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Marisa's avatar
Marisa Y Community Member

Upwork Fees

Is this information true on Upwork rates? 

They charge you 20% for just the first $500 earned.  Then they charge you 10% up to $10,000 earned.  Then 5% after that.  Pls reply asap.

ACCEPTED SOLUTION
Brigot's avatar
Brigot Y Community Member

This is per client:

 

As a freelancer, you’re charged a sliding fee based on your lifetime billings with each non-Enterprise client. This includes all contracts you’ve ever had with that client. Service fees are the same whether the contracts are hourly or fixed-price.

  • $0-$500: 20%
  • $500.01-$10,000: 10%
  • $10,000.01 or more: 5%

Example: On a $600 project with a new client, a freelancer’s service fee would be 20% on the first $500 and 10% on the remaining $100. Their earnings after fees would be $490.

You can check your progress towards payment milestones under Reports  Lifetime Billings by Client.

Note: If you worked with someone under two different companies, those are considered different relationships and your lifetime billings with each company will be counted separately. However, working with someone under two different teams within the same company is considered a single relationship and therefore combined in your lifetime billings.

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54 REPLIES 54
Petra's avatar
Petra R Community Member


Jennifer R wrote:

Petra R wrote:

Jonathan, the trick is to specifically go after bigger contracts and foster long term relationships. I'm up to 77% long term clients now. all at 10% with one at 5% and a couple more about to hit the 5%.  


Finally something I beat you in.Smiley Tongue

Screenshot 2021-08-29 at 11-49-45  upwork my-stats-nuxt.png


I shall improve haha.

It sort of illustrates my point though, doesn't it.

If we can do it, Johnathan can should be able to do it as well?

There is no point moaning that the fee is so high on small contracts and then ony going after small contracts...

Maria's avatar
Maria T Community Member


Jennifer R wrote:

Petra R wrote:

Jonathan, the trick is to specifically go after bigger contracts and foster long term relationships. I'm up to 77% long term clients now. all at 10% with one at 5% and a couple more about to hit the 5%.  


Finally something I beat you in.Smiley Tongue

Screenshot 2021-08-29 at 11-49-45  upwork my-stats-nuxt.png

 

 


If we're going to show off, I beat you both.
But..., I do not earn the same as you two Smiley Wink

Screenshot (5).png

Amanda's avatar
Amanda L Community Member


Johnathan M wrote:

Preston,
Let's see...they both worked the same number of hours, doing the same kind of work, but Dan somehow netted $5,000 after a 40% fee, while Ben only netted $500 after a 1% fee.

How to explain that? Hmm...it would appear that Ben does the same kind of work as Dan, but somehow only gets paid about $25 an hour (for example, assuming both worked 20 hours), while Dan manages to get paid around $400 an hour for the same kind of work....
Jeez, I don't know, Preston - that big a disparity for "the same kind of work", same number of hours...  **Edited for Community Guidelines**.   🙂

JB



How to explain that: differences in pricing models, business models, and clientele. If the nature of your business is less long term, then it seems like you should configure your business model to price accordingly for higher client acquisition fees. The nature of my work is so long term, that I don't really consider Upwork fees at all in my pricing. But if you are having new clients every week, then you need to increase your rates to account for what your client acquisition costs are. 

Johnathan's avatar
Johnathan M Community Member

Preston,

And no, I'm not trying to "troll" anyone - I'm just raising issues, asking questions, voicing my not-so-humble opinion. That's all.

 

I must admit though, that I'm a bit surprised by the vehemence with which some people essentially assert,  **Edited for Community Guidelines**, Upwork certainly SHOULD take 20% of my billings, and I will steadfastly fight for them to be able to do so each and every week!"   🙂

 

JB

Petra's avatar
Petra R Community Member


Johnathan M wrote:

Upwork certainly SHOULD take 20% 

I WANT Upwork to take their fees because the fees ensure that Upwork is still there next week so I can make money on it...... As Upwork has never made a single Dollar profit to date, I'd rather they don't go bust any time soon.

