You want to hire a talented but affordable graphic designer and someone suggests Upwork.

Now all you have to do is register on this global freelancing platform, create a job posting and then sit back as a slew of candidates jump at the prospect of working on your project. You choose the best freelancer and your project is good to go.

Simple, isn’t it?

Well, not exactly.

While digital freelance job sites like Upwork have played a big role in helping companies and individuals find talented independent workers, the sheer size of freelancers bidding for a project make it very difficult to separate the wheat from the chaff.

In other words, if you aren’t too careful you may end up hiring an incompetent candidate for your project.

It works the other way round too!

As a freelancer, trying to find good paying projects on Upwork can be an uphill task. You need to not only outbid talented competition, but also contest with freelancers who are willing to charge very low rates.

Can you make the best of this platform?

Absolutely!

To help you figure out how, we did a review of Upwork.

Note: Time Doctor is an easy way for you to manage all of the freelancers you hire on Upwork. You can get real time insight into what tasks they’re working on AND see how long it takes to complete each task. Try it free for 14 days.

Read on to know what it does, how it operates, what are some of the pitfalls and how to avoid them so you can hire top talent for your business (at the best price!).

What is Upwork?

Few years ago, two popular online freelance platforms Elance and oDesk merged to form Upwork. According to the company, it is “the premier freelancing website for top companies to hire and work with the world’s most talented independent professionals”.

The platform says it has over 12 million registered freelancers and more than 5 million registered clients. It posts 3 million jobs annually and does $1 billion worth of work on an annual basis.

Freelance platforms are gaining popularity

With the advent of ‘gig economy’ where people are leaving the security of full time jobs to pursue different opportunities in the form of independent work, many talented professionals are signing up on digital marketplaces like Upwork to offer their services.

Even attorneys, CMOs, and consultants with world-class training are choosing to work independently.

By 2020, more than 40% of the American workforce will be freelancers and independent contractors.

Freelancing is great for individuals as they get to choose their assignments and work schedule.

For organisations, it is a good opportunity to hire talent that may not be available in-house or even in the same geography. By 2017, an average business will hire 25% of its workforce as freelance workers, up from 20% in 2015.

How much does Upwork charge?

The digital platform has changed its fee structure and now charges both the client posting the job and the freelancer getting the gig.

For clients hiring freelancers, the company charges 2.75% processing fee per payment transaction.

This fee is calculated as a percentage on top of the payment you make to freelancers. For example, if the client makes a $1,000 payment for a project, the platform will charge an additional $27.50 processing fee.

Earlier, clients were not charged any fee.

Clients that spend more than $910 a month and are in the U.S., Canada, Australia, the UK, and certain Eurozone countries, may be allowed to pay a monthly flat fee of $25 instead of 2.75% per payment. This fee structure is accepted only on a case-by-case basis, so you need to write to Upwork for approval.

Freelancers pay a sliding service fee of 20% to 5% based on the freelancer’s lifetime billings with a specific client.

You pay 20% for the first $500 billed with the client across all contracts, then 10% for total billings between $500.01 and $10,000. When total billings with the client exceed $10,000, a 5% fee is charged.

Essentially, the more business you do with one client, the less fee you pay in the long run.

Earlier, freelancers only paid a fixed 10% service fee for all contracts.

According to Upwork, the new pricing model is designed to incentivize higher-value, longer-term projects.

Some freelancers who were earlier working on Elance and oDesk have found the pricing change disconcerting. James Duren, a freelance writer who has been getting work from Upwork since 2014, said he would have trouble hitting the $10,000 lifetime total for his clients to qualify for the 5% fee.

Others like Danny Margulies, a copywriter who moved to Upwork from Elance disagree. Margulies said he quickly got a request from a client who saw his $135-per-hour rate.

Increase in fees may not be a big issue on its own.

But sometimes…

Clients may want to adjust the ‘price’ of a job with the processing fee, reducing the actual rate of a job. There are some highly tedious proofreading jobs going for as low as $10 per hour.

Freelancers, on the other hand, may jack up the cost of a job according to the margins they want to make after paying service fees.

This may lead to businesses paying higher fees indirectly, while simultaneously getting deprived of good talent that is not keen on lowball job offers.

Get your pricing right

As a client…

If you want to attract good talent, be realistic about the pricing. Good work can’t be hired at $2-$5 per hour rates.

If you price a job too low, it will attract poor quality of freelancers and ‘spambots’ – that bombard potential jobs with low bids.

Describe the project in detail, including skill requirement and how many hours required to compete it. Categorize it accurately. This will prevent you from wasting a lot of valuable time shifting through large numbers of irrelevant proposals.

As a freelancer…

Don’t price yourself low (or offer free work) to attract jobs, even if you are just starting out.

Calculate your hourly rate (or price-per-job) accurately using a rate calculator, so that it not only covers your cost but also reflects the talent you bring to the table.

Don’t just compete on price, show potential clients that time and resources that you spend on each aspect of a job and the value that you provide. This will help build trust and respect which goes a long way in getting great offers.

