Upwork is a great place to find freelance jobs online and make money.
In fact, I’ve personally made over $600,000 as a freelance graphic designer on the platform.
However, despite being a living testimonial to the power of Upwork, would-be users continue to voice concerns to me about Upwork’s sliding service fee.
Upwork’s fee structure seems to be one of the biggest hangups for would-be freelancers – and even some clients! And it’s often the focal point of negative reviews you read about the platform.
But as you can see from my profile, I haven’t let the fee structure get in the way of the ability to earn a small fortune.
Today, I make roughly six-figures a year and charge an hourly rate of $150+.
In this article we will address the following topics:
- Do you pay for Upwork?
- What fees does Upwork
- Does Upwork charge fees to clients?
- How can I reduce my Upwork fees?
- Do you build fees into your rate?
- How can I avoid Upwork fees altogether?
So in this blog post, we tackle the subject head-on.
First, I am going to discuss the Upwork fee structure and how it works. Then, I will show you simple ways to reduce those fees. Finally, I will show you how, in select cases, the fee can be avoided altogether.
And here’s the best news – this is all on the “up and up”!
All of this advice is perfectly in line with Upwork’s current Terms of Service.
But first, let’s get some of the basics out of the way.
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Do you pay for Upwork?
Upwork’s base service is free. However, freelancers may choose to upgrade to a premium subscription, for an additional charge.
Upwork asks their freelancers to use something called “Connects” to bid on jobs.
I like to think of Connects as a type of digital currency.
At the time of this writing, new freelancers are given 40 free Connects when they successfully register on the platform. And they are given another 40 free Connects when they pass the Upwork Readiness Test. This means that most freelancers will essentially have a total of 80 Connects to start.
The free way to use Upwork (Freelancer Basic)
Freelancer Basic accounts (Upwork’s free base service) will receive an additional 10 Connects each month with the ability to rollover up to 200 unused Connects at the end of each month.
Freelancers may also earn an additional 10 free Connects by winning and responding to interviews (10 per invite, with a 50 per week cap).
Job bidding, depending on the size of the project, will require a freelancer to “pay” anywhere from 1-6 Connects.
Big projects require more, small projects require less.
This means that new Upworkers, with a starter set of 80 Connects, will be able to bid on anywhere from 1-13 jobs during their first month on the platform for free.
The problem lies in the fact that landing your first job on Upwork can be quite difficult.
I personally applied for about a dozen jobs before getting a single reply. So it’s quite likely that you will need to purchase a few extra Connects to land that first job.
Additional Connects can be purchased on an as-needed basis for $0.15 each (plus tax).
And here’s the best part – you will become less dependent on Connects over time.
Connects are not required to reply to job invitations. Top-Rated freelancers generally receive so many invites that they never even bother to look at the Upwork Job Feed.
Top-Rated freelancers usually get plenty of freelance work without the feed. Plus, we tend to find that potential clients who send us invites are more eager to work with us (and make for better clients in general).
As an Expert-Vetted freelancer on the platform with a 100% Job Success Score (JSS) I never use Connects anymore and haven’t had to buy Connects in years.
The paid way to use Upwork (Freelancer Plus)
In addition to paying $0.15 for additional Connects as needed, Freelancers may also opt to upgrade to a paid membership, known as Freelancer Plus.
With a Freelancer Plus account, Freelancers are given 80 Connects each month (versus 10 with the Freelancer Basic account).
Freelancer Plus accounts also come with a variety of other benefits:
- Your profile will not be hidden due to inactivity
- Keeping your earnings confidential (but this practice is not recommended)
- Seeing competitor bids on any job posting
- Customizing your profile URL
- Accessing extended reports and an improved overall UX experience
My advice – The Freelancer Plus account isn’t worth it
I actually don’t recommend signing up for a Freelancer Plus account.
Quite frankly, it’s just not a great value for your money.
And y’all, that’s a strong statement coming from me, because I am a pretty big Upwork fan.
But here’s my rationale (and I hope Upwork is listening).
Currently, the Freelancer Plus account is $14.99 per month. And the most valuable part of the subscription is the extra 70 Connects per month. (Remember, you get 10 free each month with Freelancer Basic, and 80 each month with Freelancer Plus).
