Here’s Why Freelance Platforms Like Upwork Are Broken

Delton Rhodes
Jul 31, 2019 · 7 min read

Background

After graduating from college in 2015, I began building my portfolio in content writing and content marketing. I was fortunate enough to find a few short-term freelance opportunities on freelance sites like Upwork. Slowly, I was able to learn how to write viral content and build an amazing portfolio. I was eventually able to find higher-quality jobs on some of the top online job boards (see my favorites list here). Along the way, I experienced several issues with freelance sites like Upwork, Fivver, and Freelancer. While the quality of user experience (both for freelancers and clients) on these freelance platforms has always had issues, this seems to be more apparent than ever in 2019. Here are the major problems freelancers and clients face today.

Upwork Now Charges Freelancers to Apply

Beginning in May-June 2019, we started to see major changes in the way that Upwork operates. Freelancers first learned about this in April 2019.

Looking at my own profile in early July 2019, I thought that I had 0 available connects when the site implemented these changes. This means that I would have had to buy connects immediately in order to apply for one project. However, looking at my profile on July 30, 2019, I discovered that I actually had 60 connects available. I hadn’t paid for connects, so I guess my previously unused connects rolled over or Upwork granted them to me for whatever reason.

From the perspective of someone posting a job on freelance websites, I understand the need to find candidates who are serious about completing projects. However, many of the projects posted don’t pay nearly enough for freelancers to justify investing not only time to write a tailored cover letter but now funds as well. I know there are many job boards out there (i.e. FlexJobs or The Ladders) that require job seekers to pay money in order to access job listings. Even though I disagree with this model, I at least know that the listings posted on these job boards are higher-quality on average than freelance platforms.

I would also argue that the model of making freelancers apply for each project is a poor way of resolving the oversupply of applicants problem. Why should a graphic designer, for example, spend $0.90 to apply for a project that might only pay $20… and that’s before the 20% platform fee?

Those freelancers who spend money to buy connects in order to apply for a project aren’t necessarily the most qualified. In fact, they could be completely unqualified or have no experience in a specific domain… But they are simply the ones who are willing to pay the most to get noticed by the client; therefore, they will likely get more opportunities on the platform than more qualified applicants who simply decide not to apply due to the extra budget needed to apply for a job post that might just be spam/ not a legit freelance project.

Comparison: As of 2019, Freelancer.com allows each freelancer to apply for a maximum of eight jobs per month with the free membership plan. On Fiverr, each freelancer can apply for up to ten jobs per day. It will be interesting to see if these sites take on the bid model now used by Upwork or continue with their current models.

Incentive/Cost Model Goes Against the Trend

While freelance platforms can be a good source of small, one-off gigs, they typically don’t provide the proper incentives for top freelancers. Think of it this way. Using any service or technology, there is a certain fee equilibrium that must be maintained in order to retain customers. For example, if Bank A charges 3% fees for ATM transactions and Bank B charges 0%, it’s clear that Bank B will be able to attract more customers (unless other factors are at play).

So why is it that freelance platforms have chosen to maintain or even increase their fees on a freelancer’s work? I look at it as a competition issue. It’s not that other platforms don’t exist. There are plenty of options available. I also don’t think that the problem is that all platforms charge high fees. In fact, the rates vary across the board. The biggest factor really goes back to the talent supply problem. Because freelancers are seemingly already established on a specific platform, there is less willingness to try a new platform with fewer gigs listed, even if that means less competition from other freelancers. Therefore, the cycle of fewer jobs listed on smaller, less established freelance platforms seems to continue, making it more difficult for them to compete with established platforms.

So what about freelancers who don’t want to use platforms that charge high fees? It seems that either 1) Freelancers ultimately accept this reality and continue using the same platforms/ don’t care about the high fee problem. 2) Freelancers find gigs on job board websites rather than freelance platforms. Even those freelancers that do find long-term, high-quality remote work on freelance platforms are likely to ask whether or not other options pay better when taking the platform fee into account.

