Upwork Fees for Freelancers: All You Need to Know

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If there’s one thing guaranteed to get the jungle drums banging in the world of freelancing it’s Upwork fees for freelancers.

Many freelancers were already critical of Upwork’s fees when the platform implemented a BIG change a couple of years ago. The changes forced all Upwork freelancers to pay for “Upwork Connects” in order to bid for jobs. This caused some freelancers to abandon the platform (or at least say that they would!)

This article explains all of the key Upwork fees for freelancers, including the controversial changes made in 2019, so that you can understand what the fuss was about and decide if the platform is right for you.

I will also potentially add to the controversy by giving my own opinion on Upwork’s fees 🙂

WHILE YOU’RE HERE: Be sure to also check out our guide to Upwork taxes.

What is Upwork?

Just in case you’ve been living in a cave, Upwork is a huge online freelance work platform. With over 100,000 freelance gigs on offer at any one time, and 12 million registered freelancers on the platform, it’s a huge part of the online freelancing world. (We have a huge review of Upwork here).

It is fair to say that Upwork has a mixed reputation. With so many people on the platform there are plenty of scams to avoid. Equally annoyingly, there are plenty of “bottom feeder” clients, who expect the earth for ridiculously low rates. Differing costs of living across the world play into this too, as this article on cultural awareness around freelancing explains.

Upwork Fees for Freelancers

Aside from the scams and the cheapskate clients, the thing that seems to incense people more than anything is Upwork’s fees for freelancers. It’s fair to say that Upwork fees can eat significantly into users’ freelance earnings.

For example, Upwork charges freelancers a 20% commission on work up to the value of US$500 (with each client). The commission rate drops for higher value projects, with 10% charged between US$500.01 and $10,000, and 5% once an individual client has spent over $10,000.

These fees are undeniably significant. If you do a $500 job for a new client, Upwork take $100 for themselves. This means you’re only left with $400, and that’s before you start thinking about PayPal fees and currency conversions, let alone tax or other business costs.

The commission fees Upwork charges on completed work did not change in 2019 so the big difference between the old and the new Upwork fees for freelancers is in the new charges for Upwork Connects.

In order to apply for jobs on Upwork, you use a system of “Upwork Connects.” Between two and six Connects are required to apply for each gig.

Freelancers choosing to use Upwork with a “Basic” (free) plan under the old regime were given 60 free Upwork Connects each month. These free Connects were taken away by the changes.

The response from the freelance community was so vehement that it resulted in Upwork adding 10 free Connects to all plans. Still, no freelancer on Upwork can really apply for many gigs without having a paid membership, or buying Connects individually.

Freelance Plus subscribers on Upwork saw their fees jump from $10 to $14.99 per month in May 2019. The number of Connects offered with this plan remained 70, although Freelance Plus subscribers now also receive 10 additional free Connects.

How Much do Upwork Connects Cost?

The price of each Upwork Connect is 15 cents (US$0.15) and you can purchase bundles of 10, 20, 40, 60, and 80 Connects.

Each gig application uses between one and six Connects, depending on the contract value. As such, firing off an application for a “six Connect” job costs 90 cents.

While this is a comparatively small amount of money, it’s important to note that this fee applies simply to apply for work. There’s no guarantee of winning any work as a result of a bid.

To put this in perspective, active Upwork freelancers who were using all of their Connects each month started having to may US$9 per month to fire off the same number of applications, once the changes were made.

These limits are rather low given the feast or famine nature of freelancing. There really is no good reason (other than for Upwork to make more money) to not allow a freelancer to keep all of their paid Connects indefinitely.

Registering with Upwork for the first time earns you 40 Connects, and completing the Upwork Readiness Test gives you another 40. This does help new freelancers on the platform but it also masks the true cost until the freelancer is invested in it.

Other ways you can earn Connects are by winning an interview, completing an Upwork Skill Certification, or earning a badge.  “Top rated” and “rising talent” freelancers may be given some free Connects as well.

Free Upwork Connects may be nice, and boost your ability to apply for work a tiny bit, but the reality is that they are perks designed to make you invest more heavily in the platform.

