mean as a programmer and a a reasonable person, sorry but that does not make much sense.

 

So you have lots of FAQ and Q&A in your site which is good and usefull why you dont do these simple or medium queries to see how many freelancers reach to 10% and 5% and how much of their income come from the 10% and 5% ones.

 

And so so far you can do give us a number like: "did you know as an average freelancers pay xx% fee for getting jobs from clients to us?" and fill xx% which the value which i personally think it would be something between 15%-20% which is more close to 20% ( cause as Anirudh K said: Hi Goran V. You said that the fee gets reduced to 10% after earning $500. But that $500 is with a single client. And that happens rarely.)

 

And let me clearify this im not saying upwork or other similar sites are bad. Just saying we need to be aware what we are using. Also the ability to choose so we choose best over good or at least choose bad over worst.

 

Please let me know how much I am wrong. Is amount of me being wrong countless?

 

 "Find food, Build shelter, Save the world" Ryze

Community Guru
Rene K Member Since: Jul 10, 2014
15 of 25

Mishel M wrote: 

Like when I place 8$ per hour rate client would see 8$ per hour + the fee he should pay cause he uses your site's service. 8$*20% = 1.6$ so if client should pay 20% he should pay 1.6$ for getting job from freelancer worth 8$ per hour. However you take 2$

The client sees a price that is comprised of your rate ($8) and Upwork's fees ($2). In this case they pay $10.

$8 + 20% = $10. The fee is $2, not $1.6.

 

 

Now this is what happens instead of you taking 20$ and freelancer taking 100$, you take 20% out of the 120$ which is 0.2 * 120 = 24$ and freelancer gets 96$

$120 - 20% = $96. Considering the maximum fee: 20%.

 

Freelancers include their business expenses into their rates. Their business expenses include, but are not limited to, their structure costs, their taxes, the Upwork fees and so forth.

 

I wish Upwork fees and my taxes would be less, but they are not.

-----------
"Where darkness shines like dazzling light"   —William Ashbless
Active Member
Mishel M Member Since: Apr 17, 2018
16 of 25

thanks for confirming me.

so that is what I was saying client pays for the rates.


@Rene K wrote:

Mishel M wrote: 

Like when I place 8$ per hour rate client would see 8$ per hour + the fee he should pay cause he uses your site's service. 8$*20% = 1.6$ so if client should pay 20% he should pay 1.6$ for getting job from freelancer worth 8$ per hour. However you take 2$

The client sees a price that is comprised of your rate ($8) and Upwork's fees ($2). In this case they pay $10.

$8 + 20% = $10. The fee is $2, not $1.6.


but about this you may use calculator to verify me:

8$ + 20% =/= 10$ (considering 20% x= x * 20 / 100 ) so 8$ + 20% =/= 9.6$ 

 

but this is correct:


@Rene K wrote:

Now this is what happens instead of you taking 20$ and freelancer taking 100$, you take 20% out of the 120$ which is 0.2 * 120 = 24$ and freelancer gets 96$

$120 - 20% = $96. Considering the maximum fee: 20%.

 

Freelancers include their business expenses into their rates. Their business expenses include, but are not limited to, their structure costs, their taxes, the Upwork fees and so forth.

 

I wish Upwork fees and my taxes would be less, but they are not.

 yes I agree so I was replying to a message from another guru member which was saying client is paying for all the costs

 

 

Community Guru
Tiffany S Member Since: Jan 15, 2016
17 of 25

@Samantha K wrote:

Upwork is a great site but 20% per everything?!!!!

 

No, not everything. Just the first $500 with each client, which limits the increase to a maximum of $50 per client.

 

I have freelanced outside of upwork and just recently got my first ongoing project on upwork. I will be getting paid 10 dollars per milestone. Twenty percent means that I will actually get paid 8 dollars per milestone...

 

It sounds like you're not charging enough.

 

Then at the end of the year, I usually have to pay twenty percent for taxes. According to upwork, I have to list 10 dollars per milestone on my taxes.

 

Only if you don't know how to properly file taxes on self-employment income and deduct business expenses. 

 

That means that I would have to pay around twenty percent to taxes(of ten dollars.) So that's another two dollars per milestone.

 

We all pay taxes. That really has nothing whatsoever to do with Upwork's fees. 

