If there’s one thing freelancers always complain about when it comes to Upwork, it’s the fees.
And you know what? I get it. I really do.
Upwork is easily one of the highest commission freelance platform after last years fee hike. And that’s not an easy pill to swallow when you’re out there busting your gut, trying to make a living.
The good news is, Upwork is still one of the best places online to find high-quality, long-term clients… even with the increased costs.
Don’t believe me? Keep reading.
The Price Hike
In case you just recently joined the party, let me get you up to speed.
Almost exactly 1 year ago, we, the freelancing community, woke up to the news that Upwork were about to change their fee structure.
Here’s a snippet from the email:
The changes meant that, as of June 2016, freelancers would forfeit more of their earnings on future jobs with new clients. (At least until they hit the threshold.)
Essentially, Upwork wanted to implement a “sliding fee structure” that both rewarded high value-contracts AND punished low-value contracts.
Before the hike, it was a flat 10% fee across all contracts (and even then, some people argued this was too high.)
Fast forward today, here’s what it looks like:
And while a sliding structure does make a lot of sense, it doesn’t necessarily work out better for the little guy.
Note: A fee was also introduced for clients, which previously didn’t exist. It still stands at 2.75% on all payments.
Doing The Math
Now, I’ll be real with you.
I’m a huge fan of Upwork. I used it to kickstart my freelance business. I’ve recommended it to countless people. And I’ve even built a complete video training course around it.
But that doesn’t mean I agree with everything they do. I don’t.
Just running the math on Upwork’s “improved” fee structure shows why the move didn’t benefit the majority of freelancers on the platform.
Here’s what the sliding structure really meant:
- You now pay 10% more on earnings for the first $500
- You now pay the same on earnings after $500
- You now pay 5% less on earnings after $10,000
Note: This means for every new contract, you now pay an additional $50 upfront, and that will only balance out once you exceed $11,000 in earnings (for each client.)
And look, I always advocate charging premium prices and building long-term relationships with your clients. Regardless of price hikes.
But I’m sure I don’t need to tell you, securing $11,000+ clients just isn’t feasible for most freelancers. Far from it.
Of the 12 million freelancer accounts in Upwork’s system, less than 1% have earned over $10,000. Much less with a single client.
What I’m saying is, the community had every reason to be upset. And believe me, they were upset…
The change was always going to ruffle some feathers, but I was still surprised at how seriously pissed some people were.
These are some snaps I took from Twitter when the news went out…
Some freelancers even vowed to leave the platform, using the hashtag #boycottupwork
And it wasn’t just Twitter.
Shortly after the announcement, many headed to Upwork’s own community forum to get some things off their chest.
This thread reached 576 replies in a single day – something I’ve never seen happen before in this particular forum.
Fighting Upwork’s Corner
Like I said earlier, I get it. Having to pay a fee on your earnings is a bitch. I think we can all safely agree on that.
But let’s take a step back for a moment. Let’s look at what you’re really getting for your 20%.
For starters, Upwork harbours more than 5 million client accounts, a good chunk of which are actively hiring through the platform.
How do I know?
Because there are around 3 million jobs posted every year, or 3 million opportunities to secure work. That’s without taking into account the fact these jobs are worth a combined $1 billion (with a b).
And let’s not forget that Upwork handles payments, provides time tracking software AND offers a payment guarantee.
As a freelancer, you don’t even have to pay anything upfront. You only pay once you actually start earning through Upwork.
Weighing it all up, can you confidently say that Upwork’s fees are unreasonable? Personally, I’m not so sure.
Beating The Fees
Most people’s answer to last years fee hike was to either leave Upwork, or take clients off the platform.
I don’t think either of those are smart.
By leaving the platform, you’re also leaving behind a HUGE pool of potential clients that are only active on Upwork. It is the biggest freelance marketplace, after all.
(Not only that, but finding clients elsewhere will almost always cost you time or money anyway.)
As for taking clients off the platform? That’s probably the worst thing you can do in Upwork’s eyes. That s**t will get you banned for life if you get caught.
So what SHOULD you do if you’re not happy with the fees?
Simple; Bake them into your prices.
Think about it. You’re running a business. Every business has overheads, and those overheads should always be reflected in your pricing.
(When manufacturing costs rise, retail prices have to scale with it. It’s no different.)
Note: If you’re worried that raising your rates by 10% will make it harder to win clients, then you’re going after the wrong type of clients.
I’ve tried to be as objective as I can with this post, and I can absolutely see both sides of the argument.
At the end of the day, acquiring clients always comes at a cost. It’s up to you to decide where those costs lie.
Upwork isn’t the only place to find high-quality clients, but it’s still a great resource to tap into and one that can be justified if you simply raise your rates accordingly.
Sure. Technically after Upwork commission and IRS taxes, you get what, 50%?
So raise your fee with 50% so you can pay those and who will hire you when the competition is huge? Just curious.
I agree with you when looking at all angles of what Upwork is doing. Them doing it like they’re doing something good for clients and freelancers is probably what irritates the majority of the people. They are a business after all and shouldn’t hide that they’re increasing their profits. And what’s even worse are the bozo robots on their help screens that have their Upwork butt plugs shoved up so far they can’t see what the people are saying.