Johnathan's avatar
Johnathan M Community Member

Petra,
Amazing that Upwork can manage to not be making a profit when - assuming an average 10% cut of the $2.5 billion in billings they had for 2020 - they generated about $250 million in revenues (NOT even counting all the float interest they earned sitting on freelancers' pay for 10 days - and that's a pretty penny over the course of a year). They could have paid every single one of their approximately 500 employees $100,000 a year, and still had a minimum of about $200 million left to pay the light bill, buy some really nice computers, pay for the office furniture, etc. (Not to mention the nearly $200 million they raised from their IPO) ...And they didn't manage to have a dime left at the end of the year? - Jeez, they must be gambling at the same casinos I do.  🙂
(Actually, it's probably that they're getting ripped off on their cable and internet package.)

JB

Nikola's avatar
Nikola S Retiring Moderator

Hi All,

 

A few posts have been edited from this thread for Community Guidelines. We encourage our Community members to be professional and respectful to one another when posting here.

 

Please, be mindful of the Community Guidelines.

 

~ Nikola
Phyllis's avatar
Phyllis G Community Member


Johnathan M wrote:

A fact worth noting is that while Upwork charges freelancers 20%, they only charge clients a measly 3%. THAT burned me up when I learned about it. How is that fair? Why isn't it, say, a 10% fee for freelancers and a 10% fee for clients?

And if there is going to be such a huge discrepancy between what Upwork charges freelancers and what they charge clients - well then, just looking at it from a purely practical angle - Who can probably more easily AFFORD to pay 20%? - a COMPANY hiring a freelancer...or the freelancer?

 

**Edited for Community Guidelines**


The 3% charged to clients is a credit card transaction fee, I'm sure UW makes nothing on that.

 

The 20-10-5% taken from project payments covers everything else -- operational costs and the millions of dollars UW invests in marketing that attracts clients to the platform. For FLs it is essentially a pay-as-you-go biz dev program that rewards those who manage to align it with their own business models.

 

UW hasn't turned a profit yet but is managing to stay afloat and I, for one, am grateful. Even accounting for the fees, work I do through UW is more profitable because finding/being found by the clients here costs much less than pursuing them in the wild. When UW stops making money, then I stop making money and then it becomes a lot more difficult to pay for anything -- utilities, dog food, broadband, software licenses, car insurance, gin, taxes.

 

You want "fairness", start a non-profit. Some of us are busy earning a living here.

 

Wes's avatar
Wes C Community Member


Phyllis G wrote:


The 3% charged to clients is a credit card transaction fee, I'm sure UW makes nothing on that.

 


My guess is they're at most breaking even on that, and I wouldn't be surprised if they're losing a bit. When I collect payments for off-platform clients, the CC fee is 2.9%+$0.30 for US clients and 3.9%+$0.30 for international. UW might be getting a volume discount, but I doubt it's much.

Johnathan's avatar
Johnathan M Community Member

Respectfully, I think you missed my point, which was why is the WHOLE (or at least the great bulk of the whole) burden of fees put on the freelancers, who likely have considerably less financial resources than the clients do. Isn't Upwork providing a service for clients just as much as they are for freelancers?? - So why should the cost of providing services only be assessed on one side of the equation?

Tonya's avatar
Tonya P Community Member


Johnathan M wrote:

Respectfully, I think you missed my point, which was why is the WHOLE (or at least the great bulk of the whole) burden of fees put on the freelancers, who likely have considerably less financial resources than the clients do. Isn't Upwork providing a service for clients just as much as they are for freelancers?? - So why should the cost of providing services only be assessed on one side of the equation?


I can't imagine someone with your area of expertise doesn't already know the answer to that question. 


 If it makes you feel better, think of it as Upwork charging you a $50 processing fee per new client contract which they are kind enough to discount if you fail to earn a minimum of $500 from that relationship. 

 

 

Petra's avatar
Petra R Community Member


Johnathan M wrote:

Respectfully, I think you missed my point,


I didn't miss a thing. I answered your question directly.

 


Johnathan M wrote:

why is the WHOLE (or at least the great bulk of the whole) burden of fees put on the freelancers


Please go back to my other post where it was explained in detail that, actually, the client pays 100% of the fee anyway. Freelancers pay the fee on paper only, as an advertising gimmick. Every last Penny of that fee is paid by the client. If you haven't factored the fee into your price / rate, you made a grave error.