Instead, you could just buy 70 Connects at $0.15 each without upgrading – roughly $10.50 plus tax – which is the best solution in my opinion.
And in my personal experience, I wasn’t impressed by the other benefits offered in the upgraded account.
I’ve held a Freelancer Plus account in the past and never used any of the “premium” features.
I also think that the “extended reports and functionality, including grouping and sorting” should be free. I don’t believe customers should ever have to pay for a better UX. But I digress.
So, in my humble opinion, the upgrade needs some improvement or should at least be discounted to $9.99 to be a better value for the money.
How many Upwork Connects do you really need?
For experienced freelancers, I think roughly 200 connects should be more than enough to get the ball rolling.
Consider buying an extra $20’s worth of Connects after signup for an additional 133 to add to that starter 80.
That’s likely more than enough Connects to start finding work (and steady invites which require no Connects to reply) on the platform without having to rely on the Job Feed.
Freeing yourself from reliance on the Job Feed is the name of the game for Top-Rated freelancers on Upwork.
What fees does Upwork charge?
And then we have the dreaded Upwork fee.
Upwork charges a sliding fee based on your billings with each unique non-Enterprise client.
Those fees are as follows:
Upwork freelancer fees
|Per Client Spend||Fee|
|$500.01 – $10,000||10%|
|$10,000.01 or more||5%|
The fee is automatically taken out of your billable hours.
It is important to note that the above fees are client-based, not contract-based.
For instance, if your client employs you under three separate contracts but uses the same login, your service fee is the same across each contract and based on lifetime billings with the client instead of individual billings on each contract.
That’s an important distinction to make because I’ve had to walk more than one client through how to create a second contract in lieu of a second account to keep my Upwork service fees low.
Does Upwork charge fees to clients?
Yes, Upwork also charges the client a 5% payment processing fee per transaction (or 3% for eligible U.S. clients who pay via ACH).
To be clear, “transactions” include; contracts initiated on the freelancer marketplace, fixed-rate and hourly projects, milestones, catalog projects, the Bring Your Own Client program, bonus payouts and expense payouts.
It does not apply to the $29.99 fee to post a Featured job, Enterprise service subscriptions or Direct Contracts.
The fee used to be – prior to April 2022 – just 3%. Which was in line with industry averages, with the typical credit card processing fee ranging from 1.3% to 3.5%. It’s also important to remember that this processing fee is charged to the client whereas most vendors (the vendor would be Upwork in this case) would normally eat that fee as an expense.
So if you want to talk about high fees – it’s actually the client fee that I think is a tad unfair.
If you’re a client on the platform, you may want to keep those fees in mind when setting up your preferred payment method and opt for ACH whenever possible.
Upwork client transaction fees
|Client Transaction Type||Client Fee|
|ACH (eligible U.S. clients)||3% per transaction|
|PayPal||5% per transaction|
|Credit Card||5% per transaction|
Other (optional) client fees
|Available Client Upsells||Client Fee|
|Posting a Featured Job||$29.99|
|Upgrade to Upwork Enterprise||Requires custom quote|
How can I reduce my Upwork fees?
So now we’ve gotten to the most important question. How do you reduce your Upwork fee the legitimate way without getting in trouble on the platform?
Below, I will offer two solutions
By employing the strategies I am about to share with you, I’ve managed to dramatically lessen my fees over time. A chart of my earnings (billed) versus my fees can be found below.
And at the time of this writing, I am currently tracking at just 6.78%.
Here’s a more detailed breakdown of my earnings over the years:
- 2017: $18,848 billed, $2,849 fees paid
- 2018: $102,801 billed, $10,463 fees paid
- 2019: $157,842 billed, $12,142 fees paid
- 2020: $185,887 billed, $14,903 fees paid
Now, without further ado, here are the two strategies I used to make it happen.
1. Focusing on large, ongoing long-term contracts
Focusing primarily on long-term relationships will naturally reduce your Upwork fees over time.
As we mentioned earlier, the Upwork fee structure is client-based. This means that the moment you hit the $500.01 mark in lifetime billable, your fee is automatically reduced to just 10%.
The fee is reduced again once you hit the $10,000.01 mark to just 5%.
And if you’re currently thinking: “I will never hit the $10,000 mark – that’s crazy!” It’s genuinely not that difficult to accomplish. It just takes a bit of time and a bit of hard work.