 

That means I am getting paid 6 dollars to do almost an hour of work! Plus, they get an extra 2.75% from the employer. 

 

No, they don't. The 2.75% they get from the employer is a payment processing fee, which they, as the direct payee, have to pay on credit card transactions.

 

I mean, if I did a 700 dollar contract. 159.25 and I would get only 560 dollars. Then I would have to pay taxes which would leave me with 420! I mean it's already hard for everyone having to pay so much taxes!

 

If you did a $700 contract, you would pay $120 in Upwork fees (20% on the first $500, or $100, and then 10% on the remaining $200, or $20). Upwork is a company in business to make money and does not (and should not) care about your taxes.

 

And Yes, I know that Upwork has a fair amount of expenses but that's too much!

 

Really? You've analyzed Upwork's expenses and projected profit margins and determined that the company is profiting too much? That's interesting, as many reports suggest that Upwork is losing money. 

 

Upwork says that people earn more than 1 billion dollars a year. That means upwork is earning around two million a year!!! I

 

Actually, if you're going at a straight 20% (which the fact that your outcome starts with a 2 suggests), Upwork would be making 200 million a year. Of course, a lot of that income is charged at 10%, or 5%, or even 0% under the BYOC program, so let's cut that in half and all it 100 million, as a very, very, very rough estimate.

 

Upwork is probably spending (again a guess, but an educated, experience-based one) $25 million or more annually on marketing to draw clients to the site. Upwork also has a fairly large staff--developers, customer service reps, moderators, enterprise account managers, (etc., etc., etc.) I don't know how many of them there are or what they earn, but their LinkedIn profile has them in the 201-500 employee range. 

 

Let's conservatively say that they have 250 employees who earn an average of $40,000/year. That's another 10 million. But, if those are full-time employees, there's a roughly 40% mark-up for benefits and such...so, roughly 14 million.

 

That's $39 million in annual expenses with fairly conservative estimates for marketing and payroll, and we haven't even considered hardware, equipment, office space, server maintenance, utilities, internet, phone service, Upwork's taxes (a good bit higher than that 20% you're concerned about), insurance, legal representation, accountants, Upwork's share of the arbitration fee every time a freelancer and client can't settle a dispute between them...

 

 

Not to mention the fact that you can only apply to 60 jobs a month with your connects. Unless you want to buy more! 

 

It's 30 jobs, but that's a lot.

 

They should charge us for finding the jobs not for doing them. They don't help us do the projects so we shouldn't have to pay part of our earnings. We should have a separate charge that has nothing to do with our projects! A monthly payment or a fee per client.

 

You'd prefer to pay a large monthly fee even if you earn nothing, or have to pay to bid on each job even if you didn't win any of them, instead of paying only when you were generating income through Upwork?

 

That would make it impossible for many newcomers to get started on Upwork.

 

If anything, how is it fair to make the client pay 2.75% but the freelancer pay 20%?????? That is completely unfair.

 

Explained above.

 

At the very least, go back to charging 10 percent and split it between the client and the freelancer evenly. 

 

You say you're aware that the 20% is only on tiny jobs, so this is a bit disingenuous. 10% is the norm. The 20% fee applies only to jobs that are so small and insignificant that Upwork was losing money on them before. 

 

You did all your math, but think about it from Upwork's perspective. Prior to the rate change, if someone did a $20 job, Upwork would get paid $2. Then, Upwork would pay roughly $2.50 to process the client's credit card payment, and be in the red fifty cents. Multiply that by 50,000 tiny jobs or so, and Upwork has lost tens of thousands of dollars servicing those jobs--paying out of its own pocket to let you earn money.

 

And, that's only if neither you nor the client requires any customer service at all. If a $12/hour employee spends ten minutes working on the contract in any way, answering questions or whatever, that's another $2 lost--which means that Upwork earned $2 and paid out $4.50. How long do you think it would take the company to go out of business at that rate? And, that's assuming there are no serious issues, such as a dispute, that consume significant staff resources--but, that's a bad assumption, because cheap clients and desperate freelancers tend to be much higher maintenance than professionals exchanging significant sums.

 

Active Member
Mishel M Member Since: Apr 17, 2018
18 of 25

@Tiffany S wrote:

You say you're aware that the 20% is only on tiny jobs, so this is a bit disingenuous. 10% is the norm. The 20% fee applies only to jobs that are so small and insignificant that Upwork was losing money on them before. 

