Upwork is changing its fee structure. Is this a bad thing for freelancers?

From June 2016, Upwork is increasing the fees it deducts from the money it pays to freelancers.

I’m already hearing screams of outrage (rather like those that erupt across the globe every time Amazon changes the way it does business) and I have to say that when I first read Upwork’s email on the subject I was concerned. I’ve taken a good look at the figures and now it doesn’t seem quite so troublesome.

The changes themselves
Until now, Upwork had deducted 10% from all fees. As far as I was concerned it was a commission worth paying because:

  • Upwork helped me find business. Although only 30 percent of my work comes from Upwork, I’m still one of their Top Rated writers and I appreciate the work I get there
  • Upwork guarantees that I’ll be paid, and when you consider the global nature of the work I do and the difficulty of chasing people on another continent who don’t want to pay, that guarantee is worth 10% of the fee.

From June, the fee structure changes to this:

  • 20% until the total fees earned from that customer reach $500
  • 10% on earnings from one customer from $501 to $10,000
  • 5% on earnings over $10,001 from one customer

I only have my own earnings figures and so I can only look at the impact of this change on me. I’ve been on Upwork only since October 2015 and so I don’t yet have any customers that I have billed for more than $10,000. 93% of my Upwork assignments, though, have been for clients who have gone on giving me work to the point where I have billed them for more than $500. If the new charges had been in place since I started, so that I paid $100 instead of $50 on the first $500 and 10% on the balance, the total I paid Upwork in fees would have risen from 10.65% to 13.64% of the total billed. (It’s 10.65% and not 10% because Upwork always rounds up when calculating fees and those extra cents make a difference). Yes, it’s an increase, but not the doubling that I hear people talking about. Sometime in the third quarter of this year, my two largest customers will pass the $10,000 total billing and go down to a 5% fee, and round about New Year’s Eve I should actually find that the total I pay Upwork in fees has dropped below the 10% I’ve been paying.

The conclusion?

  • You may want to increase your hourly rate and the number of cents you charge per word for fixed-price contracts, but probably by less than you think
  • Small jobs – jobs under $500 – that will never become big jobs are less worth taking on than they were. Jobs paying less than $100 may not be worth taking on at all – your choice
  • The writers who are going to lose out in this change will be those who only take on small jobs. Savvy freelancers will evaluate each job posted to see which are most likely to result in additional long-term work

What else?
Look: I know a lot of people don’t like to talk about this, either because they think it’s racist or because it’s politically incorrect for some other reason, but Upwork freelancers are not all created equal. There are the highly skilled (we know who we are) and there are those who will happily write for a cent a word and who, frankly, are worth no more than that. (Yes, I know, but a reviewer of my book How To Make Money As A Freelance Writer said:

If, in reading this book, you are offended by the direct approach or if you think that it all sounds too difficult for you, give up the idea and try another career

and I’m afraid I must ask you to take me as I am).

The less skilled are likely to find that they have to work harder to earn less money. Is that altogether a bad thing? I’m not convinced. This may be the first step in rehabilitating the reputation of freelance writers which, to be frank, has suffered in recent years.

What about clients?
Up to now, Upwork has not charged clients and that is changing. From here on, clients will pay 2.75% per transaction, except that clients in the U.S., Canada, Australia, the UK and certain Eurozone countries may be eligible to pay a monthly flat fee of $25 instead, which will commend itself to clients spending more than $910 a month. What will be the result of that? We can’t be sure; but my guess would be that the kind of clients we all as freelancers want will take that charge in their stride and that some of the clients we don’t want will be put off.

When I look for work on Upwork, I search on “Expert Writers” only, and I focus on Top Rated, but some ridiculous proposals still pop up. Only yesterday, there was one from someone looking for an expert writer to write 1000 words for a budgeted price of $5. They said they wanted “the finest writing by a native English speaker.” It isn’t going to happen! Okay, if a really good writer with no freelance experience has just joined Upwork they may accept a few assignments like that in order to build a work history and a portfolio, but generally speaking you get what you pay for and for five dollars you don’t get very much. People wanting to pay five bucks may decide that Upwork is no longer the place for them and they will try Copify instead. That will be no loss to the freelancing fraternity.

If you’d like to learn more about the freelance writer’s life, you’ll find it here.