How To Make Money On Upwork As A Freelancer In 2022
Upwork uniquely connects business owners and freelancers with benefits for all parties involved. Freelancers find work quickly, get paid on time and build reputation, while business owners find talent fast in a cost-effective way.
This guide explains the contract types, fee structure, benefits and disadvantages of using Upwork for freelancers and businesses.
What is Upwork?
Upwork is a global work marketplace for freelancers and business owners. Business owners find talent by posting a job and hiring the best freelancers. Freelancers can apply to listed job posts or post a project within Upwork’s Project Catalog. Upwork makes it easier for freelancers to find jobs online and make money by choosing the best job offers out of thousands available.
Upwork Inc. is listed on Nasdaq, one of the biggest stock exchanges worldwide. Their business is rapidly growing. While in 2015, only 5% of buyers considered online staffing, in 2020, already 47% did. The trend strengthened during the work at home period with more and more people offering their skills by using freelance platforms like Upwork.
Upwork’s Market Cap as of January 2022 is 4.08B, while the NYSE-listed alternative to Upwork, Fiverr International Ltd., has a market cap of currently 3.83B.
Create A Trustworthy Upwork Profile
Currently, 10,000+ skills are offered by millions of freelancers on Upwork. The Upwork profile is the first point of contact when business owners receive an application or browse offers from freelancers.
It is crucial to understand that building a reliable Upwork profile is essential for long-term success and trustworthy business partnerships.
An Upwork profile needs to reflect the skills and serve a similar purpose to a resume. The better a business owner understands the area of expertise, the higher the chances of getting hired.
A high-quality photo and detailed description of working experience are also important. Based on an Upwork survey of February 2021, 73% of talent have college degrees, making it essential to list every degree in the profile. Finally, there is a little badge beside the freelancer’s name once the government ID check and visual verification were successful. This badge provides a high grade of credibility and trust.
Chose The Best Membership Plan
Freelancers can join Upwork for free with the Freelancer Basic plan, create a profile and start working on projects. Upwork also offers a monthly plan for $14.99 per month called Freelancer Plus.
Freelancers Plus comes with benefits like a customized profile URL, insights to bid ranges on jobs from your competitors and a permanently active profile. However, this is entirely optional and not required.
- Freelancer Basis: $0 per month
- Freelancer Plus: $14.99 per month
Freelancers can downgrade from Freelancer Plus to Freelancer Basic at any time within the settings under Edit Membership Plan.
Understand The Payment Process
Upwork takes care of the entire payment processing to ensure a smooth transaction.
Once the freelancer and business owner decide to proceed, a contract gets created. The contract includes a name and description, and within the contract, separate milestones are defined.
Each milestone has a budget. Those milestones can be either time-based or with a fix-price.
For time-based contracts, Upwork monitors the active time of a freelancer on his computer while working on a client project. The number of hours multiplied by the hourly rate defines the overall payment.
For Fix-price contracts, both parties agree to a specific budget for a particular task. The benefit of fix-price contracts is that the freelancers only need to deliver results without getting tracked for the time invested. The freelancer and business owner know the amount of the project precisely right from the beginning.
Understand the Fee Structure
Upwork’s fee structure is one of the best in the freelance business.
Fees for freelancers:
- 20% fees on the first $500 per client
- 10% fees on the revenue with a client from $500.01 to $10,000
- 5% fees on the revenue with a client above $10,000
It is rewarding to build a long-term relationship with clients to reduce the fee to a minimum of 5%. The revenue is always based on a per-client basis, not per milestone basis.
Fees for business owners:
Upwork currently charges 3% of revenue from business owners. So, for example, if a job with a budget of $100 gets started, the business owner pays $100 + $3 fees.
Start Working On The First Project
New freelancers on Upwork start by submitting proposals for jobs in the preferred category. The main categories on Upwork are:
- Development & IT
- Design & creative
- Finance & Accounting
- Admin & Customer Support
- Engineering & Architecture
- Sales & Marketing
- Writing & Translation
The job posts in each category are listed with the newest first and include details about the job with a headline, job description, expected duration and requested experience level.
What is the difference between hourly and fix priced contracts?
With an hourly contract, freelancers get paid at a rate per hour. To ensure accuracy, Upwork tracks freelancer activities via automated monitoring. The hourly rate multiplied by the hours of work results in the total payment. In contrast, a fix priced contract is made if a freelancer and company agree to a specific fixed price for a result. If the freelancer delivers the result, the company pays the fixed price. This type of contract is a good choice if the parties involved want to know about the exact conditions and payment volume before starting work.
What fees do freelancers pay offering their skills on Upwork?
Upwork uses a fee structure based on the total amount of revenue with a client and not per job. The first $500 of revenues are the most expensive ones with 20% fees. From $500.01 to $10,000 revenue, the rate falls to 10%. Every amount of revenue with a client exceeding $10,000 comes with a fee of only 5%.