Upwork removing 5% commission bracket and moving everyone to 10% bracket
support.upwork.com
support.upwork.com
Yes, Upwork are moving everybody on the 10% fee. But they previously had a progressive fee:
* 20% fee for the first $500 earned from a client
* 10% fee between $500 and $10,000 earned
* 5% fee after the first $10,000 earned
Those figures are per client. Start a new job with someone else, you start from the lower bracket again.
So they were basically living off short term contracts and low paid freelancers. Now it penalises everyone the same, but 10% is much more reasonable than 20%
I've been trying to stay afloat in this terrible hiring market through Upwork, and I'm ambivalent. Without it, I'd pretty much be broke. But even with a profile that has been created in 2012, has $50k billed, I've only been able to find short term consulting or sysadmin jobs paid terribly, and lost 20% off each of them because of the prohibitive lower bracket.
A large number of freelancers & agencies have built a stable clients on Upwork from years together. It will be a little revenue shock for them. Or eventually clients will pay more to cover the costs.
Let's assume you are a freelancer with a client relationship of 40k
* 20% fee for the first $500 earned from a client - $100
* 10% fee between $500 and $10,000 earned - $ 950
* 5% fee after the first $10,000 earned - $ 1500
New model - 40k
Am I missing anything here?
* 10% fee of any amount - $ 4000
I guess the problem is that I haven't had any luck finding any serious client, due to the competition and race-to-the-bottom.
Some clients want quality, of course, but in this economy if it's a lottery to find a job in the real world, it's a lottery for those billing upwards of $100/h on Upwork.
So what's left is small contracts where being a seasoned expert to deal with emergencies is more important than being cheap.
See https://support.upwork.com/hc/en-us/articles/360043210654-Mo...
If you want to convert sooner, it's a percentage of the income for that specific client/freelancer relationship, and not total work for the freelancer. So it is probably a more palatable amount, assuming the freelancer has multiple clients.
This sounds like something a pimp or a mob boss would say.
These seem like real concerns and failures of the market. I know Upwork has strong network effects, so this seems like a justified government intervention
That incentive always was there, but it was small. It isn't small any longer. The trajectory makes one wonder what this fee will be in another year or two. Clearly they won't be lowering it.
Upwork is not an independently sustainable company. Upwork shares are worth less than at their 2018 IPO. They've never really been profitable. They rarely have a positive free cash flow. They've increased outstanding share count 26%. The things they've done only reduced the value customers receive from them (like when they decided to charge extra money to view contractor reports.)
How did they never make any money? Companies spend billions of dollars a year on recruiting. This isn't a tiny market. Someone grossly mismanaged Upwork -- for their customers, for their contractors, and their shareholders.
90% of the job I apply for, on Upwork or otherwise, are always looking for an expert in a particular niche technology, and hire only based off that small nugget of information.
I have been doing Elixir full time since 2016, and got a contract with someone that was looking for a Phoenix.Socket expert—a small WebSocket server module part of a larger framework—and the interviewer spent 30 minutes drilling down how much I know that small piece of logic. In this case it's like hiring plumber asking them how much experience they have in square zinc kitchen sinks. Given that I couldn't convey how dumb that is, I had to lie and say that in all of my 7 years with Elixir I have been using Phoenix.Socket pretty much daily. And as expected, it was a bog standard job doing nothing more complicated than an intermediate Phoenix tutorial.
If someone has a lot of experience in databases, and in competitors to ClickHouse they might be good or better than someone that claims to be a world class expert in ClickHouse and nothing else.
(Not to pick on you in particular, but as a true generalist this hiring pattern has been bugging me more and more as my breadth of experience grows.)
When I'm hiring a contractor, I'm not really interested in paying them to learn, I'm interested in getting my need fulfilled as efficiently as possible. If the problem I have is my square zinc kitchen sink it makes sense to find someone who already knows about them.
In my 11 years of experience as a consultant, people hire me because they need a square zinc sink fixed, but as soon as they see that I know much more than that, they ask me to redo the living room wall and trim the topiary.
Being an expert gets me through the door, being a generalist keeps me around.
The problem is that the square sink expert filter is the biggest obstacle to getting a contract. Reason why with 17 years of total experience, I'm still without a job after 4 months, my longest jobless stint in my entire career (to be fair, I'm pivoting towards starting my own business rather than keep being rejected by clueless recruiters)
This doesn't apply to everything, but Clickhouse is not so different from other analytics tools it requires a specialist.
At around 2-3 weeks of work paying a someone that’s very close but not quite what you’re looking for saves your time and means at the end of it you have someone that you can go back to with the exact skill you’re looking for.
It really doesn’t take long before the contractor’s overall competence dwarfs how much specific time they have with some niche thing.
Looking at their site now, it looks like they've grown a lot and aren't a just boutique Clickhouse consultancy, but offer managed clickhouse cloud instances. There's still a reference to their support contract on the site though, so might still be worth a chat with them.
I have no affiliation with them, just an extremely pleased ex-customer. That was a long time ago though, so I take no responsibility if they've gone to shit now :D.
With business-related things it's better to have it upfront in my experience.
