Since July, Upwork has changed how it charges freelancers commission for its service. There used to be a flat 10% deducted from your earnings whether you charged flat or hourly rate. Now, they have a staggered system that about which many people are still not happy.
The New Upwork Charges
In case you have been off the site for a while or only now thinking about joining, this is what you need to know.
- All work with with earnings under $500 is charged at 20% commission for Upwork
- Work with a earnings between $501 and $10,000 is charged at 20% for the first $500 and 10% from $501 onwards. More simply, if your job is worth $600, you will pay $110 commission. $100 for the first $500 (20%) and $10 for the $100 between $500-$600 bracket (10%)
- For any job where the earnings exceed $10,000, the commission is reduced to 5% but only on that which exceeds $10,000.
You don’t need to be Upwork Top Rated to realise that few jobs will exceed $10,000, especially as most businesses on there are start-ups and one (wo)man band business. I have been on the site for three and a half years and have yet to hit $10,000 spend with any client.
Upwork must know this too which is why they have set the threshhold so high. Protesting achieved very little. Upwork went ahead with its plans and yet people still use the site. The only way things will change is if they start to lose money. Until then, you have several options available to you as a freelancer.
Stop Using Upwork for New Clients
This is simple enough. Continue with your existing clients (because Upwork will honour the rates for contracts opened before the deadline) but don’t use it at all for new work, or seriously reduce your dependence on it. So far, I do not have a 20% contract because I have had enough existing work and work off the site to allow me to keep ticking over. This is drastic, but some freelancers and clients have commented on their Facebook page that they will simply stop using the site.
Put Your Rates Up
As a business, this is what you should be doing anyway when such a significant cost increases. You are, after all, running a business. I understand there may be some angst about your own competitiveness, but you are taking a risk every time you change your rate of pay anyway. Self-employment is one big risk most of the time. You will find clients no longer willing to pay, but most will be – especially if they understand the quality you offer. Clients on Upwork will be well aware of these changes and the need to put your rates up.
Carry on As Normal
Simply – do nothing. This your best bet if you are new to Upwork and do not really have the clout, background or experience to start charging new clients more. If this is a side job and can afford it easily, it will keep you competitive. Carry on as normal as though nothing has changed is another option and the ideal for many people.
Offer Staggered Pay Rates
In line with Upwork’s new commission rates, you too can offer incentives to your clients that use the platform. Start out with an initial rate. Then, when it reaches the $500 threshold at which your charges will drop, lower your charges for the client. Make it clear in your profile and job pitches that this is what you intend to do. This will be attractive to those clients interested in developing long-term working relationships (not all are, some will want to hire you for a single task). If they know that the more work they send, the less you will charge, who wouldn’t want to work with such a promise?
So that is my list of suggestions. Has anybody else come up with any novel ways of protecting their profitability on Upwork?