Are you one of those who absolutely adores Upwork for the clients and work but hate the Upwork fees?
We’re in the same boat!
Upwork is an amazing platform that has helped me and many of those in my community find freelance jobs, but one of the downsides is that Upwork fees for freelancers aren’t exactly the cheapest around.
The platform has millions of job listings and of course that comes at a price. And that price is Upwork’s pricing for freelancers.
There are three main types of Upwork rates you might expect to encounter while starting out on the platform:
- service fees
- withdrawal fees and
- fees to buy Upwork Connects
I’ll tell you all about them and how you can potentially reduce your Upwork fees by up to 10%! Excited?
Me too! Now let’s get you saving on that Upwork pricing!
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What Is Upwork?
Upwork is a marketplace platform that brings together clients and freelancers.
As a beginner freelancer, it is a great place to begin because it gives you unfiltered access to millions of clients and projects.
However because it is so easily accessible, there are also many freelancers on the platform and standing out can be challenging at times.
You may also wonder if Upwork has fees, if there are, how can you cut them down?
What Are Upwork Fees?
Upwork is generally a free-to-use marketplace for freelancers and clients, so it needs to charge Upwork fees to run the website.
They charge fees as the middleman between you as a freelancer and the client.
You can avoid paying fees potentially by looking for your clients or using other sites and platforms, but you may not have the reach of client projects like what Upwork has.
Upwork charges fees also because they are helping you process payments from the client, saving you the need to invoice and bill the client directly.
Types Of Upwork Fees
Upwork has three main Upwork charges for freelancers that you might encounter as a freelancer: a service fee, a withdrawal fee, and Connects.
Bonus – There is also one fee known as a conversion fee that’s hardly brought up. Read on and you’ll find out what this is.
1. Service Fee
For Upwork service fees, you will pay a percentage of your earnings based on your lifetime earnings with your client (meaning what you make with them throughout your time on Upwork regardless of the contract type).
Upwork’s commission rate changes as your earnings go up. This is the Upwork fee structure for service fees:
- If you earn $0 to $500 from them, you will be charged a 20% service fee. So for example, if you make $500, then your Upwork fees in this instance is $100 and you get to take home $400 after fees.
- If you earn $500.01 to $10,000, you get charged a 10% service fee.
- For anything more than $10,000, meaning $10,000.01 and up you owe just 5% in service fees
Essentially this means when you earn more from your clients, you pay lower fees.
2. Withdrawal Fee
For withdrawals, there is an Upwork payment fee of $0.99 every time you do a direct-to-bank withdrawal.
You are only exempted if you have a US bank account.
If you prefer a US dollar wire transfer, it is $30 per transfer. And US freelancers who want to use Instant Pay need to pay $2 for every transfer.
3. Upwork Connects
Lastly, this isn’t a fee per se, but they function like Upwork credits which allow you to bid for jobs.
If you’re just starting with a free Upwork account, don’t worry, you get 40 Connects for free and 40 more if you do an Upwork Readiness Test. Every month, you also get 10 free Connects.
If you land an interview, that also gives you 10 Connects.
If you do run out of Connects, you can always buy them – the price starts at $1.50 for 10 Connects.
4. Conversion Fee
If you’re wondering what on earth an Upwork conversion fee is.
An upwork conversion fee allows clients and freelancers who have linked up through Upwork to take the working relationship outside of the platform.
The conversion fee is 13.5% of the freelancer’s estimated annual earnings where they take the freelancer’s hourly rate and multiply it by 2,080 hours (52 working weeks of 40 hours a week).
This fee is only paid once and how Upwork determines the hourly rate differs between hourly contracts and fixed-price contracts.
If you take your work outside of Upwork without paying a conversion fee within the first two years, it means you break the Upwork terms of service and it may result in you and the client having both your Upwork accounts suspended.
Aside from these fees, it is also good for you to know that there are also Upwork fees for clients and Upwork agency fees.
The Upwork fees for employers are incurred when they successfully hire a freelancer and when the project is completed.
How Can I Reduce My Upwork Fees: Five Ways
1. Think Long-Term
If you’ve seen the tiered Upwork fees I shared earlier, you’ll see that once you pass the $500 mark with your client your fee reduces from 20% to 10% immediately!
I personally did a happy dance every time that happens with my clients because 10% is a lot and it adds up!
That is why when establishing relationships with clients, think long-term and think about value-adding to them.
If you have just one project with them or very small projects, think about how you can pitch more components into the project or how you can re-pitch a new idea for the next project.
Remember it’s lifetime earnings with the client.
So even if they come back half a year later and want to hire you again, it still counts towards the total tally and helps you get closer to a reduced service fee of 5 or 10%.
2. Build Fees Into Your Rates
This one is a no-brainer but it took me a while before I realised I can do so without the client ever knowing! Because it’s up to me to set my Upwork fees.
Say, for example, you are pitching for a job that you think would be $500 given your skills, expertise and the project requirements.
To get around the 20% service fee, just price your project at $625 such that when the 20% fee kicks in, you still get $500.
By this principle, you can also set the best hourly rate for Upwork for yourself by applying the same formula.
3. Apply For Enterprise Client Jobs
When applying for jobs, keep a lookout for enterprise clients, which are essentially clients who pay Upwork membership fees to help them get better talent.