 

You did all your math, but think about it from Upwork's perspective. Prior to the rate change, if someone did a $20 job, Upwork would get paid $2. Then, Upwork would pay roughly $2.50 to process the client's credit card payment, and be in the red fifty cents. Multiply that by 50,000 tiny jobs or so, and Upwork has lost tens of thousands of dollars servicing those jobs--paying out of its own pocket to let you earn money.

 

And, that's only if neither you nor the client requires any customer service at all. If a $12/hour employee spends ten minutes working on the contract in any way, answering questions or whatever, that's another $2 lost--which means that Upwork earned $2 and paid out $4.50. How long do you think it would take the company to go out of business at that rate? And, that's assuming there are no serious issues, such as a dispute, that consume significant staff resources--but, that's a bad assumption, because cheap clients and desperate freelancers tend to be much higher maintenance than professionals exchanging significant sums.

 


 Hello dear Tiffany S

I have a comment on the 20$ job you said upwork was losing money on. so you as you said 10% would be 2$ and would not cover the 4.5$ costs you mentioned. And upwork was losing money on such jobs and had to make it 20% instead. But let me ask you something what about a 50$ job? the 10% would be 5$ and so upwork would not lose money for 50$ projects.

 

But what we have here is 20% for 500$ or lets say first 500$ with same client so 10% for a 500% job would be 50$ is not 50$ enough for fees and costs you mentioned? (the 4.5$?) while now upwork charges 20% of 500$ which is 100$ for covering 4.5$ costs. So are you sure its already covered enough?

 

I mean I dont know the whole process so I cant fully jodge but based on what you said. I would say you should decrease the 500$ quta of 20% fee to lower maybe 100$ or even 50$

 

Or maybe split it to this. 5$ or 10% which ever is greater or something. like freelancer.com site. I am not promoting them. they have their own advantage and disadvantages. like you have your advantages and disadvantages. So clients and freelancers are free to choose.

 

But personally this is how I would do. choose upwork for works around 10$-50$ and choose freelancer.com for 50$-10,000$ jobs actually 50$-11,500$

 

Cause based on your formula and freelancer formula (freelancer furmula for fee: 5$ or 10% whichever is greater):

freelancer takes much less for jobs between 50$-500$ you take 20% and freelancer takes 10%

and like for 1000$ what you would get would be like first 500$ for 20% and second 500$ for 10% which is 15% as average and freelancer takes 10% as its higher than 50$

so for 10,000$ you would get 20% for first 500$ and 10% for 9,500$ which is (100$ + 950$)/10000$ = 10.5% while freelancer.com takes 10%

and for jobs higher than 11,500$ jobs would use upwork again cause starts to get lower than freelancer.com's rate which is 10% for jobs higher than 50$

 

So what I wrote here was sharing my thoughts. So may help others choosing. Or may help upwork team working on their rules not to lose freelancers like me for jobs between 50$-11,500$

 

Please let me know If you have any comments or If Im wrong.

 

"Rules are made to be broken... like buildings! Or people!" Jinx

Community Guru
Rene K Member Since: Jul 10, 2014
19 of 25

Rule #1: if acquiring business off-Upwork is cheaper than acquiring business on Upwork, stop using Upwork.

 

Rule #2: do not talk about the fight club.

-----------
"Where darkness shines like dazzling light"   —William Ashbless
Active Member
Mishel M Member Since: Apr 17, 2018
20 of 25

Rene K wrote:

Rule #1: if acquiring business off-Upwork is cheaper than acquiring business on Upwork, stop using Upwork.

 

Rule #2: do not talk about the fight club.


 Well thats pretty much same that God said to me after I asked him if the world is fair or if he can explain me about it. and he said

Rule #1: If you think this world is not fare then get out of my world!

Rule #2: dont talk about the fight club. or I would block you from my world and kick you out.

 

I mean sure things is I could have not left the universe so I stayed but not sure if same applys for people living in your world, I mean freelancers using your site. So that thing you called a rule is my right and everyone's right to choose which tool or service they preffer to use.

 

Have a nice day Rene K

 

"Take care with this world. What is made can be unmade." Ryze

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