I’ve personally achieved the $10,000.01 mark with several clients.
2. Applying for Enterprise Client jobs
This is one of the easiest and best ways to reduce those pesky Upwork fees.
However, Enterprise Client fees are a bit of a “double-edged sword”.
Enterprise-level accounts are basically upgraded client accounts. Upwork charges these upgraded accounts a subscription fee in exchange for making it easier for that client to discover Expert Vetted talent on the platform.
And here’s the good news for freelancers – you only pay a 10% fee on Enterprise contracts from the start.
By default, most of these Enterprise-level jobs aren’t posted to the Job Feed – although there are exceptions to that rule (so keep your eyes peeled).
Most Enterprise-level jobs are invite-only, but it’s a great way to quickly bypass that pesky $500/20% threshold.
But here’s the bad news, at the time of this writing, the 10% rate does not change – regardless of the project duration or earnings.
This means that if you go over the $10,000 threshold, instead of receiving another fee reduction, your fee will remain at 10%.
Personally, I’m not a fan of this rule, and it’s something I’d really like to see Upwork change because it penalizes the best performers on the platform.
After the $10,000 mark, we actually have less incentive to work with Enterprise clients (who are paying for access to Top-Rated talent) than we do non-Enterprise accounts.
Do you build the fees into your rate?
There are two ways to look the fees I’ve paid to Upwork over the years:
- Wow, I’ve paid over $40,000 in fees – that’s awful!
- Wow, a 93% profit margin – that’s amazing!
I’ve always treated my freelancing career as a business. And as all business owners know, businesses have expenses.
Honestly, I wish Upwork would start marketing their fee structure a bit differently as well. “Fee” is such an ugly word. “Profit margin” sounds so much better.
When people ask me if I “build my fees in” to my Upwork rate, I usually answer: “I build all of my expenses into my rate.”
My monthly expenses generally include subcontractors, stock subscriptions, Internet service, cloud storage, software subscriptions and more.
For new clients I obtain without the assistance of online platforms like Upwork, I have the added cost of executing contracts (via RocketLawyer) and managing my own invoicing (via Fiverr Workspace).
Those services aren’t free either.
So yes, I build all of my expenses into my rates.
You shouldn’t feel the need to explain this concept to your clients unless they press the subject (and good clients won’t).
And I certainly don’t volunteer this information to my clients. They don’t need to know how I’ve determined my rates. They just need to know what that rate is.
McDonald’s doesn’t give me the breakdown on the cost of each slice of cheese they’ve used on my burger. Walmart cashiers don’t explain how the cost of electricity was built into the price of detergent.
How can I avoid Upwork fees altogether?
There are also two ways to avoid Upwork fees altogether.
1. Use the ‘Bring your Own Client to Upwork’ program
Top-Rated freelancers can ask customer service for a personal “Bring Your Own Client” referral link.
Using this link, you can bring your own clients (or clients who were referred to you by your other Upwork clients) to the platform and wipe out the fee in its entirety.
After your client successfully signs up for a new account and invites you to the job, upon your acceptance, simply email [email protected] with the contract number. Upwork customer service will handle the rest.
I do this all the time to take advantage of all the benefits that Upwork offers (like payment protection) without the added expense of annoying fees.
2. Take your clients off the platform (after two years)
I almost never do this since I genuinely enjoy the benefits Upwork has to offer.
In fact, on the rare occasion, I’ve taken a long-term client off of the platform, it’s always been at the client’s insistence after I try to talk them out of it.
And there have been plenty of occasions in which I’ve regretted doing so.
Clients who always paid on time while on Upwork, without the convenience of the Upwork time tracker and automated payments, became slow to respond to invoices and seemed agitated with the extra paperwork.
Be warned, that if you attempt to take a client off of the platform before the two-year mark, Upwork retains the right to issue a suspension.
And in many cases, this suspension becomes permanent.
Don’t ever cheat the platform by biting the hand that feeds. A short-term gain (getting out of a small fee for a couple of years) isn’t worth losing the long-term potential earnings on such a large and powerful tool.
Have you had any success using an online marketplace to find jobs? What do you think about online marketplaces like Upwork charging a transaction fee? Has the fee structure prevented you from trying Upwork in the past? Let me know in the comments and don’t forget to connect with me on social media using the links below.