How to minimize or eliminate fees on Upwork

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minimize or eliminate upwork fees

Summary links:
Eliminating fees using Time Doctor
How to transfer money when working with clients directly
Options to minimize fees while still using Upwork (oDesk)
Where to get contracts or find people outside of Upwork (oDesk)

Upwork is the largest online freelancer marketplace and came about after Elance and oDesk combined into one company and then re-branded as Upwork. More than $1 billion is being earned annually on the platform.

They recently announced a fee change. The Upwork fees schedule looks like this:

Lifetime earnings between a single freelancer and client Percentage fees
First $500 20%
$500-10,000 10%
$10,000 plus 5%

In addition to this the client pays a 2.75% transaction fee.

These are the fees charged by the platform, but there are also some other charges that you need to pay when using the platform. These are not charged by Upwork, but there is still a cost of doing business:

  • For clients located outside of the US, their bank will charge fees for currency conversion. These fees can be as high as 4.5% when you include the currency margin. These fees can be eliminated, see further below in the article.
  • For contractors, there are often fees for withdrawing money including a currency conversion charge.

All these fees can add up to be quite significant, in some cases over 27%!

Eliminating fees using Time Doctor

For contractors, if you work with a platform such as Upwork there are obviously fees involved. However, if you’re able to find and work directly with clients you can:

  • Eliminate the fees.
  • Charge higher rates! (Upwork is very competitive and so clients that you get directly, off the platform, might be willing to pay higher fees).

One of the issues with trying to eliminate fees is that clients find it hard to trust working with someone on the other side of the world. That’s part of the reason why they are using Upwork, to have a layer of trust between them (the client) and you (the contractor). Time Doctor helps to replace part of that layer of trust with software for time tracking and work verification with features such as screen monitoring and website and application tracking.

So Time Doctor might be necessary for clients to get comfortable with working remotely and to feel happy to work directly with freelancers. Many clients that are familiar with working on Upwork are unwilling to start an engagement with a freelancer unless they have work verification software, and that is where Time Doctor comes in.

How to transfer money when working with clients directly

One of the reasons why Upwork is popular is that it helps to facilitate payments between contractors and clients. However, there are many options to transfer funds directly. Here are a few of the most popular options:

Wise, formerly TransferWise – is a new kind of financial company that specializes in smaller transactions for which you pay a low, upfront fee between 0.5% and 2%, depending on the route. Their system is based on local bank account transfers, which makes them much cheaper compared to other providers and banks.

Payoneer – they transfer to almost every country and provide a way for recipients to receive a debit card and withdraw from an ATM. There is a Payoneer integration within Time Doctor to send payments via Payoneer.

PayPal – it’s not the lowest cost option and doesn’t work for every country, but it’s very convenient.

Sending money directly is especially valuable for clients outside of the US. This is because if Clients pay Upwork via a credit card, they will be charged for currency conversion charges from their local currency into US dollars. This charge can be as high as 4.5%. Then if the contractor is not in the US, they get charged AGAIN for the currency transfer from US dollars to their local currency. So there is a double currency conversion charge, going from the client country to Upwork, then from Upwork to the contractor’s currency.

If you send money directly, you will have only one currency conversion charge. The same is true if your use something like Wise, formerly TransferWise, the charge will be minimal.

Trust and security for contract work versus long-term work

One of the biggest benefits of Upwork is that they provide trust between contractors and clients. This is especially important for short-term contracts because there is no working relationship between the client and the contractor so it can be harder to work directly without that layer of trust. On the other hand, when contractors are working long term or if there are no trust issues because of the reputation of the client then this is less of an issue.

What this means is that it’s easier for a client and a contractor to work together directly if they have a long-term working relationship. It’s also easier where the client or the contractor have a good reputation and each party knows that they can trust each other.

Overall it’s a lot easier for freelancers to work directly with clients if they are working together long term.

Options to minimize fees while still using Upwork (oDesk)

If you’re going to continue to use Upwork there are a couple of options for minimizing fees:

  • Some clients have the option to pay $25 per month instead of 2.75%. This is only possible for clients who are paying more than $1000 per month in total through Upwork.
  • Contractors can make sure to choose the lowest cost method when transferring funds out of their Upwork account. Some methods have much higher currency conversion charges, so it’s important to check the currency conversion rate and not just the stated fees.
  • Clients in Australia, the UK, Canada or Euro countries may have the option to select a local currency method when paying Upwork and save the currency fees charged by their bank (although there are still some currency conversion fees charged by Upwork they may be less than the bank).

Where to get contracts or find people outside of Upwork (oDesk)

If you’re looking for an alternative to Upwork, one of the things you might be looking for is an option for finding contractors (if you are a client) or an option for finding work (if you’re a contractor). Here are some different options and how much they charge, plus what type of work they are for:

Option Fees? This is good for?
Outsourcely From $24.50 per month fixed fee with no percentage of salaries Long term work From $30/month for clients Philippines only long term work
Stackoverflow careers $499 job posting fee High-level developer jobs Freelancer pays from 10% and Client pays 3% Project or ongoing work 15% for the first $280 and then 3.5% Project or ongoing work Mostly 8.95% unless the freelancer purchases a higher level membership Project or ongoing work

Ok so what’s next?

We’ve shown you some great ways that you can minimize or eliminate fees on Upwork. Please give Time Doctor a try and see if it’s a fit for you as a tool for working directly between clients and contractors when working remotely.

View a free demo of Time Doctor

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