Announcing new, simpler fees on Upwork

[#1]

Today we introduced two key pricing changes: on May 3, 2023, we are retiring our sliding scale fee structure and introducing a 10% service fee for all freelancers, and on April 26, 2023, we are implementing a one-time contract initiation fee for clients of up to $4.95 per contract. Click here for the full announcement.

Please share your questions and feedback in the thread below.

[#2]

Ronald,

I don't live in California nor do the majority of freelancers.

The majority of freelancers are not sole proprietors.

Yes, every freelancer needs to abide by their local labor laws.

[#3]

---

William T C wrote:

Ronald,

I don't live in California nor do the majority of freelancers.

The majority of freelancers are not sole proprietors.

Yes, every freelancer needs to abide by their local labor laws.

---

Wrong again, William. Despite your repeated barbed references to freelancers "becoming employees," you seem shockingly unversed in the distinction.

No freelancer, and no client who contracts with freelancers, has to abide by "local labor laws"—you know, the laws that protect employees.

Freelancers and clients are bound by contract law, and by distinct areas of the law—across legislation, regulation, and court decisions—that determine whether freelancers and clients are respectively covert employees and employers; not by "labor laws," whether local, state, or national.

I would not hazard a guess about whether the "majority" of freelancers are sole proprietors—that is a common default legal status for freelancers who have not needed to set up another structure to embody their independent businesses.

California is relevant to all contractual concerns on Upwork, because Upwork is a California corporation, and first and foremost its policies—from escrow to contractor/employee classification to contract interpretation and validity, and any other legal matter—will be determined by the laws of that state.

[#4]

---

William T C wrote:

The majority of freelancers are not sole proprietors.

---

Source? I'm pretty sure that the vast majority of Upwork freelancers ARE sole proprietors. (At least, the ones who've bothered to follow any rules or regulations in the first place.)

[#5]

William, contractor vs employee status is determined moreso by control, not by length of term. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

[#6]

I have been pleased working through Upwork and had not planned on moving anywhere else. That is changed. I'll be trying all the competing platforms. Between this and bidding for jobs, I don't feel like Upwork is in my corner

[#7]

I've been thinking about moving out of this platform for a while now, but every move you guys make just point me to one possible conclusion: I don't want to work here anymore.

[#8]

I had assumed the reason that short term contracts had a higher fee was that short term contracts involve more server bandwidth and staffing on the part of Upwork. Setting up a new relationship like this involves time using the platform for searching, doing interviews, etc. It's also a matter of establishing trust. If the freelancer turns out to be dishonest or the client a scammer, then Upwork finds itself in a position of having to arbitrate and deal with support questions, all of which cost Upwork money.

But once a long term, high paying contract is established, it basically is running itself. Upwork has to maintain the server space for the screenshots, and automatically paying out each week, but at that point, the cost to Upwork should go down. 

It may seem like we are a minority, but I recall way back in 2008 or 2009 when they had some sort of leaderboard showing who had earned/worked the most that week, I was among the top ten here. I may not be so high up now, but that does show that those of us on the high end and who have been around a long time do bring in the money. 

The truth is not that the people who do the little jobs dominate, it's actually the people who never get a job at all on here and never bring in any money dominate. If there is anything that Upwork needs to do, it's to turn those people into revenue generating freelancers. 20% may seem like a high amount, but the truth is that that there's so many people that are desparate for any work they'd probably be happy if it was 30% to start. 

[#9]

I think this probably hits a lot of top talent more than others, I too only have long terms contracts (all of them) so for the benefit of me ensuring UpWork earns a weekly income on my contracts (for years on end) I now get to pay double the fee ... this is penalising long term work pure and simple. 

All my contracts are long term, yet most started as short term and were converted by me into long term clients, which is beneficial to the platform.  Emposing a 100% increase on my cost to use the platform for already existing business is a bad move (aside from what clients are charged).

Most clients have proposed to move off UpWork at some point, I have declined because of the ease of using the platform, but I will tell each to move once our contract hits 2 years (at which point UpWork's income will drop to zero).

You want to institute a new fee structure for new contracts, go ahead, that is your perogative and I have no issue with it. But do not touch existing relationships is my advice; leave existing long term contracts as they are or lose the earnings from them entirely, as well as the long term freelances with it.

Oh and please don't give me any:
- "we are giving you time to adjust" (we are charging you more and on top need you to increase your rates to our benefit),
- "this is for easier calculation" (pretty easy to calculate 5%)
- "you don't need to worry about tiered structure" (it was never a problem, and I never worry about it)

[#10]

Well, what can we do now?

