Platforms like Upwork have become a cornerstone for those looking to offer their skills and services. Many freelancers have been buzzing, and not in a good way, about the implications of recent changes to Upwork’s payment model.
Gone are the days of a tiered payment model, and in comes a simplified 10% freelancer service fee across the board. But is this change truly beneficial for freelancers? In this article, I’m going to share my perspective on why the answer is a resounding YES!
Understanding Upwork’s Fee Structure for Freelancers
First off, let’s break down the new fee structure. Whether you’re engaging in hourly, fixed-price, or Project Catalog projects, Upwork now implements a flat 10% service fee. So, if you bag a $250 project, you’ll part with $25 as a service fee, netting you $225.
At first glance, this might seem like a step back, especially for those who were accustomed to the lower 5% fee on longstanding client relationships (trust me, this caught me off guard, too). However, it’s a significant relief for newer ventures where the fee was previously 20%.
Why the Upwork Fee is a Fair Exchange
The crux of the matter lies in what you’re getting in exchange for that 10%. For starters, Upwork’s payment platform ensures that your earnings are secured before you even lift a finger. Clients deposit funds into escrow, and upon project completion and approval, the funds are released to you.
If disputes arise, Upwork’s structured resolution process and its terms of service are there to back you up. This system removes the hassle of invoicing and tracking payments. This means you don’t need to generate an invoice every two weeks to send to the client. You don’t need to follow up with the client for payments. Upwork does all of that for you, letting you focus on what you do best: your work.
Beyond Just a Fee: The Value Added
I’ll be honest: I get frustrated when I see the naysayers out there complaining about Upwork’s fees. First, I have to address the elephant in the room. If you don’t like the fees or structure, find a different platform. Right?
But for me, I’m open to the fees. And here is why: I have made nearly $250,000 on Upwork since 2017. That’s a lot of money. Yes, I paid a lot of marketing and advertising fees. But aside from a few hours a year to update my profile and complete any new profile sections that Upwork has made available, I can set it and mostly forget it.
This means Upwork is marketing and advertising for me and offering a listing so prospective buyers can find me, and I don’t have to do much of anything. (You do need to work the job board daily, but that’s an article for another day).
From my perspective, critics often overlook the immense value Upwork provides beyond being just a marketplace. For that 10% fee, freelancers gain access to a robust platform offering:
- A Trusted Payment System: No more chasing clients for payments. With funds secured in escrow, you’re assured of your payment, fostering a trustful freelancer-client relationship.
- Tax and Reporting Simplified: Upwork offers various reporting options, making managing your finances and preparing for tax season easier, saving you time and potential headaches. I just completed my taxes for 2023 for my first year as an S-Corp. I was impressed with how easy it was, and my accountant agreed that the reports provided by Upwork were just what I needed. I hardly had to lift a finger (but you bet I had to put a lot more effort into documentation for those direct clients that I work with outside of Upwork).
- Marketing and Exposure: Establishing a presence on Upwork is similar to setting up a shop in a bustling market where hundreds of other shops compete. Your profile, made stronger by reviews and testimonials, becomes your storefront. The platform’s visibility can far exceed the reach of traditional marketing efforts, especially when you’re just starting.
Putting the Fee into Perspective
It’s important to contextualize the 10% fee within the broader scope of business expenses. B2B marketers typically allocate 7 to 8% of their total revenue to marketing efforts. While Upwork’s fee might surpass this percentage, it’s important to consider the comprehensive suite of services it encompasses, from payment processing to marketing.
Upwork is not just a platform for finding work; it’s a partner in managing many aspects of your freelance business.
A Platform for Growth
Viewing Upwork solely through the lens of its service fee is a narrow perspective. The platform offers a springboard for growth, where the focus shifts from mundane administrative tasks to what truly matters: refining your skills and expanding your client base.
The convenience, security, and opportunities provided justify the cost, especially when considering the potential return on investment in terms of time saved and new business acquired.
In my case, I started part-time on the platform many years ago, charging just $.04 per word for my articles, which, at the time, weren’t optimized for SEO. Today, I am a full-time freelancer; about 60% of my work comes through the Upwork platform. I’m charging $.12 per word for an equivalent of $75 per hour. And my income last year was far more than what you might think it was when you did the math from those figures I shared.
Without Upwork, my income would have been tens of thousands of dollars lower than what it actually was.
The Verdict: I’m an Upwork Fan, and I Encourage You to Be, Too!
Upwork’s impact on freelancers is significantly positive when we consider the holistic benefits it brings to the table. The 10% service fee is a small price to pay for the peace of mind, security, and plethora of opportunities it provides.
As freelancers, investing in platforms like Upwork is investing in ourselves and our future success. So, to the naysayers questioning whether Upwork is worth it, the answer is a confident YES. It’s more than just a platform; it’s a community, a tool, and a stepping stone towards achieving your freelancing goals.
Want to learn more about how I started Upwork and turned it into a thriving copywriting and freelancing blogging business? Trust me, it’s all about perseverance and persistence and a great platform. Set up a consultation. Let’s chat!
