How Upwork make money?

Apart from service fees, Upwork also charges fees for handling payments, including an administration fee of 3% on each transaction. The administration fee is paid by the business advertising the job, not by the freelancer.

7/14/20237 min read

Upwork businees model

Upwork is an online platform that connects businesses with freelancers and operates as an online jobs board.

Unlike Fiverr, Upwork focuses on posting job listings rather than freelancer profiles.

Upwork generates revenue by charging service and subscription fees to contractors who use the platform.

It was founded in 2003 by Odysseas Tsatalos and Stratis Karamanlakis and is headquartered in San Francisco, California.

The platform was originally launched in 2013 as a result of the merger between oDesk and Elance before rebranding to Upwork in December 2015.

In October 2018, Upwork went public and became listed on the Nasdaq stock exchange with the ticker symbol $UPWK.

Through its initial public offering (IPO), Upwork raised $187 million and attained a valuation of $1.5 billion, joining the ranks of Silicon Valley's "unicorn club."

Upwork has capitalized on the increasing demand for remote work, leveraging its platform to generate revenue and facilitate connections between businesses and freelancers.

What does Upwork do?

Upwork provides a platform for freelancers to connect with businesses by allowing businesses to post job offers and freelancers to apply for those jobs.

Unlike Fiverr, where freelancers create profiles and companies can choose to connect with them, Upwork operates on a model where businesses post job offers and freelancers bid on those jobs.

The bidding system often leads to intense competition among freelancers, resulting in a focus on offering the lowest possible price to secure the job.

This competition is more pronounced between freelancers from emerging markets who tend to bid lower than those from developed markets.

Unfortunately, the emphasis on low bids can lead to a decline in overall quality as some freelancers may compromise on the quality of their work to win projects.

Businesses have the option to reject the delivered work and not pay the freelancer, which can result in freelancers completing jobs without receiving compensation.

There is also no way to track if the business utilizes the freelancer's content online, which can further disadvantage freelancers.

How does Upwork work?

Upwork offers a platform where freelancers can find job opportunities by browsing through over 1.3 million jobs in various categories.

Freelancers create profiles that highlight their work history and specify their hourly rate for services.

Freelancers bid on the jobs available on the platform, competing with other users for the opportunity.

Upwork tracks important data points for freelancers, including the hours they work on the platform.

The platform discourages users from negotiating or transacting outside of its system to maintain transparency and security.

By conducting business within Upwork, freelancers are protected in case the client fails to pay after completing the work.

Once a freelancer's bid is accepted, they connect with the client through the platform to discuss project details and manage the delivery process.

The platform facilitates communication, file sharing, real-time feedback exchange, and overall project management between freelancers and clients.

How Upwork makes money

Upwork generates revenue through a combination of subscription fees and service fees imposed on businesses and freelancers using its platform. Businesses are charged for their usage of Upwork's services, while freelancers may incur fees for additional client connections. Let's explore this revenue model in more detail.

Service fees

Upwork primarily generates revenue by charging service fees, which constitute the bulk of its earnings.

The service fees are a percentage-based fee imposed on transactions facilitated through the platform, ranging from 5% to 20%.

The specific percentage fee depends on factors such as the billing history between freelancers and clients and the subscription plan chosen by the freelancer.

Upwork does not charge businesses for listing jobs on its platform, allowing for a high volume of job postings and ensuring liquidity within the marketplace.

Apart from service fees, Upwork also charges fees for handling payments, including an administration fee of 3% on each transaction.

The business promoting the job covers the administration fee, not the freelancer.

Subscriptions

  • In addition to service fees, Upwork charges businesses a subscription fee to access its platform.

  • Upwork asserts that this subscription model helps attract higher-quality freelancers, enabling businesses to hire more skilled candidates.

  • However, users have expressed concerns that Upwork operates on a "lowest bidder gets the work" model, potentially resulting in lower quality hires and subpar work from freelancers.

  • This system can be challenging for freelancers with advanced skillsets, particularly when competing with freelancers from emerging markets who often offer lower bids.

  • Upwork offers two subscription plans for clients: Upwork Plus and Upwork Business.

  • The Upwork Plus subscription costs $49.99 per month, while the Upwork Business subscription is priced at $849 per month.

  • Business plans benefit from better rates, with Upwork charging a 3% payment processing fee and a 10% service fee.

Future growth engine

Upwork's growth strategy revolves around expanding its global presence and catering to freelancers and businesses worldwide. By offering opportunities to individuals and organizations across different countries, Upwork aims to foster a diverse and extensive network on its platform, driving its ongoing expansion.

