How Much Does Upwork Take From Freelancers?
Upwork charges freelancers a service fee that depends on the total amount billed with each client. Here’s a detailed breakdown of the fee structure:
1. Basic Fee Structure
Upwork uses a sliding scale system for service fees. The more money a freelancer earns with a specific client, the lower the fee percentage becomes. This incentivizes long-term relationships with clients.
- 0 to $500 billed with a client: Upwork takes 20% of the total amount billed.
- $500.01 to $10,000 billed with a client: The fee drops to 10%.
- $10,000+ billed with a client: The fee further decreases to 5%.
This means that if you build a strong, ongoing relationship with a client and bill more over time, you’ll end up paying a smaller fee percentage on those future earnings.
2. Client-Based Fee Scaling
The fee is calculated individually per client. This means that the service fee is not based on your total earnings but rather on how much you’ve earned with each specific client.
For example:
- If you’ve billed $1,000 with one client, Upwork takes 20% of that amount ($200).
- If you’ve billed another $1,000 with a different client, you will also pay 20% on that ($200).
- However, if you continue working with one of these clients and you pass the $500 mark, the fee for that client drops to 10%, and so on.
3. Other Upwork Fees
There are additional fees and considerations that freelancers should be aware of when using the platform:
- Withdrawal Fees: Depending on the withdrawal method you use (PayPal, wire transfer, etc.), Upwork may charge a fee to transfer your earnings to your account.
- Conversion Fees: If you’re earning in a currency different from your bank account’s currency, Upwork charges a currency conversion fee (typically 2.75%).
- Membership Fees: Upwork offers a “Plus” membership for freelancers, which costs $14.99/month. This membership includes benefits like increased visibility, the ability to submit more proposals, and access to other features. While it doesn’t directly affect the service fee percentage, it’s important to consider if it fits your needs.
4. How the Service Fee Affects Freelancers
At first glance, a 20% fee might seem high, but as a freelancer, you’re getting access to a platform with millions of potential clients, tools for managing work, and secure payment processing. Upwork’s sliding scale means the fee reduces as you build client relationships, which encourages freelancers to establish long-term partnerships.
The structure also ensures that new freelancers aren’t penalized for starting out. The 20% fee on small projects means that Upwork helps to cover the costs of acquiring new clients and ensuring the safety of both freelancers and clients.
5. Pros and Cons of Upwork’s Fees
Pros:
- Sliding Scale: Lower fees as you build a stronger relationship with a client.
- Client Acquisition: Access to Upwork’s large marketplace for finding clients quickly.
- Security: Payment protection ensures that freelancers are paid for their work.
Cons:
- Initial High Fee: For freelancers just starting out, the 20% fee on the first $500 with a client can seem steep.
- Membership Fees: The Plus membership comes at a cost, which may not be necessary for everyone.
6. How to Minimize Fees
To minimize the impact of Upwork’s fees, freelancers can:
- Focus on Long-Term Clients: The more you work with a client and the more you bill, the lower your fee percentage will be.
- Use the “Upwork Plus” Membership Wisely: If you’re a high-volume freelancer, the extra benefits of Upwork Plus (like the ability to send more proposals) may justify the monthly cost.
- Offer Packages or Bulk Work: If you can negotiate larger projects upfront, this could reduce the overall impact of the fees by lowering the relative percentage taken by Upwork.
7. Summary
- For the first $500 with a client, Upwork takes 20%.
- For $500.01 to $10,000, the fee drops to 10%.
- For over $10,000, the fee drops further to 5%.
These fees apply individually to each client and help support Upwork’s platform. Freelancers can minimize the fee burden by fostering long-term client relationships, selecting their membership plans wisely, and leveraging Upwork’s tools for client management.