As a freelancer, you’ve got a ton of different client acquisition options. One of these options is to join freelance websites like Fiverr or Upwork.
But, like anything else, there are pros and cons. I’ll share the perks and the pitfalls so you can make an informed decision for your business.
What is a Freelance Website?
Before we get into the inner workings of a freelance website, let’s define what one is. Essentially, it’s a marketplace where freelancers and clients get matched up so they can work together.
Of course, every site operates differently and has unique features, but this is a good, basic definition.
Perks of Using Freelance Websites
I like to keep things upbeat around here, so we’ll start with the good points about freelance websites or platforms. There are two main benefits to using them in your freelance business:
- Time Savings
- Reduced Administrative Load
Let’s look at each.
How a Freelance Website Saves You Time
When you land clients on your own, it’s time-consuming to find prospects, connect with them, build rapport, and pitch your services. And — after all of that effort, there’s no guarantee that they actually need or want what you’re selling. Frustrating, right?
Well, when you source clients using a freelance website, you won’t have that problem. Everyone there is either a freelancer looking for work or a paying customer looking for help. You can run searches, filter results, and reach out to folks who need what you do right now!
That’s a lot less hassle, so you have more time to… I don’t know… actually work!
How a Freelance Website Reduces Your Administrative Load
When you freelance, you’re a small business owner. That means on top of completing your client deliverables, you’re generally responsible for:
- handling important paperwork (like contracts or statements of work)
- communicating with clients
- invoicing and collecting payments
… and a whole host of other things!
But, when you work through a freelance website, many of those business logistics get taken off of your plate. You communicate with clients via the platform, sign contracts, statements of work, and other documents via the platform, and get paid via the platform.
All of your essential paperwork will be organized in one place, and the website handles payment processing.
You just have to do a good job on your freelance projects. Sounds pretty sweet, right?
What to Watch out for on a Freelance Website
Well, unfortunately, it’s not all roses. There are three major bummers when it comes to using freelance websites:
- Stiff Competition
- Low Pay Rates
- Platform Fees
Let’s take a peek at each.
It’s true — finding clients on freelance websites can be easier than trying to land them on your own. At first glance, it may seem a little like pulling fish out of a barrel.
But! You’re not the only one vying for the attention of folks on those platforms. In fact, there are lots of other freelance pros chasing the same leads you are. That means you really need to stand out as a freelancer to gain traction.
When you find clients on your own, it can be time-consuming and challenging. But, chances are, those leads aren’t being as hotly pursued. So, if they do need your services, your odds of getting hired are pretty solid.
Low Pay Rates
Although some freelancers make a good living on these sites, many clients use them to source low-cost talent. I mean, Fiverr literally has people offering $5 services. (Of course, some gigs pay more, but you get the point.)
So, what does this mean for you? Typically, you can command higher rates when you work with clients independently.
Freelance websites don’t offer their services out of the kindness of their hearts. Nor should they! They’re a business, and they’re in it to make money.
That means you (and the clients) have to pay to play. The platform will take a piece of your freelance earnings in exchange for your use of the website.
Each freelance website has different fees, but as of this writing, here’s how Fiverr and Upwork do it:
- Fiverr: 20% of everything you make
- Upwork: tiered fee structure:
- 20% of the first $500 with a given client
- 10% of $500.01 to $10,000
- 5% of anything over $10,000
So, if you make $1,000 with Fiverr, they’ll take $200, leaving you with $800 (pre-tax).
$1,000 with Upwork gets you $850 before tax. (20% of $500 is $100 and 10% of $500 is $50 for a total fee of $150).
That’s a pretty significant chunk — especially when you haven’t paid self-employment taxes yet. If you lob off another 20-30%, what are you left with? A fraction of the initial pay rate!
Is that gig really worth your time now?
Note: Yes, you can deduct freelance website fees on your taxes, but that doesn’t help your month-to-month cash flow.
Should You Use a Freelance Website?
So – what do I think?
Personally, I don’t use these websites. I like landing clients through networking and relationship building. I also like to keep more of what I make.
However, I can see some potential here. These websites may be good for landing some initial portfolio-building gigs. Once you have those, you can jump ship and find clients in other ways.
Final Thoughts on Freelance Websites
Even though I’m not a fan of these platforms, every freelancer’s journey is different. You’ll have to decide if freelance websites have a place in your business.
Either way – I’m rooting for you.
Learn by listening? Check out this podcast episode about freelance websites.