I wrote this post based on my experience working on the Upwork platform as a freelancer, agency owner, and client for about 9 years. It highlights the main disadvantages that, in my opinion, are unacceptable for the future of freelancing. Upwork does have its advantages too, but they are obvious - it's the largest platform where clients can find freelancers for any job within any budget. And it's precisely this that the platform capitalizes on, making money off everything possible.

For the most part, Upwork reminds me of a 16th-century conquistador. Just as conquistadors set out to conquer new lands, search for treasures, and, to put it mildly, did not particularly care about the welfare of the local population, Upwork, in a sense, "conquers" the world of freelancing by setting its own rules of the game.

I have highlighted some major issues I saw while working through Upwork. I hope we can find a way to maintain the benefits the platform provides while also gaining more flexibility and freedom.

This is the first part of this post.

Fees

Both the client and the freelancer pay fees to Upwork for the opportunity to work on the platform. In general, freelancers pay 10% of each payment received from a client, plus VAT on the Upwork fee amount (averaging 20%). Clients pay 5% for each payment, plus $9.95 for a contract with each new freelancer.

Let's calculate how much Upwork earns from different projects.

A small order of $100 — for example, an article about Upwork's fees.

The freelancer pays $12, and the client pays $14.95. Upwork earns $26.95 from this small contract. Get ready, it's about to get fun... or at least, we'll try to make the calculation of Upwork's fees a bit more amusing!

A substantial order of $10,000 — for example, an MVP for a financial tracking web application.

The freelancer gives away $1,200 (10% + VAT), while the client pays $509.95 (5% + $9.95 for the pleasure of working with a new talent). Upwork sits aside, rubbing its hands, receiving $1,709.95. "Ah, it's good to be the middleman!" - the platform purrs.

A long-term contract for $300,000 to develop a freelancing platform.

The freelancer, already dreaming about their island in the Caribbean, reluctantly sacrifices $36,000 to Upwork. "Maybe I should have become a pirate?" they ponder, looking at the transactions history.

The client pays $15,009.95 from their wallet. "Next time I'll find the treasure without Upwork's map!" they swear.

Upwork, like a dragon hoarding treasures, rejoices in its $51,009.95. "Every day is Black Friday, but just for us!"

The great magic of Upwork is not only in connecting you but also in its ability to make money... magically!

What do clients and freelancers get in return?

For freelancers, it's:

• An endless stream of projects, as if from a horn of plenty. We'll talk more about this later.

• Payment security: Upwork acts like a reliable guard, protecting from the evil spirits of fraud. However, it's not all straightforward; Upwork can take money back from an honest freelancer — more on this below.

For the client:

• Access to talents from all over the world: as if you had a magic portal through which you can find the perfect performer for any task. Imagine your feelings when you post a job like "Full-stack developer for fintech web app" and receive over a hundred identical responses, possibly aided by AI. But it's still possible to find a gem in this ocean.

• Cost and time efficiency: Quick search and hiring of specialists without the need for long-term commitments or hiring expenses. You can always dismiss a freelancer at any moment and without warning. Imagine freelancer’s feeling when he woke ups one morning and see “Contract was paused/ended” email.

Connects

Once upon a time, to find a job on Upwork, it was enough to send a proposal and discuss the details with the client. Sounds too simple, and importantly - free. Therefore, Upwork “fixed” this and introduced the need to pay for each proposal sent.

The cost gradually increased. Once, 4 connects were enough, but now it requires an average of 8 to 16. Even to send a proposal to client with no history and unverified payment method.

Connects can be obtained for free (upon registration, achieving a new status on the platform, or by subscribing to Freelancer Plus plan), or they can be purchased. As of February 2024, 1 connect costs $0.15 + VAT.

Thus, one proposal for a good job will cost $2.88. If a freelancer is actively looking for orders and sends several proposals daily, you can imagine the expenses involved. Of course, we should not forget about free connects, but still.

Now, remember how many proposals come in for a job:

Let's assume that if half of the freelancers used free connects and the other half used paid ones. Thus, just from the posting of this job, without hiring a freelancer, Upwork earned $2.88 × 236 / 2 = $339.84.

Sounds fantastic, but let's still assume that everyone used free connects.

Besides paying for connects, a freelancer can boost their proposal to the top of the list by participating in an auction with other freelancers. To boost one proposal, you can pay more than 100 connects. There can be 3 boosts from different freelancers for one job. Roughly estimating, if they were for 100, 75, and 50 connects (and assuming half were free) - that totals $324.

$339.84 from connects + $324 from boosts = $663.84.

I can't believe this could be real and hope that Upwork doesn't actually earn that much from just one job posting that then went to the archive, and no freelancer earned anything.

A freelancer can get connects back if the client closes the job and hires no one. But if the client just ignores it, doesn't close the job, and it gets archived on its own, the connects don't return. Why? That's a rhetorical question.

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Thank you for reading the first part! The second part is available here. Please share your thoughts on X.