In theory only partially if the freelancers are competing with those who are not using the platform and just bill their clients directly.
- You could only find jobs if you were ready to underbid everyone else.
- The disproportion between the amount of work and job-seekers was abysmal.
- The platform did nothing to protect the workers from untruthful or exploitative clients (from anecdotal evidence).
- Upwork attracts clients who can't find contractors any other way, mostly because of unrealistic compensation expectation, unreasonable requirements, or poor reputation. This leads to the average job being an underwhelming experience (to put it in generous terms).
Moreover, being on Upwork is a sign of desperation. You fear the day any of your regular clients notices and asks why are you there or just starts to doubt you.
The proposition of the service is very attractive, but I'm not sure if it brings more value than harm in practice. It's very hard to find clients nowadays, but I'm still fighting the urge to restore my account there.
It is like it's own career. You start off being underpaid to get a reputation, and work your way up.
Weird story: I started my career on odesk (before it was called upwork) and finished 50 or so contracts before I moved 3.5k miles to my first bay area job.
Which was across the street from the odesk office.
Weird world.
What is the best 'other way', though? Situation: Technical guy at a small company or nonprofit who needs _X_ more complicated technical task done. The choice is either to learn some new skill (lots of time) or find an expert. What other expert marketplaces are there that offer a substantially better environment or experience for all parties?
For the tasks I needed done, it worked well enough (translation mostly). However, I wouldn't dare to hire an engineer from the platform. Not because of skills, but because of what it has done to the market. Also, it's a race to the bottom.
On the one hand, I keep coming back because I usually find the better freelancers on Upwork than elsewhere.
On the other hand, paying them 10% means a freelancer who works for me for two weeks works one whole day just to pay the Upwork fee. And there are other fees on top of that. Upwork's overall take rate is over 15%.
And what is super annoying: For every freelancer you work with, they send you 12 (!) PDFs per month. For each week, they send you: a) The invoice of the freelancer b) An invoice of Upwork 3) A receipt for your payment.
Even if you worked with a freelancer for years, there is no way to switch to monthly invoicing.
This move will potentially hurt lot of indie & freelancers who were working with long-term clients through Upwork.
This is like forgoing your 5% net income.
> Our hearts and support go out to all those affected by this senseless war against Ukraine. We hope that a path to peace is ahead for Ukraine, and that we are able to bring our mission back to Russia and Belarus in the future.
That's quite hopeful considering where things are right now.
I would put them in a small set of bold companies processing lots of difficult payments including Uber, Lyft, AirBnb, and Coinbase.
If they have any sense they pass the cost of the fee on to you in their hourly rate or project cost or whatever.
The only way the fee "magicly" disappears is if someone in the pipeline doesn't care about the increased cost and eats it. At which point, the freelancer is underbidding for the job anyways.
The real point is having effectively having high % fee discourages/suppresses the volume of transactions. Because freelancers are pretty heavily locked into the platform by design and the companies that hire are not, the freelancers get hit with the burden of the suppressing fees to a much higher degree (they have to compete with bids from other platforms/consultants that don't have large fees)
The platform has a lot of features, including complex ones in the area of payments. But I think a challenger should be able to build something with fewer resources and take, say, ~7% instead of 15%. Being an old incumbent, Upwork probably carry a lot of cruft around.
Of course building a marketplace is very hard (dual marketing problem, etc.) but I don't think it'd be that hard to build a new one. As a buyer at least I'm not that locked in, I have also tried other platforms (ex: a European one called Malt) with great success, and I often shop around between platforms if I can.
If you work through a consultancy that could be as high 30-50%.
If you do your own business development then that is hard work, risky and also expensive. It would take much more than 10% of your time.
Though freelancing can be a tough gig, I don’t think Upworks rates are unreasonable considering they have a marketplace of work requiring very minimal biz dev and various financial protections to make sure you get paid.
All of these rates just gets loaded into the rates the clients pay anyway so it’s a wash to a certain extent.
I would still expect a pure software marketplace to be significantly cheaper than a recruitment agency, given economies of scale and other efficiency gains.
Just this last week I saw ads for the "CPA Card" from Expensify with 2% cash back.
All those cash back offers from credit cards is from money extracted from businesses of all sizes by monopolists.
I think there should be pushback for any increases in cuts that are taken.
I think what hurts here are how the fees are structured. If I charge client $100, the invoice will show this number. This will also be the income I’ll be reporting to tax authorities, so I have to pay income tax on $100, and an Upwork fee will be automatically deducted. I don’t know if they would have a legal way to do this but I would much rather my invoice showed $90 in this case since I never even had the chance to see the full $100.
Due to the way depreciation works, development is treated as incurred mid-year regardless of when in the taxpayer's tax year they are actually incurred, so the ultimate effect is that only 10% of the development costs can be deducted in the first year, 20% for the next 4 years, and 10% in the final year (6th calendar year after incurring cost, due to the deemed mid-year start in the first year).
Hawaii also has a general excise tax based on gross retail and/or service revenues and is the state's primary tax on businesses (in lieu of income taxes).
Ohio's commercial activity tax is based on gross revenue above a threshold.