 

Ultimately, on a $100 payment the freelancer gets $80 whether the client pays $100% of the fee or freelancer does. It's taken out of the payment at source. So it's gone - The freelancer ends up with 80% of what was paid either way. And all of it is paid by the client anyway.

 

It really can't be that hard to understand.

 

Johnathan's avatar
Johnathan M Community Member

Petra,

Okay, I'll grant your point that the client does pay the fee - although I think you're perhaps hanging it on a bit of a technicality. I'm still the one only receiving 80% of what I'm billing - and I'm also the one who's doing without my payment while Upwork enjoys collecting interest on it for the week and a half that it sits in their bank account before they dispatch it to me.  🙂

But, anyway - valid point - granted.
JB

Woodrow's avatar
Woodrow Q Community Member

Hello Johnathan,

 

Here's how to combat the 20% issue on a one-time project.

 

The Client wants to pay $100. 

 

Upwork is going to take out 20%.

 

I have to wait 10 days for the delivery of monies.

 

My proposal will be $150. 

 

Why?

 

I'm not going to get $20 from the $100, and I have to wait for payment.

 

In the end, I get the $100 and an extra $20 for my time.

 

Win/Win/Win

 

Johnathan's avatar
Johnathan M Community Member

Woodrow,

Well, your suggestion there assumes that the client just gleefully agrees to pay $150 instead of $100...that ain't always the way it goes...sometimes the client's response to your attempt to overcome the 20% is just to hire the guy who'll do it for $50.

 

JB

Woodrow's avatar
Woodrow Q Community Member

Hello Johnathan,

 


Johnathan M wrote:

Woodrow,

Well, your suggestion there assumes that the client just gleefully agrees to pay $150 instead of $100...that ain't always the way it goes...sometimes the client's response to your attempt to overcome the 20% is just to hire the guy who'll do it for $50.

 

JB


You are absolutely correct. And after being in business for 28+ years, I let them walk. 

 

Think of the massive amount of headaches I just relieved myself from getting.

 

 

Ashraf's avatar
Ashraf K Community Member

Hello Johnathan, How are you sir?

Johnathan's avatar
Johnathan M Community Member

I'm fine, Ashraf - I hope you are as well.

Best wishes,
JB

Preston's avatar
Preston H Community Member

re: "why is the WHOLE (or at least the great bulk of the whole) burden of fees put on the freelancers"

 

But none of that money is actually coming from the freelancers. It's just a word game or numbers game.

 

The client pays all the money. The freelancer pays nothing.

The freelancer only receives money.

Wes's avatar
Wes C Community Member


Johnathan M wrote:

A fact worth noting is that while Upwork charges freelancers 20%, they only charge clients a measly 3%. THAT burned me up when I learned about it. How is that fair? Why isn't it, say, a 10% fee for freelancers and a 10% fee for clients?

And if there is going to be such a huge discrepancy between what Upwork charges freelancers and what they charge clients - well then, just looking at it from a purely practical angle - Who can probably more easily AFFORD to pay 20%? - a COMPANY hiring a freelancer...or the freelancer?

 

**Edited for Community Guidelines**


As Petra, Phyllis, and others have pointed out, these are business expenses that freelancers can and should factor into their pricing and deduct at tax time. They're part of my pricing spreadsheet.

 

It took me roughly a month of grumbling to myself about the fees before I realized that they are quite worth what I was getting for them. And now, as I look at long-term clients who are past the point where I can move the relationship off the platform, in most cases it makes more sense to keep it here. 

 

There are platforms that charge lower fees, and I encourage you to go check them out. You may find, as I did, that lower fees often come with lower quality, just like with most things. There is also at least one platform that offers a 10%/10% split like you mentioned. The overall, long-term rates are much higher than Upwork's. And, to me, that split is much more confusing and one more thing I'd have to explain to a client. 

 

The 3% client fee is for payment processing. It covers the credit card fee. Honestly, it'd be easier for me if it was charged on the freelancer side as I wouldn't have to explain to clients why they were billed more than I quoted.

