Work requires purchasing my product

[juras-mark]

I am a partner in a technical software company.  I sell and develop an automated software re-engeering product that helps me read, interpret, and rewrite large VB6/ASP/COM systems in .NET.  My company and I have invested well over 30-person years in building and improving the product and it has a significant price tag (monthly use fee).  If I do a project for someone and use the product for them, they still have to purchase a license of the product as well as pay my time to use it for them.  

I am interested in finding customers through UpWork and I am happy to share some of the earnings, but I am unclear how it relates to fixed bid earnings and direct costs outside of the hourly rate.

How do these factors relate to the fees expected by Upwork?  

[cylver1z]

Hello Mark,

I would like to suggest that you should communicate with your client first and tell them that you will use a product for their work and you will require an extra fee for that. Kindly discuss this with your client to avoid any problems and confusions. Thank you!

[juras-mark]

Of course: fixed costs would have to be defined, set, and agreed to before the work is started.  But this does not help me understand how fixed costs relate to Upwork's 20% broker fee on my hourly rate.  Say I charge the customer $12,000 for a project: $10,000 for the product license and $2,000 for labor.  I know UpWork expects 20% of the labor fee.  But, does Upwork also expect a share of the license fee? If so how much?

[cylver1z · Accepted solution]

Hello Mark,

Freelancers are charged a sliding fee based on your lifetime billings with each client (across all contracts you’ve ever had with that client company). Service fees are the same whether the contracts are hourly or fixed-price. Kindly click this link to learn more about freelancer service fee.

[juras-mark]

Ryan,

The freelancer service fee article provides the information I was looking for.

Thank you.  

[bobafett999]

Upwork will collect their fees based on the total (in your example $12,000).  Yours is tricky becasue you are a worker as well as seller of that product.  In my work, I ask the client to buy license to widgets or images or icons (they are small amounts though).