Don’t restrain yourself from applying for a job where the client budget is lower than your price. Sometimes, clients do not know what the budget should be for a job but are happy to pay for good talent.

How do I make payments on Upwork?

When you hire a freelancer on this platform there are two types of payment – for fixed price contracts and for hourly gigs.

For fixed price contracts, clients need to make deposits in an escrow account. The money is released to the freelancer once the job is done or on reaching specific milestones in the project, whatever has been decided between the two parties.

On hourly jobs, clients are billed every Monday for the previous week’s hours based on the freelancers’ work diary that records number of hours put in a job with work-in-progress snapshots.

Payments can be made through credit card, debit card, bank accounts (US clients only) and PayPal. These payment accounts need to be verified by Upwork.

As a freelancer on an hourly job, the billing period will start on a Monday and end on Sunday; and your funds are available 10 days later (following the close of the billing period).

For fixed price gigs, money is released to the freelancer (on completion of the milestone or project) after a security period of around 5 days. Upwork needs this time to process and clear the payments, and resolve any disputes, before funds are released.

This system also has an in-built payment protection for clients and freelancers.

As a client you get to define milestones in fixed price jobs. Payment is released to the freelancer only after you have received and approved the work. For hourly jobs you can check a freelancers’ work diary before approving payment.

Freelancers are assured payment for hours clearly worked on the project using the Upwork Desktop App. On fixed rate projects the client deposits a milestone payment into escrow before work begins.

For many freelancers this system works better than running after a client to clear an invoice after completing a project.

However, it sometimes gets tricky.

There have been cases where freelancers have finished a job but the client has refused payment on some pretext – like unsatisfactory quality. Similarly, clients sometimes make the final payment but aren’t given complete access to all deliverables of a project (code files, graphics, templates, etc.) by the freelancer.

This means as a client you don’t get access to the job you have paid for and as a freelancer you can’t get your money.

For hassle-free payments

As a client…

Release payment and close the contract only after you’ve received the final product from the freelancer and reviewed it to check for quality.

Have clearly defined milestones and specify the payment associated with each milestone for the project.

Don’t delay reviewing a completed job or releasing payment. This can create disputes and your account can get blocked.

As a freelancer…

Ensure that the clients’ payment methods are verified.

Work only using Upwork’s desktop app and work diary that tracks your time and takes snapshots of your screen to avoid any conflict at payment stage.

Adhere to deadlines as discussed with client. If there is going to be a delay, communicate it clearly to the client and get an extension.

How can I find good freelancers on Upwork?

Finding and hiring good talent on any freelance platform is a time consuming job. It is no different for Upwork.

Companies and entrepreneurs, looking for freelancers on Upwork, usually complain that good talent is hard to come by, there are too many mediocre applicants and you also need to keep a look out for scamsters.

However, it’s not impossible to hire good talent at reasonable rates. Try these tips:

One common mistake clients make is not write detailed and clear job descriptions. This is most essential to attract even moderately fit applicants for your job.

Chalk out objectives for the project, identify any special tools or skills needed, and describe the level of experience you’re looking for. Also include details like results expected in the form of deliverables and deadlines.

When writing a description of your project add a unique identifier like asking the applicant to use the word “blue” in their cover letter or ask an obscure question that the freelancer needs to answer. This will show you who has read your job description clearly and has sent a customised proposal. It can weed out people who make mass applications.

Study each applicants experience, work history, feedback from other clients, and references to understand if they would be a good fit for your project.

Avoid profiles which are sketchy or do not have a professional looking picture.

Use a paid test to qualify applicants. This not only dissuades the non-serious freelancers, it also gives you a fair idea about the capabilities of an applicant.

Make sure you hold a video interview on Skype or Google Hangouts. Non-verbal cues during a video chat are invaluable when trying to separate a good hire from a bad one.

In case a freelancer is not comfortable being interviewed (maybe it’s their first interaction with you), then exchange messages through the Upwork Messenger to clarify all details before hiring. Upwork Messenger allows real time communication. Since all conversation is achieved within the system, it creates a sort of paper trail for both parties, which could come in handy in case of dispute resolution.

Post a fixed pay project only if you know what the exact output will look like and also the number of hours it should take to complete that project. Clarify these with the freelancer. If you have any doubts or the project is complex then you should post it at hourly rates.

You can also consider hiring a few top applicants for a trial contract (like a paid test drive) to help make the final decision. Upwork lets you do this.

Seems like too much work?

You can also give Upwork Pro a chance. It is a new, paid service from Upwork. The company says it helps busy hiring managers find, engage and hire the right freelancers from a group of handpicked, pre-vetted professionals.

Under the Pro version, freelancers go through a series of tests and interviews to qualify on technical skill as well as behavioural aspects that evaluates communication skills, teamwork and professionalism to determine if they are fit for a role.

As a client, when you sign up for Pro, you get an account manager who works with you to understand the requirements of your job including specific technical expertise, budget, etc.

