As a former freelancer, I’d generated over $60K back in the day. As a company owner, we’ve already invested 6 figures through Upwork.
Increase The Profit Margins
While the long-term strategy of Upwork may shift, going public will mean stricter compliance reported to investors and finding opportunities to increase the profit margins (and profit as a whole).
The easiest way to do this is increasing the lifetime value of each customer or freelancer.
Upwork has twelve million registered freelancers and five million registered clients. Three million jobs are posted annually, worth a total of $1 billion USD, making it one of the largest freelancer marketplaces along with Fiverr.
There’s a fine balance between:
- Sufficient engagement (number of available jobs for freelancers and enough quality applications in a short period of time for clients)
- Scalable infrastructure and minimal overhead (the ability to keep expanding and keeping costs down, both on hardware and headcount)
What Upwork Has Done So Far For Clients And Freelancers
Upwork has already made certain adjustments in order to support high-profile clients and successful freelancers. Some of which adjustments include the following:
- Signing up is pretty rough for certain countries, especially across Asia.
- The first $500 per client are taxed with 20% by Upwork.
- “Rising talent” is a prominent feature for freelancers who aced a few jobs, and get a slight boost for additional job prospects on the platform.
- The minimum hourly fee was boosted to $3,33 several years ago. This may see low, but for comparison, the is ~$60/month, and it goes as low as $20 or so.
- Long-term contracts incur lower overhead for Upwork. That’s why a freelancer accumulating over $10K for a client is charged just 5% onward, a tempting offer for ongoing contracts and hiring.
- Reputable companies often get additional recommendations for hiring help and recommendations with an account manager from Upwork. Another incentive for keeping investments on the platform.
So, reasonable move forward is establishing stronger constraints for freelancers, possibly reducing their number to increase the average quality. There are far too many bot agencies sending proposals for every single job, radically reducing customer satisfaction.
Additional perks for companies who outsource their development entirely, probably with dedicated account managers.
Move Up The Ladder
There are plenty of low-cost freelance networks out there, and a few high tier like Toptal. My guess is that Upwork will move up the ladder, reducing their overhead and increasing the satisfaction of their enterprise-grade customers.