Oregon's corporate activity tax is based on gross revenue above a threshold.
Washington's B&O tax is based on gross revenue and is the state's primary tax on businesses (in lieu of income taxes).
France's social contribution tax is based on gross revenues above a threshold.
And those are just the ones I know off the top of my head because I deal with them regularly.
Taxes fund a civilised and (mostly) well run society that you benefit from. Misreporting your gross income shifts more of that burden onto your friends and neighbours!
Fiverr trademarked the word "gig".
That eliminates two of them. Luckily there are regional freelancing firms that seem promising.
At least UpWork lets people rant about them on their website. Maybe that will change too now that they've given into taking a higher cut. https://community.upwork.com/t5/Freelancers/Time-Tracker-Is-...
Impressive!
Assuming that I’m correct and that that hyphen should be read as “minus”: How are you able to get your clients to pay in advance?
Assuming that I’m wrong, it’s still impressive.
Freelancers are typically paid after providing a service.
We had a fairly complex client project, and it worked really well for bringing in fractional skills. 20 hours of a Spark expert, 60 hours of an Azure expert, 5 hours of someone to help install a certain tool etc. Better than hiring a generalist for a longer period.
I imagine it is challenging as a freelancer, but it's a decent platform from the other side and adds value.
It has a medium talent density, as a buyer there are lot of protections & power to switch.
As a Freelancer, you similarly have challenge of working unreasonable clients.
Their ‘recruiters’ are just friendly community chatters who talk a lot to people with that automatically (you get them too in the recommended list) match the skills (in their profile; there is of course no way to tell if they actually do match the skills you need; I needed an AD expert for 1 year and the recruiter introduced me to the perfect person; in a chat they admitted to me that they had worked with it once a long time ago…).
This is ready for disruption. But not by something like Toptal. Which should be mentioned, if you want to talk about greed…
As a very long time user of Upwork since before the days of oDesk and Elance, don't understand the greed here. They used to at least offer discounts on the rate when you had over $10K billings with a client.
This just increases prices across the board as contractors will raise their rates to account for the fees.
Silly as it gives their users motivation to give competitors a look, as well as a competitor to rise that doesn't want to be as greedy with the now common Airbnb style of charging all sides fees.
Surely they got jealous of all the 20-30% fees relatively new services like Uber, GrubHub, Fulfilled by Amazon charges and figure they should get in the game as compared to their legacy thinking...
Wish they'd provide additional value and services for additional revenue, rather than continue to squeeze both sides of the transaction.
I feel like now it's better to search the job in LinkedIn via the connections and the jobs posts with Fast Apply option. I don't promote LinkedIn but it's more attractive for me for now.
Also what you get by paying the huge commission and timer that screens you? they don't help you promote, autocomplete cover letters, what the real advantage in this case.
Well it's definitely a clown car. The product experience is comically bad (like sad clown comedy). There is incredible friction in the hiring and interviewing processes. API access is disabled unless you have a through-the-nose enterprise account.
I would die for a freelancer hiring platform that I could interact with programatically, so I wouldn't have to use their shitty tools.
(Source: Hired through rentacoder, vworker, upwork, elance, etc.)
Although not so much on UpWork these days, I personally feel that having a single fee is less confusing then the so called "progressive" fee bracket.
They charged us at least 20% more than the contractor.
I also work in cloud consulting at $BigTech. I know exactly how much money I bring into the company at I know how much my bill rate is. The company takes much more than a 10% cut.
On a broader note: it’s easy to find out how much revenue BigTech brings in per employee and compare it to your compensation.
Since Upwork theoretically locks you in for 2 years with a client, I’m expecting there will be a small exodus of people with long-term projects . I’d much rather sort out invoicing myself and get paid through Stripe than lose out on extra 5%.
If you can find and bill directly, of course that may be preferable, but finding clients is hard and the business development also has a cost.
I've only used it once, but after having a call with the client, I felt comfortable accepting payment directly in crypto and not paying their fees.
The advantage of staying on the platform for freelancers is that they are guaranteed to get paid for correctly booked work on a predictable timeline.
For buyers, the advantage is one weekly payment to your credit card, some contractural protection and a bunch of features to support the work.
I’ve never felt the need to bypass them as a buyer, and I’ve only been approach a few times by freelancers to go direct. (My answer has been no mainly because I dislike the admin of manually paying people, checking timesheets, invoices etc.)
Also, automatic billing is a big value add for those of us who hate paperwork and chasing non paying customers. Upwork does it for you.
Re crypto, it's an appealing vehicle for laundering and we don't want to be implicated. couple of clients suggested it and it's a red flag for me. (if you want to get paid in crypto I don't get why you would use Upwork at all honestly, surely you have your own great platforms with how much talent is supposedly working on that web3 stuff)
Can you explain?
It seems they changed it quite a bit since the last time I looked at it. You can find more information about it here: https://support.upwork.com/hc/en-us/articles/360043210654-Co...
Pretty much every client expects you to enter a bidding war starting at $100 (and going down, obv) to build them a multiplatform app with backend and a mountain of features.
What I don’t understand is who accepts these jobs? Scammers? I can’t imagine that Upwork has many happy clients.