Too Many Spam/Fake Job Posts

Looking at job board websites, there are typically much higher quality opportunities than you can find on freelance platforms. Why is this the case? I think it’s simply because of the fee model that’s being used. On Upwork, Freelancer, and other freelance platforms, the client doesn’t have to pay anything for posting a project listing. While people working for the freelancer platform do undergo quality control efforts to reduce the number of spam or fake job posts, many of these issues remain. Yes, it’s possible that the project listed might actually be legit; however, this uncertainty can mean wasted time for freelancers who don’t wont to waste time to sorting through fake posts. Let’s take an actual listed project as an example.

Here are a few comments based on the photo above. Although the payment method of the client is verified, there are a lot of projects listed such as this. A few issues I see are 1. Only one open job (this one) 2. A fixed price of only $40 3. The talent level is “expert” but expert pay with someone with account experience is most likely over $40 per hour. 4. The scope of work is not made apparent by the description. Why would an expert agree to a fixed price of $40 if it could very well take an entire day or multiple days to complete the task? 5. The job is only open to US freelancers. While $40 might be sufficient in other places for the work required, the amount is most likely too low for the US. Yes, I know that the client can increase the price after talking with freelancers, but there’s also a good chance that this won’t happen.

Many Clients Don’t Hire Anyone For Listed Projects

Even for projects that seem to be legit (or maybe even high quality), there is a good chance that the person posting the job on a given freelance platform won’t hire any candidate. The issue isn’t necessarily because there isn’t a qualified freelancer for the job. I also don’t see the bids placed by the freelancers as a problem. Sure, there are freelancers that are too costly for the client. However, there are many freelancers who have solid reviews with market rates. Again, I think the incentive for hiring ties back into the minimum requirements needed to post a project. For a client, there isn’t really any requirement on most freelance platforms. I think one issue is that many clients simply forget they post the project because there’s no fee to do so. Introducing a fee model for posting is one possible solution. Compare the hire rate to job board sites where posting a job description for one open role can cost $250 or more. There is a much greater financial incentive for recruiters to only post legit roles and actually take the entire process seriously, from posting job listings to conducting interviews to sending offers.

Customer Support/Contract Dispute Resolution Is Non-existent

When using any freelance platform, one of the biggest benefits is supposedly the idea that contract disputes can be resolved easily.

What happens if a freelancer decides not to do the work? Freelance platforms are built to protect the client, so typically we see no issues from this. The worst-case scenario is that funds put in an escrow account by the client are returned a few weeks later. While this is an inconvenience, it’s generally not a big deal.

What happens if the freelancer does the work but the client doesn’t approve of the work and decides not to release escrow funds? What happens if the client simply doesn’t respond at all after the freelancer requests payments? The dispute resolution process takes significantly longer. Oftentimes, the freelancer either doesn’t receive any of the funds in escrow or only receives a portion (as determined by someone at the platform). Meanwhile, the person posting the job can simply use the work without consequence. As this problem has happened to myself and others working on these platforms, it’s easy to wonder… what is the point of keeping contracts on the platform if the contract payment isn’t even protected?

Conclusion

Do some specific freelance gig markets have an abundance of freelancers? Yes.

Does this mean freelance sites should try to remove those who aren’t serious by making every freelancer pay to apply? I don’t think so.

Based on my experience as a freelancer, I think that clients should also take their efforts to find freelancers more seriously.

The Green Light

An independent, Medium-only publication about business…

Delton Rhodes

Written by

Writing and reading about startups, SaaS, blockchain, e-commerce, real estate, and more.

The Green Light

An independent, Medium-only publication about business, technology, and the global economy

Delton Rhodes

Written by

Writing and reading about startups, SaaS, blockchain, e-commerce, real estate, and more.

The Green Light

An independent, Medium-only publication about business, technology, and the global economy

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