Our new pricing
tl;dr — we have to increase our prices to be able to grow and expand Uplink. The monthly fee will stay at 10% but we will charge it for 6 months instead of capping it at 1,500€.
We have had a very simple pricing model from the very beginning — our service is free for clients, but the freelancers pay a monthly fee of 10% of their earnings, capped at 1,500€ in total per client, for each new client they find through us. This means that once a freelancer has invoiced 15,000€ to the client (no matter whether for one or multiple projects for that client), she has paid the maximum fee of 1,500€ to us and can continue to work for the client, for as long as she wants, and keep 100% of her income.
Clients love it because they don’t get any invoice from us (they don’t even need to make a contract with us), they simply negotiate the day rate with the freelancers and are invoiced directly by them. We tell each client early on about the fee the freelancers have to pay, and that most of them add this fee to their day rate of course, but the clients don’t mind because what is 10% compared to the 20–40% that IT recruiters charge? And if the project runs longer than a month, the cap lowers the percentage even more (assuming full-time work with a — for Berlin — average day rate of 650€).
Now to the bad news — this pricing would be unsustainable for us in the long run. Many advisors (and even our members) have long told us that we are “too cheap” and will basically “run out of steam” if we don’t raise our prices, and we can see that happening not too far in the future if we don’t act now.
So after deliberating for a few months and talking to many of our members, we have decided to keep the monthly fee at 10%, but remove the 1,500€ cap and instead charge the fee for the first 6 months of the client and freelancer working together.
- for short projects (< 1 month) nothing changes (since the €1,500 cap wasn’t reached),
- for medium-length projects between 2 and 6 months, the freelancer will have to pay the 10% for each month, which wasn’t the case before,
- and for longer projects, after the initial 6 months the freelancer will keep 100% of her earnings, just as before.
The new pricing will not affect any ongoing or open projects, but it will be the default for all new projects starting today.
Why do we raise the fee?
To be honest, our current costs are not the reason for the change — they have increased a bit, mainly due to my colleague Timo joining me in October 2017, but otherwise Uplink is still a very lean operation with monthly fixed costs of less than €250 (excluding salaries): €150 for our office, €50 for servers and online services, plus various other small expenses.
The problem is that our current pricing limits the size that Uplink can grow to, because we need to invest into expanding to more cities in Germany. All clients and projects so far came to Uplink through word-of-mouth recommendations, googling (by the client), or cold-emailing (by us). While this is really amazing, it was only possible because after 8 years of freelancing in Berlin, I had quite a lot of contacts who I could reach out to when I started Uplink.
Our next step is to expand to more cities (Hamburg is next!) and I am sure clients won’t come to us quite as easily as they did in Berlin. We want to be able to try out SEM, XING/LinkedIn ads, (snail-)mailings, partnerships, attending trade shows and other avenues to reach new clients, which wouldn’t be feasible with the current pricing model. We would simply not make enough money from each placement to be able to invest into finding new (and “better”) clients.
While I know that this change makes Uplink a bit less attractive for freelancers compared to “free” alternatives of finding new clients (job boards, cold-contacting, attending meetups/fairs etc.) I hope that most of them still feel that our service is worth the price.
We have improved and automated a lot of tasks in recent months, which means less hassle and time-wasting for both the freelancers and us, and we will continue to add new features to make job requests, introductions, scheduling, and invoicing more effective!
In the end, the silver lining is that the increased revenue will make it possible for us to grow, expand our community, and find new clients, which will make Uplink a better service for everyone!