Ready for some big news, freelancers?
There are some major changes coming to the world’s largest freelancer marketplace.
In a surprise announcement by the company earlier this morning, effective May 3, 2023, Upwork (formerly Elance-oDesk) will be removing the sliding-scale service fee structure from its platform and replacing it with a simple flat fee.
For the uninitiated, the current fee structure features a sliding scale. This means that Upwork charges freelancers a:
- 20% fee per client spend on transactions less than $500
- 10% fee per client spend on transactions between $500.01-$10,000
- 10% fee on all Upwork Enterprise client transactions
- 5% fee per client spend on transactions of $10,000.01 or more
Read Also: Can You Make Good Money on Upwork? How I Made $600,000 in 5 Years
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The new Upwork fee structure
The new structure wipes away that sliding fee and instead charges a flat 10% rate across the board regardless of client status or lifetime billings or earnings – a perk Upwork Enterprise contracts and Featured Jobs have enjoyed from the start.
This new flat fee applies to both fixed-price contracts as well as hourly projects.
The standard client-side payment processing fee, at this time, remains unchanged. However, clients will be charged a new initiation fee of up to $4.95 (initiation fees may vary) on new contracts created through Upwork’s Marketplace and Project Catalog.
The surprise change is Upwork’s response to years of negative customer feedback on the old system.
It is suspected that this new fee structure will lessen the barrier to entry for beginners on the freelancing platform who may find the old fees confusing and cumbersome. It will also likely help ease the pain of rising proposal submission costs that currently disproportionately impacts new freelancers (more on that below).
Most notably, the change will make Upwork service fees far more competitive compared to other popular marketplaces like Fiverr. Fiverr, at the time of this writing, charges a flat 20% fee on all earnings.
It will be interesting to see whether or not Upwork’s competitors follow suit.
Will 5% contract fees be grandfathered in?
Unfortunately, freelancers who are currently working on contracts with over $10,000.01 in client spending and enjoying that aforementioned 5% rate will only be temporarily grandfathered in.
According to Upwork, these contracts will only remain at 5% until the end of the year, at which time they will rise to 10%.
At the time of this writing, it appears that clients brought to the platform through BYOC (Bring Your Own Client) will remain at 0%.
Editor’s Note: As an Expert Vetted freelancer who is currently making 5% on a large portion of my contracts, I’ve already reached out to Upwork and encouraged them to reconsider. I suggest other Top-Rated and Expert Vetted freelancers do the same. After all, it is clear from this historical fee structure change, that customer feedback is important to Upwork.
More big changes to the Upwork platform
The new fee structure isn’t the only thing that’s changing at Upwork. Three other big changes have surfaced on the platform in recent weeks including:
- The addition of work-to-hire contracts
- Increased cost to submit proposals
- Changes to the Upwork Connect rollover/expiration policies
Let’s quickly breakdown each:
1. Work to hire Contracts
On February 13, 2023, Upwork made a historical announcement that they would expand the famous gig-based platform to include work-to-hire contracts.
Now, when a client creates a job post on the platform, they can mark the job as a contract-to-hire opportunity.
This change is meant to attract clients who wish to trial a working relationship with freelance talent prior to committing to a long-term full-time opportunity. This also allows freelancers, for the first time, to seek full-time employment on the Upwork platform.
However, it is important to note that the standard Upwork Terms of Service still apply to work-to-hire contracts. The client and freelancer must keep their relationship on the platform for two years or pay the conversion fee.
To look for work to hire jobs on Upwork:
- Change the Job Preferences section of your profile to “open to contract-to-hire opportunities“.
- Use the advanced Upwork Search (by clicking on the search icon in the top menu). Then, click on the checkbox “Contract-to-hire roles” to filter work-to-hire job posts (located in the left-hand sidebar).
2. Increased cost to submit proposals
In May 2023, eagle-eyed Upwork users started noticing that Upwork has increased the cost to submit proposals from 1-8 Connects to 2-16 Connects.
Upwork Connects is a form of digital currency that can be used to bid on jobs, boost proposals, and purchase a boosted availability badge on the platform.
They are mostly used by new freelancers on the platform looking for new clients via the Jobs Feed. Connects are not required to apply when directly invited to a job.