So whoever agree with the fee, he could stay with Upwork.

For those who don't, like me, let's message the support and ask about the conversion process. (the fee for the conversion is 1$ as I read in the Terms of use)

This is the link to the support room:

https://support.upwork.com/hc/en-us

I've attached screenshots below.

Here is what I told the support team: "I've worked for a client for over 2 years. Since upwork is going to charge me 10%  instead of 5% after 2023, we're going to move out. I've read the Terms of use and the moderators' answers in the forum, and I would like you to guide me on how to do the conversion process."

Hopefully if there are so many people, Upwork may think again. I personally don't think they will.

**Edited for Community Guidelines**

[#11]

I've seen the formula for the conversion rate. It's basically paying Upwork, upfront the same

fees that you would be paying in 1 year I think. 

To be honest, I really don't understand why we "have" to do that. My clients always ask me to pay straight to my bank account, before starting a contract in fact.
I have always said no. But now, I'd rather just stop my contracts and get paid in my bank account. More money in my pocket. I pay more than 40% to the government anyway. 

[#12]

The formula for the conversion rate is for relationship that is less than 2 year. (it is extremely huge)

If you and client have worked for more than 2 years, it is 1 dollar.

[#13]

For those who have worked for over two years:

For those who have worked for less than 2 years:

[#14]

---

Andra M wrote:

To be honest, I really don't understand why we "have" to do that. 

---

Because this is what you agreed to when you signed up.

[#15]

Rather than be **Edited for Community Guidelines**, understand the statement: we feel this is a rip-off. If upwork needs to reach BACKWARDS into EXISTING long term clients by raising them to 10%, then that says the internal bureaucracy has grown out of proportion and we will be subsidizing bad business decisions. And if she "signed up" for that, then ANY PROPOSAL that has been accepted BEFORE the announcement should keep the 20/10/5 structure, because, just as YOU said, that's what she "signed up" for. It goes both ways.

[#16]

The OP was asking why she had to follow a rule. It is because it is in the ToS we all agree to when we sign up.

I understand the statement, I was the first to comment here. As wanting to have the decision reversed, they will decide. ToS also mentions that they can change any of the Terms by providing sufficient notice.

[#17]

Thank you again, **Edited for Community Guidelines**

[#18]

As you know, Upwork has decided to raise the fee for those have earned more than 10000$ from 5% to 10%.

So I think, whoever agree with the fee, he could stay with Upwork. I don't since I'm poor, so I message the support and ask about the conversion process.

The fee for conversion is incredibly huge for those who have worked with the client for less than two years, counted by the formula: Conversion Fee = 13.5% of a freelancer’s hourly rate x 2,080 hours (52 wks x 40 hrs)

However, for those who have worked with the client for more than two years, the fee is 1$ (https://support.upwork.com/hc/en-us/articles/360043723533-The-Upwork-Conversion-Fee#:~:text=If%20you....)

This is the link to the support room. I typed "Chat with an agent" in the box.

https://support.upwork.com/hc/en-us

Here is what I told the support team: "I've worked for a client for over 2 years. Since upwork is going to charge me 10%  instead of 5% after 2023, we're going to move out. I've read the Terms of use and the moderators' answers in the forum, and I would like you to guide me on how to do the conversion process."

**Edited for Community Guidelines**

p.s: Upwork merged my new topic into this one.

[#19]

Let’s do some simple thinking. If you raise the fees, it probably means you give something in exchange, right?

I have a 4y+, $300k+ client. Upwork made 15k+ on it already. But what kind of service/help I received from you guys? Financial intermediation? – for 5% fee I guess it’s worthy enough for both of us. Because in fact you don’t do nothing besides getting money from my client and handing it to me. Doesn’t look like big of a deal, right? You have no risks – they’ve been paid off long time ago.

But now you say, it’ll be 10%. What for? The same financial intermediation? I don’t feel it’s worth 10%.

You say better opportunities. Okay, I earned my Top Tallented badge 4 years ago, the Expert Vetter one - 2 years ago. Maybe you brought me bigger clients with higher rates? Nope. You keep saying “Record a promotion video”, “create a specialized profile”. I’m a Senior Web developer/Architect, I’m not selling pizza, for god sake. Even if I try to look for a new possible client, I get the same outrageously low rates which are way below the market, the same results as I was getting 4 years ago.

So you don’t help me finding new clients. You don’t actually bring me any other services other than handing me my own money.

I don’t feel 10% is fair at all.

[#20]

I've been feeling the same thing. 

Fewer invites and fewer responses when I apply to jobs. And it's weird because I'm top in  my field. Top rated, expert vetted, 100% approval rate and I get lots of leads from referrals.