Upwork Competitors

  • Fiverr

  • Freelancer

  • Toptal

  • Outsourcely

  • ServiceScape

  • Truelance

  • WriterAccess

FAQ

1. How do I get started on Upwork?

follow these steps and starte work on Upwork

a. Sign up for an account on the Upwork website.

b. Complete your profile, including your skills, work experience, and portfolio.

c. Take relevant skill tests to showcase your expertise.

d. Set your hourly rate or project-based pricing.

e. Start browsing and applying for jobs that match your skills and interests.

2. How do I create a successful Upwork profile?

To create a successful Upwork profile:

a. Choose a professional profile picture.

b. Write a compelling headline and summary that highlights your skills and experience.

c. Showcase your portfolio and previous work.

d. Use relevant keywords to make your profile more discoverable.

e. Highlight your top skills and certifications.

3. How do I find clients on Upwork?

You can find clients on Upwork by:

a. Searching and applying for relevant job postings.

b. Sending personalized proposals to clients.

c. Responding promptly to invitations from clients.

d. Networking and building connections with potential clients.

4. How do I set my rates on Upwork?

Set your rates on Upwork based on your skills, experience, and the value you provide to clients. Consider market rates and your competition when determining your rates.

5. How do I get paid on Upwork?

Upwork offers various payment methods, including direct bank deposit, PayPal, and wire transfer. Once a client approves your work, payments are released based on the agreed-upon schedule.

6. How do I protect myself from scams on Upwork?

To protect yourself from scams on Upwork:

a. Be cautious of clients offering unrealistic payment or asking for personal information.

b. Avoid working outside of Upwork's platform, as it violates their terms of service.

c. Use Upwork's secure messaging system to communicate with clients.

7. How do I leave a good review on Upwork?

To leave a review on Upwork, go to the "My Jobs" tab, find the completed contract, and select the appropriate star rating and comments about your experience with the client.

8. How do I dispute a payment on Upwork?

If you encounter payment issues, contact Upwork's customer support to help resolve the dispute.

9. How do I cancel my Upwork account?

To cancel your Upwork account, go to the "Settings" page, select "Contact Info," and click on "Close my account" at the bottom of the page.

10. What are the most in-demand skills on Upwork?

As of my last knowledge update in September 2021, some of the most in-demand skills on Upwork included web development, mobile app development, graphic design, content writing, and virtual assistance.

11. How much money can I make on Upwork?

The amount you can make on Upwork depends on your skills, experience, and the number of projects you complete. Top-rated freelancers can earn a significant income on the platform.

12. What are the pros and cons of Upwork?

Pros of Upwork include access to a wide range of clients, a secure payment system, and the ability to work remotely. However, cons may include competitive pricing and potential difficulty in finding clients for beginners.

13. Is Upwork safe?

Upwork takes various security measures to protect its users, including escrow-based payment systems and secure messaging. However, users should still exercise caution and verify the credibility of clients before starting work.

14. How do I get 100% on Upwork?

To achieve a 100% Upwork profile, focus on delivering high-quality work, maintaining clear communication with clients, and building positive relationships. Completing skill tests and receiving positive feedback can also contribute to a higher profile score.

15. What are the best practices for Upwork communication?

Best practices for Upwork communication include:

a. Responding to client messages promptly.

b. Being clear and concise in your communication.

c. Setting realistic expectations for project timelines and deliverables.

d. Providing regular updates on the project's progress.

16. How do I negotiate on Upwork?

When negotiating on Upwork:

a. Clearly communicate your rates and services.

b. Be open to compromise while ensuring fair compensation.

c. Showcase your expertise and why you're the best fit for the project.

17. How do I build a good reputation on Upwork?

To build a good reputation on Upwork:

a. Deliver high-quality work on time.

b. Maintain professionalism in all communications.

c. Ask satisfied clients for feedback and testimonials.

d. Participate in relevant Upwork communities and forums.

18. How do I deal with difficult clients on Upwork?

When dealing with difficult clients on Upwork:

a. Stay calm and professional in all interactions.

b. Communicate openly and transparently.

c. Set clear boundaries and expectations for the project.

d. If necessary, involve Upwork's customer support for assistance.

19. How do I improve my Upwork ranking?

To improve your Upwork ranking:

a. Complete your profile with all relevant information.

b. Deliver high-quality work and receive positive feedback.

c. Be responsive to client messages and invitations.

d. Consistently update your portfolio and showcase your best work.

20. What are the future trends for Upwork?

As of my last knowledge update in September 2021, future trends for Upwork are likely to include continued growth in the freelance economy, more remote work opportunities, and a focus on niche skills and specialized services. The platform may also introduce new features to improve user experience and facilitate smoother project management. For the most current trends and updates, it's best to refer to Upwork's official resources and announcements.