This is perhaps more significant than it sounds. Once you are established and successful on Upwork, people begin to come to you, rather than you going to them. Some freelancers, my wife and I included, only really work via Upwork when people approach us on the platform. For Upwork freelancers who work in that way, the changes made have a limited effect.

Upwork Fees For Employers

Upwork offers three different plans to those looking to employ freelancers on the platform:

• Upwork Basic: This plan allows access to all the freelancers and agencies on Upwork but little else. The plan itself is free but employers still need to pay a 3% payment processing and administration fee for each job.
• Upwork Plus: For $49.99 per month, in addition to the 3% administration fee, businesses get dedicated support, tools to simplify working with freelancers, and a variety of perks to help their business draw the attention of top freelancers.
• Upwork Enterprise: This plan is for those who want to integrate freelancers into their business and so the benefits and fees will vary from company to company.

It is worth noting that in these plans the employers are really not paying for the use of Upwork, but rather for the additional tools and services. It is a clear indication that Upwork considers the employers as their clients, not the freelancers.

How Important was the Change in Upwork Fees?

The reaction to the Upwork fee changes was predictable, and you don’t get a medal for guessing the general theme! Forums (like this one – running to dozens of pages), are full of outrage, with Upwork being described as “greedy,” “brain dead,” and “mean and unfair.”

On a simplistic level, I do understand why people railed against additional Upwork fees. Upwork is already known to charge significant commission on work freelancers complete through the platform. Doing $500-worth of work and handing Upwork $100 of it for “nothing” has always stung, and always will. However, those charges are really the subject of a whole different discussion.

When it comes to these new charges for Upwork Connects, I can actually see a number of clear positives, which I shall now defend:

In recent years, I’ve used Upwork at least as much to hire freelancers as I’ve used it to work on the platform. When you place an advert on Upwork, you brace yourself for an inevitable onslaught of time-wasting, poorly written applications. Many of them come from completely inappropriate freelancers who’ve clearly not read the requirements or assessed their suitability for the gig.

If having to pay 30-90 cents to put in an application for each gig is going to eliminate most of these people from Upwork, that’s a good thing.

And it’s not only a good thing for employers. It’s also good if you’re a professional freelancer who’s taking your work seriously. This is because your own good application isn’t going to have to fester in a pile of rubbish that the client has to wade through.

Keep in mind here that under the “old” system, 60 free monthly Connects gave every crap freelancer the opportunity to send out up to 30 crap applications – without spending ANY money. With all of this “noise” removed from the platform, the end result should be something far more streamlined and far more professional.

I do sympathise with novice freelancers, and those on a really tight budget. This is especially the case for those in less developed countries, where 50 cents is a far more meaningful amount of money than it is in the western world.

But ultimately, $10-15 per month isn’t a big investment in a career. If you think back to the days when people would pay to advertise in the phone book or the local paper, that was just a business running cost that any small business would be prepared to bear.

I liken Upwork connect fees to what you would one day have spent on stamps to send off written applications.

To my mind, these changes helped to sweep away the many, many people who, in truth, had no business cluttering up the platform by applying for jobs they stood no chance of getting.

The changes actually inspired me to take a fresh look at a platform that could – hopefully – become more attractive to professional freelancers, and to high quality clients.

How Do Upwork Fees for Freelancers compare with Other Platforms?

Ultimately your decision to work on Upwork will be determined more by how its services and fees compare to other platforms, rather than how they have changed their fees.

A quick look at the some of the established platforms shows that Upwork’s model and fees are fairly common.

Upwork vs. Freelancer vs. PeoplePerHour

Fees on Freelancer

Freelancer is another major player that has a similar fee system to Upwork. It’s actually a little more complicated.

In essence, you get a limited number of bids according to the level of your membership plan. You use these when applying for jobs. Unlike Upwork, you cannot purchase additional bids but must rather upgrade your membership plan if you need more. This is why they need to offer five different paid plans in addition to the free plan. The paid plans range from $0.99 to $69.95 per month.

