As of November 2019, the Upwork fee is 20% of a contract valued from $0 to $500. After the first $500 earned, the fee drops to 10% until you reach $10,000, in which case the fee drops to 5% from then on.
My wife, bless her heart, is a bit of a penny pincher. She’s frugal, but hate that word because it conjures up an image of an old empty nester clipping coupons at the dining room table.
So, whatever you want to call it, she is careful with money. And a lot more careful than I am; I’ve learned a ton from her.
The other day we were talking about Upwork and my side gigs, and how I’d just landed a $500 project.
“Nice, our savings can use $500.”
“Well, it’s actually $400 with fees subtracted.” (I didn’t have the heart to remind her we need to take even more out to save for taxes.)
I thought she broke her jaw it hit the floor so hard.
She couldn’t believe it. 20%? How can they get away with taking 20% in fees?
At first, I was starting to get a little outraged myself, but that quickly washed away. The reason why, and the answer is clear to see:
If it wasn’t for Upwork, I wouldn’t have had the chance to land this project at all.
Meaning, when it comes to fees, charges, prices, etc. many of us quickly forget that these sites are running a business. They are providing a service. With Upwork in particular, they are giving freelancers a fairly easy way to get in touch with clients in need. Of course they are going to charge for that.
Now, playing devil’s advocate to my own attempt to approach this situation with a level head…it would be one thing if you were only paying fees for the jobs you landed, and technically, that’s true. You only pay the 20% fee when you are selected for a project.
However, you also have to pay for membership, or “connects” in order to bid on jobs. Under a free plan, connects are $.15 each, and if you pay monthly dues for a “Plus” membership – which is $14.99/month – you receive 70 connects.
So, when is enough, enough?
Of course, we all have our limits. 20% might in fact be my limit, because let’s take a look at the impact such a fee makes. It’s way more than simply having less earnings make their way to my account.
My hourly rate before my wife’s “chime in” was stated at $125. Thus, I had priced that $500 project as 4 hours of work. But with a whole $100 knocked off my earnings, I’m now at 4 hours of work at $100/hour.
How much should freelance writers charge anyway? Really, it’s up to you and depends on your circumstances. Frankly, I value my time at a higher clip than $100/hour, thus the $125/hour rate, which was probably too low anyway.
So, what’s a person to do if they are now working for less money than they think they’re worth or for less money that they know they need to earn to make working a success? Well, in the real job world, they ask for more money, or they leave. While Upwork still offers a superior freelance experience in my opinion, my only choice is to “ask” for a raise. So, I’ve upped my rate to $175/hour, and after the 20% fee, I’m now earning $140.
Problem solved? Not at all. There is another piece to this.
Think about how my raise impacts my ability to land a job, and how my rate is viewed through the hiring client’s eyes. They don’t care about fees and how much I’ll earn in the end. They only care about their budget, and how much they have to spend on their project, and rightly so.
So think about the increase in the probability of sticker shock when a client saw my then $125/hour rate, which can be thought of as “a little more than $100” versus what it is with $175/hour, which is now seen as “almost $200.” This is certainly going to hurt my chances of landing future jobs.
It stings. I’m now probably going to land fewer jobs at the same rate of applying, which means when it comes time to re-up my connects, my margins are thinner and I’m losing even more in the end.
So yes, I see both sides. A fee is a fee because nothing is free, but a fee is also way more than that when you consider the chain of events that follows.
Give all of that, at least we still have 100% of tips or “bonuses” as Upwork frames them, right?
Bonus Payment…Upwork Cut?
When it comes to bonus payments, tips are also subject to a 20% fee.
Ouch on ouch.
But let’s not forget the moral of this blog. My wife or an outsider would probably say, why should you be “charged” for doing a good job? Upwork didn’t play any hand in your skill-building or budding expertise; so why do they get to take 20% when you knock it out of the park?
To which I would say, because I would have never had the chance to work for this tipping client without Upwork. And then on a more operations-related note, if this safeguard wasn’t in place, someone could easily post a job for $50, to where the freelancer gets hit with the 20%, but then receives a “bonus” in the amount of $450 which goes untouched. Logic! Darn!
In the end, I don’t want this to come off as me being thrilled with paying 20% in Upwork fees. I’m most certainly not. But would you rather pay 0% of nothing?
I don’t have time to pursue freelance work out in the wild. And this website leads to a little work, but it’s sporadic, and not a controlled-activity by any means. Upwork offers a service, but for me, it’s offering a convenience, and one superior to what I’ve been able to conjure up without it.