Upwork has dynamic fees for freelancers: from 20% when you earn less than 500$ with current client and to 5% when an amount of money of all operations between client and freelancer reaches 10000$. In addition, Upwork charges 2.75% from a client, so total fees are: 7.75%, 12.75%, and 22.75%.
How are the fees calculated?
Amounts and commissions (payments for different projects are added):
- 20% for the first $500;
- 10% between $500 and $10000;
- 5% after $10000.
Example of how much commission you will pay on project with a new client with budget $15000:
- $500 * 0.2 (20%) = $100
- $9500 * 0.1 (10%) = $950
- $5000 * 0.05 (5%) = $250
- $15000 * 0.0275 (2.75%) = $412.5
Total commission from $15000 will be $1712.5 ($1300 will pay freelancer and $412.5 will pay client), earlier we would pay for this project $1500.
You need to focus on the amount of $1300, not in $1712.5, because the commission of 2.75% for the client is less noticeable, and more often the client will be shown the amount without 2.75%. Usually, clients think something like
I can spend a maximum of $1000 on a new design for my store
But in fact, the budget will be more due to an additional 2.75% commission.
Who not pleased with dynamic fees?
- Freelancers who earn less than $10000 per project on average, and especially less than $500;
- Freelancers from poor countries without special skills, since their very low hourly rates will take a long time to achieve the $10000 stage with one client;
- Freelancers who do bad work, so can not build a long-term relationship with the client;
Why dynamic fees are not bad?
- Final fees for freelancers will be near 10%. Because a lot of projects exceeds $500 budget;
- Upwork stimulates long-term partnership. I believe that the best way to earn money on Upwork is to work with old clients. Even the most successful small project cannot replace long-term work on several projects. It is important to consider projects and clients in terms of possible collaboration in the future and to pay attention to the amount of the budget of the project (which is often only the first part of the work).
- The commission for a freelancer is less than 10% if a project’s amount of money exceeds $10000.