Comission fees are also more complex than Upwork, although significantly lower. Freelancer charges a flat 10% on hourly projects, 10% or $5 on fixed price projects, and 20% on services. The kicker is that Freelancer charges its comission fees upfront. This means freelancers must pay the platform before they get paid.

PeoplePerHour Fees

PeoplePerHour is a major UK-based freelance platform.

PeoplePerHour uses the term “proposal credits” but, like Upwork, charges users for additional credits. It is a little more generous in that you get 15 free credits per month and each bid only costs one credit. But even if you purchase a pack of 50 additional credits, you still end up paying around $0.50 per credit (compared to $0.15 on Upwork).

Where PeoplePerHour bucked the trend a little is in reducing its commission back in 2019. Like Upwork, the platform uses a sliding scale to encourage long-term relationships between clients and freelancers. By limiting the 20% fee bracket to the first £250 (c. $350) earned, PeoplePerHour has certainly made its offering more attractive.

Still, little things like conversion rates and minimum service fees mean that the difference between the two is less than it might initially seem.

Hubstaff Talent Fees

Users of Hubstaff Talent are probably doing a double-take here and that is because this platform actually charges NO FREELANCER FEES.

Hubstaff is definitely different from the mainstream platforms and while that can be incredibly refreshing it also comes at a certain cost. There are nowhere near as many jobs available on Hubstaff Talent as there are on Upwork.

If you are looking for a platform with a lot of jobs, a certain level of security in the financial transactions, and ease of use then Upwork is still among the top contenders. This is why, despite the fuss created by the changes in 2019, it remains one of the most popular platforms. But there are some things I would like to see Upwork do better.

Ways Upwork Could Improve

As Upwork charges merely to apply for jobs, I hope that the company will soon recognise that this means the freelancers are their clients too. 

As such, I’d like to see:

• Consideration given to reducing the commission on completed jobs, especially on the 20% rate charged on low value (sub $500) contracts. These hit novices particularly hard.
• Far more proactive efforts to clamp down on scams on the platform. The scam I described here comes up time and time again.
• Improvements in Upwork’s technical infrastructure and reliability (which will hopefully happen naturally as a result of less traffic going through the system). An update to the user interface, which has been largely untouched for years, wouldn’t go amiss either.

Whether these things happen remains to be seen. A decrease in commission has not yet happened and seems unlikely, but it would be a nice gesture to those still willing to – now quite literally – invest in their career by using the platform.

On the other hand, the problem with being one of the biggest freelance platforms is that Upwork can become bloated and loaded with scams. Upwork fees do make it more expensive, but that can actually benefit serious freelancers by filtering out some of the noise.

I dread to think how the influx of freelancers due to COVID-19 would have impacted the platform if the Upwork connect fees had not been in place.

While Upwork commissions are undeniably high, they do improve if you can build a long-term relationship with a client. And that is something that I can guarantee is doable. I have personally found great long-term clients there.

Alternatives to Upwork

Those looking for alternatives will find plenty as the surge in freelancing during 2020 saw the birth of many new work platforms.  

Not all platforms are equally good or trustworthy so I commissioned an article rounding up the top freelancing alternatives to Upwork, which you can find here.

Conclusion

Upwork fees for freelancers will no doubt continue to be the subject of much debate, but the reality is that Upwork is not that different from its competitors. While the changes to the Upwork fees were huge news at the time, people have got used to the new way of doing things and for the influx of new users it is just business as usual.

I will reiterate what I personally believe: Every rubbish job application that’s eliminated from the platform because a 30+ Cent fee gives pause to the person about to send it is a good thing. It’s good for the clients, and it’s good for the freelancers who are making more of a professional effort.

Upwork, like other freelance platforms, was slammed with a huge increase in demand in 2020, making it a little hard to truly evaluate the effect of the higher fees. Still, I believe that the changes to the Upwork fees for freelancers was a step in the right direction and hope to see Upwork focusing more on the needs of good freelancers in the near future.

If you are interested in using the platform we have a lot of Upwork articles on the site ranging from an ultimate review to getting approved to tips for success.

What do you think about the Upwork fees for freelancers? Share your opinions in the comments.