Upwork’s Price Change: Squeezing Both Sides

If you’re an Upworker like myself, you were probably outraged by an email sent two weeks ago that was disguised as good news. “We’re lowering our rate to 5% on jobs above $10,000!” it trumpeted in the subject line, only to reveal the real sucker punch inside – it was also raising its fee to 20% on jobs under $501.

Upwork management has been on serious damage control in the days since – its message boards alive with fury and venom, especially once we also found out that it was now charging clients 2.75% on every job they hire for, after that service was free for the length of the website’s existence. That means in one fell swoop come June 1, Upwork will go from making 10% of the sum total of a job to making 22.75% on anything under $501.

In one giant greedy move, they’ll go from making $50 on a job of $500 to $113.75 on a job of $500. That’s the equivalent of a hotel randomly deciding that instead of $129/night, it was going to start charging $293/night. Same hotel room, new rate. Or if a car that used to cost $30,000 now cost $68,250. You’d ask the salesman, “Wait, what did you do to the car to suddenly make it worth $68,250?”

“Nothing,” he’ll reply. We just have to stop losing money.”

It’s not just on the community forums that people are expressing their anger. Forbes has put a story online about it, as has Staffing Industry Analysts.

Ironically, it was just about a year ago that Upwork was born from the Elance-oDesk merger, with the new CEO claiming revenues would grow from $1 billion to $10 billion in six years. $1 billion in revenue and you’re losing money? Guys, somebody needs to figure this out.

One of my best current freelancing clients is a cat named Christopher who lives in Florida and owns a company specializes in wealth management. He knows more about the financial markets than I could hope to learn in 10 lifetimes, but he’s generous and likes to engage in conversations with me like we were on equal footing. He mentioned the price hike by Upwork yesterday, and his exact words were “What a bunch of idiots. They’re gouging their client base right in the eye and doubling their costs for what is essentially a dating website.”

Fortunately, Christopher and I already closed out our initial Upwork contract and have moved on to a payment system through an alternative platform, one that doesn’t decide it needs to fix its business model by alienating the people that use it.

If you’re as upset about Upwork as I am, spread the word through social media, blogs, and every format you can think of. They might not get the message today, tomorrow, or even this year, but as their client list shrinks and freelancers start exploring other options – I recently joined LocalSolo – eventually they’ll figure it out or fail.