Upwork’s New Pricing Model – How will it Effect You
By Ritika Tiwari / May 24, 2016 / Comments: 0
If you use Upwork on a daily basis, I am sure you must have got an email about Upwork’s new pricing model, and if you have, I am pretty sure you are extremely disappointed.
For people who are new to Upwork, its a freelancing website where many freelancers take their first step. I did too, but I soon moved away from it because I realized being dependent on one single website for your entire monthly income was dangerous.
It was around the same time when Upwork decided to chang their rating system. Instead of taking an average of all the feedbacks received from clients, they calculate a Job Success Score (JSS), which is is extremely confusing to everyone.
And by the way, even if you get a high JSS and become a top rated freelancer, you hardly get good job invites like Elance. I have been a top rated freelancer for months now, and I have never received a good job invite till now.
For now, I only use Upwork for my long-term clients.
Upwork’s new pricing system
First of all, I should remind you that Elance used to charge 8% commission fee and when Upwork was formed, it started charging a 10% of commission fee. Though all the projects that were moved from Elance still maintained the same fee percentage.
This fee was only charged from the freelancer’s side, and there was no extra fee for clients.
Here is what Upwork said in their announcement email –
To offset high payment servicing costs, we’ll start charging a 2.75% processing fee whenever Clients make a payment on Upwork.
The service fee that freelancers pay to Upwork will change from a flat 10% to a sliding fee per client relationship, decreasing the more the freelancer works with a client:
20% for the first $500 billed with the client
10% for lifetime billings with the client between $500.01 and $10,000
5% for lifetime billings with the client that exceed $10,000
You can check the freelancer pricing page for more explaination
How will it affect Freelance Writers in the long run
While this kind of system might be great for agencies, and software developers since they often get large payouts, it can be difficult for freelance writers.
I am not saying clients don’t pay more than $500 to freelance writers on Upwork, I am just saying there are hardly any clients that quickly place huge orders like that in one go.
So even if you do get clients that pay you more than $500, you would still be paying a 20% commission on the first $500 earned and a 10% commission on the next $10,000.
When I used to work through Upwork, I used to charge clients with the extra Upwork fee. It was included in my final quote. I always mentioned I would charge $$$ and that would include the Upwork fee.
But now, the website also wants to charge clients with a 2.75% which might seem less, but its still way more than a zero.
So basically, on every project below $500, Upwork would take 22.75% of the total pay.
In other words,
If a client pays $500 for a project, you would get $386 only, whereas, right now you get $450
Why is Upwork doing this?
Because they know, oDesk has already merged with Elance. They have taken down their other competition and now they can take advantage of it.
In a way, they want to support freelancers that earn a lot, because they get the company the most commission. But at the same time, they don’t care about the newcomers that might be getting their first project.
I would have still been okay with it if Upwork was a great website. But its still full of glitches, and the website is down for maintenance every other week.
Most importantly – the website is very client-centric, like other bidding websites. Freelancers don’t get much options here. If the client doesn’t want to pay for a project, you cannot force him. If you do, you will end up with a bad feedback and a low JSS. So, freelancers lose either way.
What should Freelance Writers do?
Look for alternatives, ASAP.
There is no reason why you should be losing 20% of the pay that you worked for. The quality of the jobs on the website has declined as well (It was never really good ever since Upwork was formed).
I know this might not seem like a lot of part-time freelance writers, but for a full-time writer, this can be a big deal.
What are your thoughts about Upwork’s new pricing model? Will you stay on the website or eventually leave?