 

As for the sliding scale per client, it's, at least in part, to encourage longer-term relationships and larger projects. Again, you can and should factor that into your pricing. And, by focusing on longer relationships, it's fairly easy to drive the overall fee down. I'm sure I'm not the only freelancer in this thread whose overall average service fee works out to under 10%.

 

Bottom line, if the fees bother you that much and you can't find a way to incorporate them into your business model, there are other platforms out there, and no one is forcing you to use a platform in the first place. 

Johnathan's avatar
Johnathan M Community Member

"As for the sliding scale per client, it's, at least in part, to encourage longer-term relationships and larger projects."

As I pointed out in another comment, some freelancers aren't typically going to be having long-term clients no matter how much they're "encouraged" - like freelancers who do website design/setup or who produce book covers. Those are usually going to be one-shot assignments, it's just the nature of the work. For many of those freelancers, your assertion that, "by focusing on longer relationships, it's fairly easy to drive the overall fee down", is utterly divorced from reality - No matter how much they might "focus" on longer relationships, it's not only NOT "fairly easy" to drive the fee down - for many of them, it may be nearly impossible.  Why should those freelancers be stuck forever paying 20% even if their total Upwork billing is 10 or 20 times more than another freelancer who has one ongoing client and gets to enjoy the lower 5% fee?

"As Petra, Phyllis, and others have pointed out, these are business expenses that freelancers can and should factor into their pricing and deduct at tax time"

Rather than aiming your comments primarily at defending the fundamental appropriateness of Upwork fees, I would be grateful if you, Petra, or Phyllis - or anyone else - would be kind enough to actually address the issues I raised, such as, "Given that Upwork is providing a connection service for both freelancers AND clients, why should virtually all of the fees be assessed only against the freelancer side??" - With all due respect, your reply of, "these are business expenses that freelancers can and should factor into their pricing and deduct at tax time", is in no way an "on point" answer to that question.

Well, have a wonderful day all the same. Cheers.

Petra's avatar
Petra R Community Member


Johnathan M wrote:

I would be grateful if you, Petra, or Phyllis - or anyone else - would be kind enough to actually address the issues I raised, such as, "Given that Upwork is providing a connection service for both freelancers AND clients, why should virtually all of the fees be assessed only against the freelancer side??


How many more times? ALL your issues have been carefully, repeatedly, incredibly patiently and comprehensively addressed. Please take the time to read and understand.

Thanks.

Wes's avatar
Wes C Community Member


Johnathan M wrote:

 With all due respect, your reply of, "these are business expenses that freelancers can and should factor into their pricing and deduct at tax time", is in no way an "on point" answer to that question.



 

It was exactly on point, but perhaps not as clear as it could be. So, let me lay out the kind of calculation that comes into play here for a businessperson or investor looking at a business.

 

I want to clear $X this year, and I expect to be able to bill Y hours. So my rate should be $X/Y. But it's not that simple, because I have expenses. Some are fixed (Office Suite, GSuite, Gvoice, Adobe, etc.). Call those annualized expenses $F, and I have to raise my rate to ($X+$F)/Y. But I also have COGS. In my case, this is just Upwork's fees; call that U%. So my rate is now (($X+$F)/Y)/(1-U%).

 

Now, I do have to look at whether that end rate is realistic for the market. If so, it's all good. If not, I have to adjust my expectations. 

 

The fact that both the fixed and COGS expenses are deductable is, to me, gravy. I could factor that in to lower the rate some, but, well, math is hard and I have work to do.

 

I'll just walk away from this thread with this: one can make a lot more money working with the system (or working the system), than one can by railing at the system (or imagining oneself being, oh nevermind). 

 

Best of luck to you.

 

ETA: yes, taxes I have to pay should go into that calculation too, but, as I said, math is hard.

Amanda's avatar
Amanda L Community Member


Wes C wrote:

but, as I said, math is hard.

Only for boys. 😉 

Wes's avatar
Wes C Community Member


Amanda L wrote:

Wes C wrote:

but, as I said, math is hard.

Only for boys. 😉 


I'm glad my mug of tea was empty, or I might have had to add a new keyboard to that expense calculation 🙂