Upwork Fee Increases: Why It Makes for a Better Platform

Upwork Fee Increases

I spent several years on the oDesk and Elance platforms and I was pretty vocal about my preference for Elance at the time. When the two merged and became Upwork, I was trepidatious as I didn’t want Elance to basically turn into oDesk and to lose all of what made it unique in the process.

That didn’t quite happen and while much of what made Elance great did disappear, we also lost oDesk and Upwork became a platform that was superior to oDesk and, in some ways, even better than Elance.

A lot of features have since come and gone and some major changes have been made. I have been on side with all of them, including the controversial fee increases. In the old days, you were charged a flat 10% on all incomings (on Elance it was 8.75%) but now you are charged 20% on the first $500, 10% on the next $9,500 and 5% on all amounts above $10,000.

I’ve watched the platform adapt to this, I’ve watched it react, and I think it’s a lot better for it. Here’s why:

It Gets Rid of the Crap

Everyone deserves a shot at making money as a freelancer and I’m not going to dispute that. However, one of the biggest negatives about oDesk and then Upwork was the fact that it was full of cheap freelancers offering the world for $5 and change. They would undercut everyone and then use spinning software and other immoral methods to get the work done quickly.

90% of clients hired them because everyone likes to think they can get the job done cheaply. Some of those clients went on to use the work they were given, never realizing it was plagiarized, others would go on to hire a proper freelancer, others would just lave the platform frustrated.

By changing the fees, Upwork made it harder for these guys to operate. Those freelancers will easily make more than $500 on a single client because they are there to make $30 to $50 and then run. Once you add membership fees, Connects and that 20%, there is no profit for them.

Most of them have since left the program, and it has improved hugely.

You Will Earn More

A full-time freelancer should be making a minimum of $20,000 a year, and even that would be at the very bottom end. To them, it’s a job just like any other. They put the hours in, they get the money. Simple.

Those are the ones who the platform was made for, the ones who rely on it and the ones who keep it going, and for them this new system is very beneficial.

As any full-time freelancer will tell you, the goal is to establish long-time relationships with well-paying clients, as that way you can avoid the costly and time-consuming process of looking for work. Whether you’re working with a romance publisher producing 5 books a year, a webmaster who owns a lot of sites or a Pedestrian Accident Attorney who needs a steady stream of great content, they are always preferable to working lots of jobs for small clients.

And you’ll make a lot more money from them with this new fee structure. I’ve spoken with many freelancers about this and I know from my own experience that the average freelancer has 3 or 4 long-time clients who have, or will, pay them in excess of $10,000 whether it be over the course or weeks, months or years.

This adds up to hundreds of dollars extra in your pocket than if you were working with multiple freelancers all paying less than $500 or $1,000. And it means that when you have established yourself and have been working for many years, every major client you have will have paid you more than $10,000, so all fees going forward will be no higher than 5%.

Sure, Upwork still has its problems. I don’t like the fact that 1 Connect costs $1 and most jobs require 2; I don’t like the fact that I pay tax on top of those fees as both a freelancer and client; and I hate the fact that I need to wait up to two weeks to get money from a fixed price job and up to 4 weeks from an hourly job. But as far as the fees go, it’s much better as it is.

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