I'm not sure if it started when the new "pay more connects to show at the top of a job" started (I never pay extra connects) or if it's something else.

But the actual system doesn't work as well anymore *and* we have to pay more for the fewer opportunities we're given.

[#21]

being in a third world country, it took me 3 years to reach the -5% service fee, so I already paid the fee that was contractually agreed upon, and now you are going to increase it to 10%?

That's not serious at all.

[#22]

If we've already worked with our client for more than 2 years, we can send payment outside of Upwork after paying a conversion fee of 1 dollar.

I think I will move too.

[#23]

There's a perception being put out there, that freelancers who've been in contract with clients on long-term, stable jobs have become "employees", and are no longer freelancers. To me, this is preposterous.

They are not employees. They remain independent-contractors, they do not get employee benefits; there's no health insurance, there's no paid time off, and so forth. They are quite simply, on a long-term contract. The client needs a service on an on-going basis, and they have found the right person.

This doesn't mean the freelancer has now suddenly become an employee, as he/she is not exclusively with one client, and can still work with multiple clients, and for many freelancers this is the case.

The platform has in fact been promoting long-term contracts for the longest time, and has also rewarded it. Top-rated plus badge for large contracts, Long-term client percentage being displayed in the Stats section?

It seems like an agenda is at play here. The fee changes on the one hand benefitting one group, and negatively affecting the other. Does UW want to indirectly limit the long-term contracts? Do they want this platform to become a short-term contract website? Do they want long-term contractors to leave or become short-term contractors?

It also seems like UW may have considered that raising fees for long-term FLs might result in half of them leaving, but then they increased the long-term fee by 100%, so they thought this would mitigate that loss?

[#24]

They could have kept existing contracts at 5%, let anyone who reaches that threshold this year have 5%, and STILL RAISED THE RATE for NEW CONTRACTS to 10% after 10k. I don't think giving us 9 months to move our clients was a good idea either... it's like they thought they'd soften the blow and we'd decide in a few months that we're not that mad, but instead, they're just giving us a good amount of time with each client to figure out the best way to move forward.

[#25]

Reply to Bilal M: Exactly this. I don't stop being a freelancer if I leave upwork, or take clients off platform, or work with clients directly in addition to those I work with on upwork. I was a freelancer a long time before I ever joined upwork, and will be so after I leave. In my country, it might be a problem to only have ONE client as a freelancer, as there is then always suspicion that this is some form of bogus self-employment, but any freelancer with several clients, whether large or small, whether one-off or ongoing, whether on upwork or not, is a freelancer, not an employee. There are people in this forum trying to scare freelancers into believing that they will magically become an employee if they leave upwork, and that their clients will not want to employ them ("A few large clients is an employee if they go offsite not a freelancer" - apart from the fact that this sentence makes no sense grammatically, it is also factually simply wrong). Absolutely no idea where that strange idea is coming from. 

[#26]

With the latest change to Upwork fees, it is becoming a less friendly place for clients and freelancers.

As a client and freelancer on Upwork I am seeing an increase on both sides.  The client new one-time fee per project is minor, but is it really necessary on top of the percentage they already take?  I understand they are trying to keep it to a minimum so clients will continue to use their platform, but the long term implications are that the initiation fee will increase at some point based on clients response to it.

For freelancers, we just got a major increase increase on our long term clients and contracts.  This increase does not translate into motivating a freelancer into nuturing a client relationship to build a long term relationship.  I would think Upwork would prefer and support freelancers that do establish these long term relationships as they get a nice steady stream of income from them at a price point that keeps both clients and freelancers on their platform.

I don't know about anyone else, but I have noticed a steady uptick of projects never starting.  What I have found is that several of these projects are actually taken outside of Upwork.  How do I know?  It doesn't take much effort to find out when just checking on one project, but with the thousands going at any time, I'm sure Upwork does not have the resources to do the investigative work to track them down, expect for the blantant ones that give contact informaiton in their job post.  

Personally, I have welcomed the Upwork platform as a means to ensure I get paid for my work and have refused and reported clients that wanted to move off the platform.  At 5% for my long term clients, that protection has been worth it.  At 10%, it makes me reconsider.  So, to get to the positive of this latest increase to freelancers, it motivates me to start seeking contracts outside of Upwork through other platforms.  This will likely lead to higher rates for myself and more income.

Should Upwork reconsider bringing back the lower rate for those freelancers that do have long term clients, I will once again focus my efforts here.  Until then, I will be putting my effort in attacting new clients elsewhere.