Apologies if this has already been mentioned. But the way UpWork charges a 20% 'fee' is pretty misleading. In reality this is actually a 25% fee. As you are charging 20% on the total (both freelancers AND UpWorks fee included). You are actually charging for a percentage on the fee itself. I'm not sure if this is standard practice on freelancer sites (or if elance did the same) but I'm shocked you would advertise it in this way. Charging for the amount billed to a client means you will get 25% of freelancers fee.
So when I break it down to a client I have to tell them the amount I will take plus 25% for the UpWork fee.
A $100 clients fee should have a 20% upwork fee = $120 charged to client.
Instead Upwork charges 25% of the clients fee = $125 charged to client
I can see this makes sense on the clients side however as the price is set on the freelancers rate I see it as a rather malevolent marketing tactic to gather more money and leaves a bitter taste in my mouth.
As far as the legalities of payments and contracts on Upwork are concerned, the client is hiring you and Upwork acts as a payment processor during the contract. This means that 100% of the amount the client pays is your earnings. You charge the client $100 dollars, the client pays $100 dollars and you register $100 dollars as earnings in your bookkeeping (as a company, all freelancers should do some bookkeeping and in most countries it is required by law).
Once the client has paid you your $100, Upwork then charges you 20% of your earnings for their services, which is the $20 service fee to Upwork. The service fee is a deductible business expense so your net taxable earnings are then $80.
The fact that in practice the client's payment to you and your payment to Upwork occur at the same time does not change the order of the process. Though it would be easier to understand if you received the full $100 on the client's payment and then got a bill at the end of the month from Upwork for 20% of all the month's earnings. But then many freelancers would have to pay a huge lump sum at the end of each month and it would be much more annoying than the current system of automatic payments to Upwork.
Look, I have been applying for jobs all week. A hundred dollar job gets me $75. You guys say 20%. I pay 25%. That's easily referenced when you make a bid. You bought all of your competitors and raised the fees to the point where it's impossible to make a loving working for this site. You destroyed an entire industry, and you've been raising fees regularly. You're going to put yourselves out of business on the backs of poor, hardworking men and women who used to be able to rely on this place.
@Paul H wrote:
1) A hundred dollar job gets me $75. You guys say 20%. I pay 25%. That's easily referenced when you make a bid.
2) You bought all of your competitors
3) and raised the fees to the point where it's impossible to make a loving working for this site.
Seems your maths skills are off...
1) A job of $ 100 billed comes with 20% fees, so billed minus fees makes $ 80. The fee is 20% of the amount billed ONLY on the first $ 500. Then it's 10% until $ 10.000 with the same client when it drops to 5%
2) Nope. Assimilated one which was going down the drain.
3) It is not "impossible" by any stretch of the imagination.
The only thing that destroys a freelancer is the freelancer him or herself.
Upwork provides a service. You go along with its rules or you don't. Or you can mix the package - a little Upwork, a little of other job platforms and a few private clients that way you spread the investment and the costs. Sure one can rant against a large company's rules and regs, but at the end of the day (God how I hate this very useful cliché!), it is you who will decide how you are going to operate your business.
Aleksandra G wrote:
I am facing the same problem.
Earned 450usd, paid out 341usd - it is 25 percent.
what is the explanation for this?
Basic Maths: 20% of $ 450 is $ 90 (the Upwork fee) - you then pay VAT on that fee if you are in one of the countries where this applies.
You can check the breakdown on your Transaction History.
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