Upwork Fees Understanding the Costs on Both Sides

The Upwork platform provides a valuable service to freelance workers as well as the clients needing work done. The services provided by Upwork save time, hassle, and money for both clients and freelancers. So, it’s completely natural and expected to see Upwork fees charged to both the freelancer and the client in exchange. This is after all, how business works and it’s how those behind Upwork pay their staff and earn their profit. Client Fees Client fee is 2.75% on all payments made to freelancers through the Upwork system. Every client payment to each freelancer is charged this fee for processing. The processing fee is a percentage of the entire billing charge and will display as a separate transaction. If a freelancer bills the client for $100, Upwork automatically charges a processing fee of $2.75 which shows up as a separate transaction. Fees are charged weekly for hourly projects and at the time of funding for fixed project milestones. The 2.75% processing fee applies for bonuses and milestone payments. Flat Fee Option for Clients For those clients who process more than $910 monthly in payments, Upwork offers the option of a fixed fee of $25 per month. Clients who choose this fixed fee option, pay $25 per month in lieu of a per payment fee of 2.75%. To qualify for the fixed fee option, clients must use local currency credit card billing or bank payments as the main billing method. Any payments made for any reason through a payment method other than the primary payment method will be charged the 2.75% fee for processing per payment. The monthly fee is assessed automatically on your enrollment date. For clients who choose to opt out of the flat fee option after paying the non-refundable fee for the month, per payment fees will start being assessed at the end of that monthly billing cycle. The $25 monthly fee is regardless of the number of payments, freelancers, contracts, or teams the client has via Upwork. Clients who are not eligible for the flat fee option include those who are in a contract for Upwork Enterprise services or who previously signed legacy payment agreements with Upwork. Those clients using Elance or Elance Private Talent Cloud contracts are also not eligible for the flat fee option. Payments made to freelancers who are on Pro contracts (Upwork Pro program fees) are not exempt. Freelancer Upwork Fees On the freelancer side, up until recently, Upwork was known as ODesk, and the fee structure was relatively simple, a 10% service fee on each project or job. But ODesk recently merged with Elance, another large freelance website, and the two rebranded as Upwork. As part of that process, the company overhauled the structure of Upwork fees on the freelancer side. The new sliding scale fee structure is calculated based on the lifetime amount billed to each client. This freelancer sliding fee structure applies to both fixed and hourly projects. When a freelancer first starts working with a new client, there is a 20% service on all amounts billed to the client. If a freelancer bills a client for $100, the freelancer service fee is $20. When the client pays the bill, Upwork will take their $20, and the freelancer will receive $80. The 20% service applies for all charges billed to the same client up until the client exceeds $500. For billing between $501 and up until the client exceeds lifetime billing of $10,000, the service fee charged to the freelancer reduces to 10%. Freelancer rewards are reflected in the Upwork fees for taking on larger projects or repeat clients by cutting the service fees in half as soon as the client has surpassed $501. If a freelancer reaches a lifetime billing to the same client that exceeds 10,000, the service fee drops even further, to just 5% for that client. There are no time restrictions on reaching the $501. If a freelancer accepts a contract for a total amount of $600, the Upwork service fee for the first $500 would be $100 and for the remaining $100 it would be $10 for a total service fee of $110 paid to Upwork. If it takes several different projects for the same client to exceed the $501, then each billed amount up to the $501 incurs a service fee of 20%. All hourly, fixed, or milestone billing falls under the new pricing structure. Agencies fall under the same sliding fee structure. All billing by the agency to the same client, regardless of who completed the work, are included in calculating the Upwork fees. Exceptions to the Rule There is an exception to the sliding fee structure implemented in 2016, and this is for those contracts that were in effect before the change in pricing structure. Contracts in place before the pricing structure are grandfathered in at whatever their current service fee was until the lifetime billing amount exceeds $10,000. Once the billing exceeds $10,000 the service fee drops to 5%. The same exemption applies to former Elance freelancers working through Upwork with former Elance clients. New contracts with clients who existed before the pricing structure are subject to the new fee structure. Freelancers paid hourly via the Upwork payroll service are exempt from paying Upwork fees since they paid via a third-party staffing firm. Sliding fees also don’t apply to Enterprise client contracts as those contracts are negotiated with companies separately. In most cases, Enterprise client contracts incur a flat 10% service fee. Upwork offers several different reports that enable freelancers to quickly see which clients are approaching the next tier based on lifetime billing amounts. My recommendation is that freelancers carefully monitor the lifetime billing totals for all clients to ensure that service fees are deducted accurately. Hopefully, I have clarified some of the mystery and furthered your understanding of the Upwork fees on both sides so that you can make an informed decision about fees involved when using the Upwork platform.