Upwork is one of the world’s largest freelancing platforms, connecting businesses and individuals with skilled professionals from all around the globe. However, one aspect of the platform that has sparked controversy and debate is the Upwork commission fees.
Upwork previously charged a sliding commission fee based on the freelancer’s lifetime billings with a specific client. For contracts that billed less than $500 to a client, the fee was 20%, while for contracts that exceeded $10,000, the fee dropped to 5%. This meant that the more work a freelancer did for a client on Upwork, the less commission they paid.
While this fee structure may seem reasonable on the surface, it has received criticism from both clients and freelancers.
On the one hand, freelancers argue that the 20% fee is unfair and puts a significant dent in their earnings. Many freelancers already struggle to make a living wage, and the high commission fee makes it even more difficult for them to do so. Freelancers also argue that the sliding fee structure incentivizes them to work more for a particular client, which can lead to burnout and overwork. They equally argue that the old fee structure is not transparent because it is confusing and that it is not always clear how much they will be charged for a particular project.
On the other hand, clients argue that the 20% fee is too high, making it difficult for them to justify using the platform. They also argue that the fee structure is complex and confusing, making it difficult to understand exactly how much they will be charged.
Despite these criticisms, Upwork maintains that the commission fee is necessary to cover the cost of running the platform and ensure that clients and freelancers have a positive experience. Upwork also notes that it provides a range of services to freelancers, including access to clients, invoicing, and dispute resolution, which justify the commission fee.
However, some experts argue that Upwork’s commission fee is not justified given the relatively low cost of running an online platform. This raises the question of whether Upwork’s commission fee is truly necessary or whether it is simply a way for the company to maximize its profits.
Upwork Bows to Pressure
It is interesting to see that the new Upwork commission fees are a direct response to feedback from users, who say that the Upwork 20% commission fee is too high and have suggested that it should be reduced to 10% or less, which would allow them to keep more of their earnings.
Upwork recently announced the changes to its commission fee structure and the introduction of some minor pricing adjustments, including a one-time contract initiation fee for clients of up to $4.95 per contract.
According to Upwork, the new fees, which aim to simplify the existing model, are “an industry-low rate designed to offer you more ability to price your services competitively and lower the fee on all new talent/client relationships,” but they have ignited discussions and concerns among freelancers and clients.
Concerns About the New Fees
Although Upwork’s updated commission fee structure is designed to offer a simplified approach for calculating fees, many freelancers have voiced their concerns about the new commission fee structure, citing various challenges it poses to their earnings and careers.
Freelancer Christine A. sees the new Upwork commission fees as “further disturbing evidence that Upwork just doesn’t see a future in catering to expert, higher-charging freelancers,” wondering how long it would take good clients to stick around if good freelancers take their services elsewhere. “My services are in demand everywhere EXCEPT Upwork. This leads me to the conclusion that this website no longer provides a good ROI for me,” she laments. “I think that Upwork is trying to go down-market, not up-market, and it’s the cheaper freelancers with mid-level talent who will be in demand.”
For freelancer Amanda L., she would be figuring out how to move her over-two-year-old clients off Upwork before she would lose her 5% fees with them as well because it doesn’t “make any sense to give up that much money after 2 years,” adding that “for some of us it will be thousands of dollars in loss[es].”
Another freelancer, Sofia V., who has been freelancing on Upwork for seven years, agrees with Amanda, saying “it’s thousands in loss[es] for me too” and wonders if “this is how they reward loyalty.”
For freelancer Boriana D., she “stopped getting invitations and hear[d] far fewer responses to applications” recently, adding that the new fee structure “would reduce quality for clients.”
According to Upwork, freelancers who are currently enjoying a 5% commission fee on some qualifying contracts will continue to do so until Dec. 31, 2023, after which they will automatically migrate to the new fee structure, but some freelancers agree otherwise.
Freelancer Florian B. says he would invoice his main client, who has had six contracts with him at 5% for over three years now, directly because there’s no point to keep him on the platform, urging Upwork to reconsider the new policy.
Another freelancer, Akhtar Z., agrees with him, arguing that increasing the fee for some qualifying contracts from 5% to 10% would “demotivate long-term freelancers on Upwork and they may move to other platforms.”
Finding a Balance
The new commission fee structure on Upwork has sparked a discussion about striking a balance between fair compensation for freelancers and reasonable costs for clients.
Freelancers are eager for fee structures that provide opportunities for growth and fair compensation, particularly for beginners and those handling smaller projects. They hope for a system that rewards experience, expertise, and long-term client relationships without compromising their earning potential.
Clients, on the other hand, seek cost-effective solutions without sacrificing quality. They appreciate the convenience and global talent pool that Upwork offers but are cautious about the impact of Upwork commission fees on project budgets and the potential trade-offs in freelancer quality.
While freelancers express concerns about reduced earnings, limited growth opportunities, and intensified pricing pressure, clients voice frustrations about higher project costs and potential compromises in quality. Achieving a balance between fair compensation for freelancers and reasonable costs for clients remains a challenge. As the freelancing landscape evolves, platforms like Upwork need to consider feedback from their user base to ensure a sustainable and equitable commission fee structure. That’s how freelancers can succeed on the platform.
What do you think about the new Upwork commission fees? Tell us in the comment section below. We’d love to hear from you.