Upwork Fees and Charges I Complete Guide to Reduce Them
The fee structure on Upwork varies depending on the type of project and the size of the contract. But it’s important to note that Upwork fees can impact a freelancer’s earnings, so it’s important to factor the Upwork fees into your pricing strategy when bidding on projects. Now Upwork also made some good decisions regarding Upwork fees.
So, are you ready to listen to great news? The big news is coming for all freelancers with respect to Upwork fees. The company announced that it would remove the sliding scale service-free structure from its platform and replace it with the simple flat fee structure. The new fee structure of Upwork will be active from May 3, 2023.
Here, in this article, I explained both the old and the new method of fee-charging by Upwork and I also explained the strategies through which you can reduce your Upwork fee further. After reading this article, you will come to know about the new and the old methods of Upwork fee charging. So, keep reading this article until the end to clear all your concepts about Upwork fees.
Upwork Fee Structure Prior to May 3, 2023
The current method of Upwork fee charging is as follows.
Above is the fee structure through which Upwork is currently charging.
Upwork New Fee Structure ( Effective from May 3, 2023)
In a new structure, Upwork set the simple flat 10% rate across all the boards irrespective of client status or earnings.
The flat 10% rate is for both fixed-price contracts and hourly projects. However, the standard client-side payment processing fee remains unchanged. Now, the Client will be charged a new initiation fee of up to $4.95 on new contracts (this initiation fee may vary), which came through the Upwork marketplace and Project Catalog.
The company changed the fee structure after years due to continuous negative customer feedback. Because the fee structure needed to be clearer, especially for beginners. The fee also affects the earnings of freelancers, especially new freelancers.
So, Upwork decided to reduce the Fee to a flat 10%, which will benefit both customers and Upwork.
For Customers, firstly, it will become very easy for them to understand the fee structure, and the Fee is also less compared to other platforms.
For Upwork, this new initiative is beneficial because more new freelancers will join the network because of less Fee, and the ranking of Upwork will also improve due to good reviews of customers, so the fee-reducing step is going to be the best Pro of Upwork.
Now Upwork will also give more competition to other platforms like Fiverr because Fiverr charges a 20% fee, and now Upwork will start charging a flat 10% fee.
What’s about 5% Upwork Contract Fees
The freelancers working on contracts with more than $10000.001 client spending are paying only a 5% fee, which will remain the same for these freelancers this year. This Fee will remain the same throughout this year, and after this year, the Upwork fee will be changed from 5% to 10%.
The clients who are brought to the platform through the BYOC (Bring Your Own Client) will also remain at 0%.
Other Important Changes to the Network
Upwork is not only changing the fee structure. The network also takes some other important changes, as shown below.
1. Work to Hire Contracts
Upwork took a very good initiative on February 13, 2023, to start a work-to-hire contracts option in the scope portion of the job postings on Upwork.
Now during the job posting on Upwork, the Client can mark a job as a contract-to-hire opportunity. Now it’s the opportunity for all the freelancers who want to work for the long term with any client. So, the freelancers took this project as a trial and submitted their best work to the Client. If clients are satisfied with their work, they can hire a freelancer for longer-term projects.
So, it’s the opportunity for the freelancer to show his abilities and get a full-time job.
But the standard Upwork Terms of Services still apply to the work-to-hire contracts, and the freelancer and the Client must keep their relationship on the platform for at least two years or have to pay the conversion fee if they want to keep their relationship out of the platform. If we have a long-term client with more orders then Upwork fees will also reduce.
You can find the work-to-contract jobs as follows.
2. Increased Cost to Submit Proposals
In March 2023, some sharp-minded Upwork users noticed that Upwork increased the cost to submit proposals, as now we have to use 1-6 Connects or 2-8 Connects for submitting the proposals.
Connects is a form of digital currency used on Upwork for submitting and boosting proposals. Upwork Connects are mostly used by new freelancers to find new jobs. Connects are not required for those jobs to which freelancers are directly invited.
The value of each Connect is $0.15, so to submit the proposal, you have to spend at least $0.15-0.9 or $0.30-1.20. So, this value is much for the new freelancers who don’t earn money from the platform but are applying for many jobs to get clients. That’s why this cost is affecting beginners.
But If the beginners go with all the calculations, there are many chances that there will be no need to buy Connects. So charges other than the Upwork fee will also be reduced.
All the beginners receive 40 Connects on joining the platform. If beginners utilize these 40 Connects carefully and only apply for the concerned jobs, there are many more chances that new freelancers can get a job before they finish those free Connects.
When any freelancer is shortlisted for an interview on applying for the job, he also gets some free Connects from Upwork as a reward.
So. If the new freelancer goes with all the calculations, he doesn’t need to buy new Connects.
Freelancers get the free Connects as a bonus by:
3. Changes to the Upwork Connects Expiration Policy
Upwork also changed the expiration policy related to Connects at the start of this year.
Now all the Connects will expire after one year of buying these Connects.
It would help to buy Connects, which you can use within one year. Otherwise, these Connects will expire after one year.
After expiring Connects, you cannot utilize those Connects, and even these expired Connects will be non-refundable.
How to Reduce Upwork Fees?
I have already mentioned some recent and upcoming changes, especially regarding Upwork fees and other Charges. But you can also reduce Upwork fees and other charges from the current Upwork fee structure with the help of the following strategies.
1. Set long-term clients
You should always deal with your Client in such a way that your Client will be your long-term Client. Because if you have a long-term client and you are receiving too many orders from that Client, then it will be very beneficial for you to reduce Upwork fees.
For Example: If you have a long-term client with many orders from that Client, then you can reduce your Upwork Fee so that if you are earning more than $500 from that Client, you have to pay only a 10% fee instead of 20%. And if you earn more than $10000 from that Client, you have to pay only a 5% fee.
So, in this way, you can reduce your fees.
2. High Rates
It depends on how much you charge for your services as a freelancer. According to the Current Upwork fee structure, you must pay a 20% fee on earning up to $500 per Client. But from above $500 earnings per Client, you must pay a 10% fee.
So, if you set your rates high so that you earn a minimum of more than $500 from each Client, then you can reduce your Fee to half because now you have to pay only a 10% fee on your earnings instead of 20%.
3. Work with Clients having Enterprise Subscription
You can also reduce your Upwork fee by choosing clients with Enterprise Subscriptions.
If the clients have an Enterprise Subscription, then you have to pay only a flat 10% fee on your earnings instead of 20%.
But before trying to reduce Upwork fees, you should know all the pros and cons of that method because Upwork protects both the Client and the freelancer and provides a support system in case of any issue.
So, if you try to deceive Upwork into reducing the Fee and play any dirty game, it can affect you badly, as Upwork can suspend your account permanently.
As there is a famous saying:
Don’t bite the hand that feeds you
So, you should only use legal methods to reduce Upwork fees; otherwise, it will not be good for you.
What’s your Point of View?
What do you think about the recent changes in Upwork? The most important point is whether Are these changes helpful for the freelancers and the Clients or not?
Let me know your understanding regarding these recent Upwork changes in the below comment section.