The manager then posts the job in your Upwork account, screens Pro freelancers and creates a shortlist for you. These shortlisted applicants submit proposals to you. You can then sort through this selective list of freelancers, interview them and finally hire the best candidate.

All these services come at a price of $149 per month and a client service fee of 10% on all freelancer or project payments.

The Pro sourcing service is also available to Upwork Enterprise clients.

Upwork Enterprise gives large businesses direct access to freelance talent on Upwork plus the ability to source and engage freelancers from their own private talent clouds.

The latest version of Enterprise also allows businesses to customize their on boarding processes with steps and checkpoints that could include skill tests and background checks.

Want to know how to hire a great developer on Upwork? Check out our detailed post here.

How to get a great job on Upwork?

While we all know that when applying for a job, you need to write a top-notch proposal that attracts a client, there are a few tricks that could seal the deal for you on this platform:

Around 34% of Upwork proposals will need you to answer one or more ‘additional questions’ after you write your Cover Letter. Don’t take these ‘questions’ lightly and don’t treat them as an afterthought. They are the first thing the client gets to see when he receives your proposal. The cover letter comes last.

Write a customised proposal and cover letter that addresses the points made by the client. Don’t be generic. You can be the least experienced for a job and an expensive bidder but if you take the time to understand the clients’ needs and communicate that clearly in your proposal, you’ll win the gig.

Don’t forget to look the part of a professional. There is more to a proposal than just the words you write. Upload a good, professional looking picture of yourself. Use sites like Photofeeler to know how competent and influential you look. Even though it’s not mandatory to upload a picture, it does make a difference.

Your hourly rates need to be competitive, but don’t sell yourself cheap. Research other freelancer profiles to find out hourly rates for your expertise. Also find out what you would be paid in a regular office for that same work.

Instead of searching for jobs through keywords and filters, skim through the headlines of all the jobs in your category. When you find few headlines that strike as promising, dive deeper. Keyword filters don’t work very well on Upwork and sometimes clients don’t categorise good projects accurately.

Upwork lets you take qualification tests to show how good you are at something. Take only relevant tests that will impress potential clients in your area of expertise. If you have done below average in some test, hide them from your profile till you can take them again and improve.

You need to research your client as well to find a good fit. Interview the client while they interview you to make sure you understand what they’re looking for. If you thinks it’s not going to be the right match, don’t take the project.

All set?

As the client you have found the best freelancer; and as an independent worker you have found a well-paying, interesting job.

Now we can all sit back and relax.

Not so fast, though.

How to complete a project successfully

There’s more to getting a job done right than hiring a great guy. Here’s what you need to remember:

Clear communication and effective collaboration is the answer to most problems that crop up in a project. Upwork allows collaboration between client and freelancer through its desktop app. Everyone can use it to send messages.

However, Upwork in the past has penalised clients for ‘too much’ messaging. So, if a freelancer has too many questions, just hop on a voice call or video chat to hold a detailed conversation. Make a note in the Upwork messenger that you are taking the conversation offline.

Any change in project deadline, details or payment when discussed and decided offline needs to be mentioned in Upwork messenger. Write a line or two putting the main points across.

Set a schedule for regular updates from the freelancer. You can then quality check and give feedback to the freelancer if improvements are needed while the project is midway rather than after it has been completed. This reduces delays in final delivery.

All details of project deliverables, deadlines, payment, files, etc must be communicated through Upwork. This is essential for dispute resolution.

Some common grounds for dispute

Despite all precautions sometimes disputes arise. Some common sources of dispute on Upwork include if a freelancer has billed you for more hours than necessary to complete the task or has submitted subpar quality of work.

In such cases, the client has time till the end of the review period (usually a week) to talk to the freelancer and resolve the issue or file the dispute. For hourly jobs, disputes must be based on hours billed, not the quality of the work.

For fixed price jobs, rules say that only freelancers can file disputes (for the release of the escrowed funds). However, that does not mean you cannot talk to your freelancer about a refund. Moreover, there have been cases where clients did dispute fixed price jobs and got a refund on the total payment.

As a freelancer, you must always work using Upwork’s time tracker that is part of its desktop app. This is proof of the time spent on a job. Also for fixed hour work, negotiate on milestone based payments to ensure that you get part payment for completing certain parts of the project.

Go into a dispute only if absolutely necessary. Dispute resolution is not one of Upwork’s major strengths and they tend to be subjective in this matter. Often, Upwork will turn over disputes to arbitration which entails a costly fee.

Conclusion

With the rise of freelancer economy, many companies are finding it profitable to hire through online platforms. The talent pool of freelancers and remote workers on these platforms is bigger and also gives you a wider geographic reach. Moreover, you save on the additional costs associated with hiring an on-site worker like office space, work stations, insurance, etc.

With new marketplaces like Upwork expanding and improving its services to allow easy and efficient connection between clients and freelancers, there hasn’t been a better time to source top performers for your projects online.

Will you be hiring your next graphic designer or copywriter from a digital freelance platform