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Comment by MrThoughtful | Hacker News Reader

I have been using Upwork for years to outsource tasks. I'm still not sure what to think of them.

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.

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In the UK, if you work through a recruitment agent then they will be taking 10-20% of your rate as a margin.

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.

> In the UK, if you work through a recruitment agent then they will be taking 10-20% of your rate as a margin.

I would still expect a pure software marketplace to be significantly cheaper than a recruitment agency, given economies of scale and other efficiency gains.

It is significantly cheaper and more efficient. The expectation that this benefit would be passed on to us clients is what is unrealistic. :)

Why would that mean it was cheaper instead of making the middleman’s margin fatter? Upwork isn’t a charity, the owners want to make money.

In a word, competition.

A recruitment agent or a consultancy will often give you a personalised one-to-one service, and hence the higher fees can be somewhat justified. Upwork largely provides an automated service. So let's be realistic and not compare the two.

What if it goes up to 15%? The Overton Window is shifting.

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.

My experiences have been similar. Very happy with the talent and confident that I could get good people there at any time. At the same time, I'm quite ambivalent about their UX (the invoice issue you mention is really bad) and the fees. I feel it's prime for disruption.

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.

The 12 pdfs are equally annoying to freelancers.

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.

The Upwork fee is reported as a business deduction on your tax return. As an independent contractor you pay income taxes based on your self-employment net income (not your gross income, as employees are) because you are effectively treated as a type of business for income tax purposes.

There are almost no forms of tax that are significant in size and based on gross revenues at the same time.

Washington State has a B&O tax which, until recently, was the primary state tax. Hawaii has a ~4% gross receipts tax but it can be visibly passed on to customers like a sales tax.

I realize this doesn't apply to Upwork, but don't the new U.S. tax laws discussed in https://news.ycombinator.com/item?id=35614313 prevent companies from writing off development costs, meaning they are taxed on the gross revenues (at least for that year)

No, they have to capitalize (or amortize) development expenses over a 5 (domestic R&D) or 15 year (foreign R&D) period instead of getting to deduct them currently (meaning in the year incurred).

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).

San Francisco has a gross revenue tax that is significant for tech companies.

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.

it's really depends on the country laws and legal entity type, in some cases you must report gross income and all platforms fees can't be considered as expenses.

Not a tax advisor, but you probably need to show that you paid Upwork 10$ as commission and get a business expense deduction.

In some countries not necessarily. I’m based in Czech Republic and as a sole proprietor the most preferential way to do taxes (up to certain threshold) is to report the gross income and use a tax rule that assumes that it cost you 60% of gross revenue to get your income. In this case the lower income shown the better.

So you've spent 10% and are 50% up. Isn't that already advantageous enough for you?

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!

UpWork by default has your freelancers install their crappy spyware. That's the main reason I've never used it.

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-...

Absolutely. Additionally they have a power to de-platform an individual.

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.

They seem to try harder than most not to kick anyone off. That was demonstrated in that they waited until the last possible moment to stop operating in Russia. Also their press release reads like this:

> 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.

> works one whole day just to pay the Upwork fee

If they have any sense they pass the cost of the fee on to you in their hourly rate or project cost or whatever.

Which raises the freelancers bid, which decreases their competitiveness, which decreases the chance of winning the job/contract, which decreases overall pay. That's what one of the other commenters meant when they said they have to pay it one way or another.

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)

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