One of the biggest freelance platforms out there has stirred up some controversy with a decision to increase its service fee by 100 percent. Starting June 2016, the Upwork service fee is going up from 10 to 20 percent. Clients will also have to begin paying a processing fee of 2.75 percent per payment or a flat monthly fee of 25 percent.
Needless to say, the Upwork service fee increase and the introduction of the new charge have left both freelancers and clients quite unhappy. A heated discussion is still taking place on the Upwork forum with freelancers claiming that nothing justifies the increase.
If you’re a freelancer trying to make money online, you’ll definitely need to learn a bit more about the change. Here’s the detailed explanation and a few strategies that will help you cope with it.
The Upwork Service Fee Increase: How will it Work?
The Upwork service fee increase is actually the introduction of a new commission system. Previously, all contracts were subjected to a 10 percent flat fee, regardless of the sum paid to the freelancer.
The new fee will affect interactions between clients and freelancers that don’t exceed 500 dollars in total value. A fee of 10 percent will be valid for lifetime billings by a single client in the range from 500 to 10,000 dollars. Lifetime billings with a client that exceed 10,000 dollars will be subjected to a five percent service fee.
So, why are people so unhappy with this new structure?
Most freelancers on Upwork choose simple projects with multiple clients. Many of the contracts will never exceed the 500-dollar mark. Thus, a large portion of the projects will be subjected to the Upwork service fee increase.
Here’s a simple example based on my experience. I’ve been on Upwork since December 2010. Over this period of time, I’ve worked on 100 jobs. Of them all, only one exceeded the 10,000 dollars mark. It was with a long-term customer and the client ended our work relationship at approximately the 11,000-dollar mark.
I currently charge 25 dollars per hour. Thus, it’s not an issue of low pricing. As a freelancer, I simply prefer diversity. In addition, the number of clients that are looking for repeat work isn’t that high. Most people are simply in need of a service once. Some of them may require assistance for a few months, maybe one year. The whole premise of hiring a freelancer, however, is that the interaction is going to be either short term or on per-need basis.
Freelancers Revolt against the Changes
The Upwork service fee increase is hitting many freelancers hard.
People from different parts of the world have different fees. Some people work for three dollars per hour. Needless to say, such professionals will have an incredibly difficult time going over the 500-dollar threshold.
Upwork’s social media channels are currently ripe with negative comments. People are threatening to take their business elsewhere. As time passes, however, chances are that things will subside. Many other freelance websites feature similar fee structures. On the downside, they don’t have such a plethora of projects for freelancers to apply to.
Upwork is a business and as such, it has the right to set fees and modify those. Unfortunately, a 100 percent increase on some of the most common projects seems to be unjustified. Taking 20 percent of every sum earned by a freelancer isn’t going to go down well. This is the main reason why people are currently threatening to leave the platform and why some may even go ahead and delete their Upwork profiles.
How to Cope with the Upwork Service Fee Increase
I believe that many of us will stay on Upwork – there are so many projects and so many money making opportunities that it will be difficult to completely go off the platform. I have accounts on several freelance platforms and so far, none compare to the former Odesk when it comes to diversity and even to projects that allow freelancers to earn more.
So, what are the possibilities when it comes to coping with the Upwork service fee increase? Here are some of the strategies that I’d recommend:
- Increase your fees: many freelancers are very worried about increasing their fees. They fear that a hike would discourage clients from hiring them. Over my years on Upwork, I’ve increased my hourly rate three times. The changes were motivated by my increasing experience. After each hike, I didn’t have problems applying to and winning new projects. To boost your rate, you’ll have to work on enhancing your experience and offering a superior service. If your clients are satisfied and you get positive feedback, you’ll be successful when it comes to acquiring new clients.
- Look for higher budget projects: this tip is a bit tricky since it doesn’t apply to all fields. Translators and resume writers, for example, may have access to a big number of one-time or short-term projects. Still, when applying you can prioritize clients that pay bigger amounts or the ones that offer long-term opportunities. Many of these job offers are never going to translate into an actual hire. Still, you have nothing to lose.
- Remind clients that you’ve already worked for about your existence: it’s always a good idea to drop a note to your clients every now and then and see how they’re doing. Reminding clients that you’ve already established a relationship with about your existence could eventually contribute to repeat work. The new fee structure on Upwork doesn’t apply to relationships that you’ve already established.
- Look for work on other platforms: there are many platforms that are a viable alternative to Upwork. I’ve scored projects on multiple other websites, though I’m not as active on them. If you simply can’t accept the new fee structure, you should definitely build your profiles on other websites. This blog features some of the alternative opportunities that freelancers can rely on.
- Acquire direct clients: there are many job boards that feature ads and channels that help you connect with clients. You can acquire clients through those and you’ll be free from having to pay any kind of commission. Such opportunities, however, come with some risks. If you choose to work with clients directly, always request an advance payment to reduce the risk of getting the job done and having the client disappear.
The rules of the game do change and it’s up to you to have a strategy and a back-up plan for such situations. Upwork has introduced a massive service fee hike and it’s nothing but natural for freelancers to be unhappy. If you’re strategic about it and you don’t keep all of your eggs in the same basket, however, you’ll most definitely survive! Please let me know what you think about the Upwork fee hike and how you plan to cope with it.
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