Once you get a job from an enterprise client, you only pay a 10% service fee without having to pass the $500 mark!
That’s a whole 10% reduction on service fees!
The downside however is that even after you’ve earnt $10,000 with them, your service fee for enterprise clients stays fixed at 10%.
Enterprise clients are also not the easiest to find – you typically have to be invited to apply.
But hey never say never. I’ve seen some enterprise clients’ jobs on the main feed. They’re out there!
4. Work Your Way To Be Expert-Vetted
If you have skills in web, mobile and software development, design and creative, and sales and marketing, then you’re in luck!
Upwork has an Expert-Vetted programme where you are invited and given some screening tests and a personal interview to determine that you have the expertise and skills to be marked as an Expert-Vetted user on Upwork.
Once you have gotten this status, you will be assigned a talent manager who helps match you with the right jobs.
You also get a badge that shows you’ve passed this super stringent process with Upwork.
And the best part is – you get reduced service fees for Featured Jobs where you only get charged a 10% service fee, instead of starting at 20%.
After the first $10,000 this similarly reduces to a 5% service fee, like with regular jobs.
5. Go Off The Platform (But Only After Two Years)
Now the most obvious way to reduce any sort of Upwork fees is to just go off the platform and work directly with your client. You can, but only after two years.
When you agree to Upwork’s terms upon registration, you agree to exclusively use Upwork for two years for payments from the time you first start talking to your clients.
Or else you’ll need to pay a conversion fee or risk having your account suspended.
How Much Should I Charge On Upwork As A Beginner?
As a freelancer, you should expect to charge anything from $20 to $35 an hour. However this really depends on the client requirements, your experience and the level of demand for your skillset.
Tips For Beginners On Upwork
Here are some tips for beginners on Upwork that I found particularly helpful when I first started out:
- Have a clear, professional-looking profile shot
- Actively login to the platform to look for potential clients
- Tailor proposals to each client – this includes reading every part of their job posting and also including words to show you’ve read it
- Find a niche. If you’re a writer try to write about topics that have higher demand but a lower number of writers available like technology
- Have a portfolio ready for potential clients
- Overdeliver always
- Remember to follow-up for reviews as they help you get more clients the next time around
- Communicate constantly with your clients – they’re paying money and want to ensure they receive the product or service they’ve gotten you to do. Don’t go silent on them even if you’re busy working on their project.
How Much Does A Beginner Freelancer Earn?
Beginner freelancers earn around $20 to $35 per hour, but depending on their skills and the demand for the skills, it could also go up to $80 per hour.
FAQs On Upwork Fees
Why Are Upwork Fees So High?
Upwork fees are so high because Upwork is a very popular platform and despite their fees they remain very popular among freelancers and clients so they can continue to charge these fees.
Their fees are also high because of the network of clients they can give you access to as a freelancer.
Can I Withdraw 30 From Upwork?
Yes you can withdraw any amount from Upwork. Just note that depending on your payment method, you might incur charges:
- Free for transfers to US banks
- To local banks outside the US – $0.99
- US dollar wire transfer – $30 for every transfer
- Instant pay for US freelancers – $2 for every transfer
How Long Will Upwork Hold My Money?
Upwork holds your money for a five-day security period after your client approves your milestone or project.
If you’re on an hourly contract, the weekly billing period ends on Sunday and you can then withdraw your funds 10 days later (the following Wednesday).
If you’re top-rated or you belong to an agency working on hourly contracts then you do not have a five-day security period.
Does Money Expire On Upwork?
No, your money doesn’t expire on Upwork. It stays in your Upwork account until you choose your payment options, which could include an automatic payment schedule or an automatic withdrawal limit.
Once your money on Upwork or balance is older than 180 days, it is automatically withdrawn.
Does Upwork Pay Daily?
No, Upwork does not pay daily. For hourly contracts, they are on a weekly billing cycle while for other types of projects, you have the flexibility to withdraw money according to a payment schedule or when it hits a certain value.
How Do I Avoid Upwork Fees?
You cannot completely avoid Upwork fees if you’re on the platform. However, to summarise, some ways you can avoid paying more Upwork fees include:
- Having projects that pay more than $500 so you can circumvent the 20% service fee and cut this down to 10% straightaway
- Build anticipated fees into your client rates
- Withdrawing your money less often so you don’t have to keep paying the $0.99 withdrawal fee
- Aim for enterprise clients so you only need to pay 10% service fee from the get-go
- Switch to other platforms like Fiverr or Freelancer
Does Upwork Charge A Monthly Fee?
No, Upwork doesn’t charge monthly fees. It is completely free to join Upwork and to start looking for jobs.
You only pay when you earn from clients and are charged a service fee of 5% to 20%.
If you want to do better on the platform, you can opt to upgrade to Freelancer Plus which charges $14.99 a month, but this isn’t mandatory.
You get insights on clients, free connects, and a customized profile URL and you can even keep your earnings private.
Now, Upwork fees are not completely avoidable unless you go off the platform completely.
But you’ll need to know that going off the platform might contravene Upwork’s terms unless you do so only after two years. If not you’ll need to pay a conversion fee to take your working relationship outside of Upwork.
In general, Upwork fees can be hefty but the good news is that they can be reduced over time and with the right strategies.
I hope this article has helped you understand what those fees are and how you can go about reducing them by 10%!
Now go out there, get those clients and get earning!