Each Connect is valued at $0.15. This change means it will now cost $0.30-$2.40 to apply to jobs via the Jobs Feed – not including the optional additional expense of boosting.
Read Also: Upwork Connects: Tips on Pricing, Bidding from a $600k Upworker
Freelancers receive 40 free Connects upon creating a freelancer account on the platform. They can also get bonus Connects by:
- Earning the Rising Talent Badge
- Winning and responding to interviews
- Completing an Upwork Skill Certification
- Collecting free monthly Connects
- Subscribing to Freelancer Plus
- Purchasing Connects by the bundle
- Redeeming a Connects reward
Read Also: 8 Ways To Get More Connects On Upwork
Speaking of which …
3. Changes to the Upwork Connects rollover and expiration policy
Earlier this year, Upwork also implemented a big change to the Upwork Connects rollover and expiration policy.
Originally, Upwork Connects expired monthly and users were limited in the amount they could hold at any one time.
Now, Connects expire one year from the date of issue and the maximum limit has been removed altogether.
Hopefully, this change, coupled with the removal of the sliding-scale fee structure, will help to offset the previously mentioned rising costs of submitting proposals.
What do YOU think?
What do you think about the recent changes at Upwork? Is this going to change the way you use the platform? Let me know in the comments below. Also, don’t forget to connect with me on social media using the links below.
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Thanks for the update.
A big kudos to Upwork on this, it’s a plus for we upcoming talents
Upwork should not charge connects fee. It should free and open bid without connects/ buying these type of charges to buckup and welcome new freelancers.
Upwork should remove the boosting system ,if freelancer is not able to buy boosting connects rather than other compititor then how can get the jobs on upwork . Talent is hiding through of this system. Please close boosting system.
I love the death of 20% but the removal of the 5% is a real slap for anyone that’s enjoying that relationship. Overall I’m seeing remote opportunities on the platform decreasing quickly and I’m searching the regular apps like Glassdoor, Indeed, etc for work.
can´t change 5% for 10%
stop steal freelancer with connects
I have been using upwork.com sine it was rent-a-coder. In the many years of using the service I learned that you have to use the platform to your advantage. I only bid on jobs that interest me. I don’t try to get every posting. I look for the quality clients and have them quality for what I do, not what they can do.
It is also vital that you work the feesinto your bid. The clients need to cover these fees. Never devalue your work and time. There are way more options for quality freelancers. You can easily run the same thing from your own website with some time and effort.
To your success!
It’s hard to see the removal of the 5% fee structure as an explicit statement that long term relationships between freelancers and clients is no longer a priority for Upwork, and they are actively encouraging shorter term engagements.
So they want to increase fees 5% to 10% for full-time freelancers. What a rip-off, and they are so happy about their announcement. They will lose freelancers for sure, no need long-term for this middlemen if it takes 10% cut.
I have been on the platform since 2008 ( when it was Odesk) all my contracts are 2+ years old and in the 5% range. The additional 5% will make me convert all those contracts off the platform. The change if I stay on the platform will cost me at least $12000 a year in additional fees on top of the $12000 a year they are already getting from my contracts.
When my current contract hits 2 years, I will arrange with my client to get paid directly. I’m just miffed that it won’t be until after the end of the year. They offer nothing in exchange for skimming an extra $5k off the top of what I earn.
I have been on Upwork for seven years now and I only use it for clients that I am at 5% with and now that they are being greedy and taking an extra 5%, I will not be on there anymore. I have already moved two of my clients off of there. Upwork is going to lose 80k+ a year from my work. When they decide to change it and realize it was a terrible business decision, it will be too late because many of the top rated plus Freelancers like me will be gone!
Thank you for sharing this valuable information! Your insights and tips have been really helpful for me as I navigate my freelance career on Upwork. I appreciate the time and effort you put into creating this article and sharing your knowledge with others. Keep up the great work!
Hi!
Thank you for your information, it’s new for us,
So basically, Upwork decided to rip off high value freelancers which worked hard to reach the 5% fee. What a way to treat loyal freelancers. Good thing about this “genius decision” is that this tier of freelancers have already build trust with their customers and can easily move away from the platform.